John Lewis deputy chairman and Waitrose boss Mark Price gives his thoughts on 2014 and what the future holds for grocery retail.
It’s been, if not exactly an annus horribilis, certainly a year of drama for food retailers. A year when it finally hit home that we were not in the cycle typical of the industry for several decades – normal service would not be resumed shortly. The sands we had seen shifting for a while became tectonic plates, changing food shopping significantly.
Despite their undoubted impact on some players this was not all about the German discounters. What happened in the last 12 months was that a number of issues crystallised and it became apparent that the problems facing the grocers are as dramatic as the introduction of supermarkets into the UK in the 1950s.
There are four key factors: lower disposable income leading to people spending less on groceries and cutting their food waste; the growth of online shopping; people’s desire to shop at times and in ways that are convenient to them; the increase in casual dining - people eating out more.
The days of the once-a-week big shop are over. Customers have changed the model and 2015 will be about food retailers’ powers of reinvention.
Being brilliant online will be essential, doing it profitably a commercial imperative. The relentless store opening programmes have caught up with the larger supermarket groups and so deciding how much space and how to use it effectively will be important.
Attracting customers to your stores, giving them reasons to spend time with you and making their lives easier will be the name of the game.
That’s why for several years we’ve been growing our convenience estate and innovating in our supermarkets to make them interesting destinations with a sense of warmth and vitality. We’ve invested in welcome desks that have fast become the social hubs of our branches – focal points for information and services like click and collect and dry cleaning.
Hospitality is a vital element of our vision – whether it’s grazing points in our bakery and deli areas, cafes and wine bars or just a cup of coffee to go.
At a kick-off conference a couple of years ago I talked to our branch managers about the characteristics of winners and losers in any industry. I suggested that successful businesses have a clear sense of identity and purpose; they recognise and anticipate where their customers are going – and develop their strategies and action plans accordingly. In a market that I don’t expect to improve greatly in the immediate future, I believe the ability to grasp the implications of the new dynamics, to respond and to reinvent will be crucial for UK food retailers.
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Retail Week's 12 days of Christmas: Mark Price looks back at 2014