Matthew Hopkinson, director at retail location data and insight provider, The Local Data Company, highlights the key topics debated at the Retail Week Conference, 16-17 March 2011
Stand still and you get run over. This is certainly true in the current market. Be it supermarkets going into convenience formats, Boots rolling out drive-thru pharmacies or everyone adopting an Apple style of retailing by going ‘Black’, retailers are working harder than ever to differentiate their offer and build on the power of the brands they retail. With an estimated 50% of all multiple’s leases coming up for review or ending in the next three years, it will be fascinating to see how UK retail changes going forward.
As one speaker put it at the Retail Week Conference “2011 is going to be the toughest year yet”.
Trust – many retailers talk of trust as an important part of customer retention, service and most importantly, it is a key component of social media and online reviews. How is this measured? Repeat business, good reviews or solid sales?
Out-of-town retailing has increased fourfold since the 1980s (36% versus 13% for in-town in the last 10 years) and within five years there will be more retail space out of town than in town!
Community – retailers cite the importance of community but what is community and does it feature within modern urban society? Is it a high street phenomenon or can it be created within a supermarket/shopping centre? How can it be measured beyond pure PR value?
Ageing population – the number of pensioners has risen by 20% in the last 25 years and now account for 16% of the UK population. Who will benefit from this spending power – supermarkets, independents, department stores, well established multiples? How does one communicate trust, value and conveneince? One thing you can be sure of is their monitoring of customer service!
Operational efficiencies – are the key to retailer growth in a world of rising costs. Direct sourcing is one area that can have a big impact but how can independents do this based on their volumes and fragmented nature? Will such efficiencies make it virtually impossible for independents to compete?
Need is the new consumer behaviour rather than want which was the last 10 years. Retailers have to work harder than before to convince shoppers to part with their falling discretionary spend. Deals generated through channels such as Groupon, eBAY and Facebook will become increasingly significant.
Online sales are cannibalising stores and whilst it is over 8% of retail sales here we need to be prepared for it to increase significantly. In Asia 20% of retail sales are online. Customer demands mean stores need to be bigger to display and hold the full range of stock and Next is an example where its pre-2005 stores are now too small to carry their range.
Partnerships are becoming more important as retailers grapple with this fast changing world. It provides a fast, low risk and cost effective way of expansion and concept testing. A good example is Waitrose’s tie up with Boots, which enables Waitrose to reach thousands of new customers and thus increase sales significantly. Pop-up shops will also be more significant as retailers maximise peak trading periods or respond to customer demand.
Think local is the new buzzword. Every store needs to reflect the needs and aspirations of its customers and as such there is no such thing as Mr or Ms Average and therefore retailers need to ensure their stores are different from one location to the next. This is also a key part of internationalisation of brands and fascias, which every retailer is looking to achieve. Hot locations being the BRIC countries and Turkey.