Richard Beattie, CEO at retail marketing promotions company, TCC Group, explores what the retail sector may look like in 2012
Looking ahead to 2012 – retailers, especially in the food industry worldwide, will be under increasing pressure to grow their business and increase their market share. This will be a difficult challenge as industry predictions continue to be pessimistic for growth.
One of the biggest challenges to face retailers during the tough economic climate is shoppers are more likely to trade down, spending more on low end own label goods and products. Retailers with a high percentage of non-food sales also find selling high margin goods becomes more of a challenge – especially with the growth in discount online retailers such as Amazon.
According to research conducted by grocery retail experts IGD online, grocery sales in the UK will continue to increase by 14% by the year 2016, which is up from a total of £6bn in 2011 to £11bn by 2016.
During this time shoppers will also visit more channels and invest more of their time in making sure they get the best deals and prices, examples of this can be seen through the success of online money saving sites such as Groupon.
As a result of these trends, retailers will have to work harder than ever to retain and increase sales from their high spending shoppers.
In this highly competitive environment, encouraging and incentivising shoppers to spend more with you and less with your competition is also an important objective of retailers worldwide.
So how can this be achieved? Three ways to increase retail sales are:
1) By increasing shopper frequency
2) By attracting new shoppers
3) By encouraging existing shoppers to spend more
With this in mind, retailers need to look for new ways of working as dedicating marketing spend to price cuts and other price promotions can impact a retailers margins. At the end of the spectrum, traditional marketing spend does little to target those best customers who make up around 20% of most retailer’s client base, but will contribute massively to overall turnover.
E-commerce will put even more pressure on the bricks and mortar retail sector. Increasingly more and more food sales will be online, unless retailers can focus on providing a reason for shoppers to visit stores, the trend will continue and is often irreversible. Retailers need to ask themselves, “how can we make shopping fun and exciting?” and, “how can I get my best customers to spend more by focusing their weekly shop in my store?”
Those retailers who provide an experience or excitement for their shoppers will benefit. Many are now looking to change the shopping experience by investing in restaurants or adding coffee houses for greater convenience, many retailers have found profit in non-grocery services such as insurance or banking.
We also need to remember new technologies bring convenience, time and price transparency to shoppers, so there is an increasing importance to look at new channels for marketing – which will incorporate mobile and smart phone apps. Some of the best apps available bring added benefits to customers including product delivery tracking, ability to decipher prices and also provide inspiring ideas.
Everyday low price (EDLP) discount stores will also continue to eat into the traditional retail sector, as increasingly price conscious shoppers continue to switch looking for the best deals and offers.