The feel-good factor has been in short supply this new year. Minus numbers have figured prominently in January’s trading statements and the implications of harsh realities such as VAT and rising business costs loom large in store chiefs’ minds.
The feel-good factor has been in short supply this new year.
Minus numbers have figured prominently in January’s trading statements and the implications of harsh realities such as VAT and rising business costs loom large in store chiefs’ minds.
Tuesday’s BRC sales data, which showed a like-for-like fall of 0.3% in December, was unwelcome news for what should have been a time when the till bells rang at their loudest.
But while the hardest-pressed retailers have been pushed perilously close to the edge, it would be wrong to think that the retail industry is in meltdown.
Compared with the dark days of late 2008 and 2009, retailers are in a relatively strong, if still uncomfortable position.
Over the past two years, businesses have been efficiently managed and despite some profit warnings this month, plenty will meet full-year expectations.
The big question is how to keep shoppers spending. Some clues were contained in Marks & Spencer’s update at the start of the week.
New broom Marc Bolland revealed that customers proved willing to move up a price point or two in fashion, convinced by the quality and style on offer.
In food, the retailer managed its biggest day ever on December 23 when takings topped £50m.
There will always be debate about how well M&S is fundamentally doing, but Bolland’s points are sound. Despite the need to offer keen prices, especially at entry level, consumers still gauge value by more than one measure.
Product innovation and selling skills will come into their own this year as retailers fight for every penny of spend. Stores must stimulate consumers with goods that immediately make them think “I really need that” or “I really want that”.
The past master at clicking with the consumer mindset is Tesco, which has also consistently offered shoppers a wide range of touchpoints - whether hypermarkets, convenience stores or online - that meet the contemporary need for convenience.
Tesco is not the most successful retailer by chance and there is no sign of others usurping its position. But even just a few of the Tesco lessons applied to other retailers might make the all-important difference between success and failure.
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