As the retailer landscape fragments along with shopper expectations and consumer experience, there is an increasing need to know your consumer’s expectations, values and demands. In today’s world, society’s awareness of environmental, political and ethical issues will define brand success. A generation is entering the market who have only experienced austerity, gay marriage and smartphones. Will your brand values allow you to win in 2019?
How your shopper and consumer works, rests and play isn’t enough. Knowing where they fit into their world, increases the penetration of the brand’s story.
So let’s take a look at what’s happening in today’s UK retail space to see if the change is reactive or proactive.
As B&Q decide not to take part in Black Friday and with B&M and Ocado coming under the umbrella of the Groceries Code Adjudicator is it too early to call an end to the online gold rush? Many have been predicting the full integration of the digital platform and physical real estate for some years but some would say this has accelerated in the last 12 months as the High Street is forced to change.
According to Deloitte’s, store footfall has declined by 10.8% in July 2018 due to the warm weather, although in the first half of 2018 food consumption increased by 3.8%. The in-store purchase increased by 2.0% in the first half of 2018 although online achieved 15.1% growth in the same period. All this before we recognise a 46% increase in M-Commerce activity. Despite all of this shiny new statistics, Tesco remains our largest grocer in terms of turnover, market share and real estate.
Are those big bell weather stores are losing their shine. With M&S expected to announce a significant drop in profits this week and Alibaba missing its quarterly targets, you might think the tide is starting to turn. But a quick look towards the horizon will confirm that IKEA is having a fabulous 2018 with one of the best performances on the High Street.
Much has been written about Debenhams, House of Fraser and Evans Cycles in recent weeks suggesting that out of date brands or brands with high debt have been slated to fail. It is no coincidence that Toys R Us, Staples and BHS lost their way as online ate their lunch, leaving investors with no choice but to close.
And still Amazon roles on opening its second four-star store in Colorado, according to the Retail Gazette. Jaeger plans to triple its store openings in 2019 and niche knitwear brands such as JAM Industries are set to continue opening new stores, fuelled by a successful online presence de-risking physical store expansion. It’s amazing what comes out of Salcombe in Devon (the home of Jack Wills) these days.
So what of the grocery market? Has Tesco opened Jacks to compete with Aldi and Lidl and temporarily decided to follow the market, instead of proactively leading the way?
With the Competition Authority determining the disposal of up to 300 stores across the Sainsbury/ ASDA estate before the takeover can be approved, is the city beginning to ask if the deal has any legs at all. When we remember the deal was designed to consolidate central operations and leverage the combined supply chains of both Asda and Sainsbury’s. can the savings be achieved within the time frames originally identified?
Morrisons have turned the corner but more is needed to confirm their growth is organic and not just created on the back of large-scale price promotion activity. Whereas smaller competitors such as Co-op, Aldi and Lidl continue to increase market share on the back of changing branded formats?
As we move into 2019 is the primary concern for all retailers (regardless of format) going to be the increase in trading pressures combined with shoppers/consumers coming under increasing pressure, as wage growth refuses to keep pace with inflation. Online will inevitably grow in 2019 but as part of a physical store alignment plan. Augmented reality will expand in-store as entertainment becomes the order of the day.
Inevitably retailers will continue to go into administration although investing in technology, apparel and grocery innovation will fill the gap creating a new stimulating environment for the consumer, as the shopper is edged out of the purchase decision tree.
Brexit uncertainty continues to put pressure on the consumer market as suppliers and consumers begin to adjust to change. On the upside this concentration on fall out, allows the retailer to experiment with consumer and in-store experience as the current store format is reimagined.
As Deloitte’s suggest this is a time for all retailers and suppliers to establish what the value to the shopper and consumer has for your brand and its values.
So here is the homework.
When was the last time you asked your clients the following questions:
- These are our values are these the ones you would expect us to have?
- How do we compare to our competition?
- If we meet your expectations on values will you buy more from us?