Your Retail Resolutions for 2019

Despite the gloomy predictions, the first half of 2018 was positive for retailers with a 4% year-on-year increase in sales. But with the critical Christmas period now over, it’s time to review who performed and who passed out in 2018. And to see what we can learn from their mistakes to make 2019 a resounding success for retailers.

We take a look at:

  • The economic landscape in 2018
  • How retailers and shoppers were impacted
  • 2018’s top, middle and bottom performers
  • Your retail resolutions for a successful 2019

Mounting Economic Pressure on Retailers and Shoppers

Recent years have been dominated by stories of online causing havoc for the high street combined with challenging economic circumstances for retailers and consumers. While internet sales continued to catch up with in-person purchasing, increasing 15.1% in the first half of the year, in-store sales also grew to £147bn, up 2% on the same period in 2017.

Discounters continued to claim market share, placing additional pressure on other retailers to absorb cost increases. However, not all discounters were immune from challenging trading conditions with pound stores in particular appearing to be overstretched.

2018 was an eventful year for high street footfall which was hit by poor weather conditions in the first three months of the year and then by hot weather in the summer which reduced footfall by 10.8%.

Despite challenging weather conditions, the hot summer saw a rise in spending, particularly in food and drink, bolstered by above-inflation pay rises. However, as the year wore on, it became increasingly clear that shoppers are still under pressure in the face of ongoing Brexit uncertainty and high levels of personal debt.

According to the British Retail Consortium, this led to the worst Christmas in a decade for retailers with 0% year-on-year growth during December. Shopping centres were hit hardest (with a 4% drop in footfall) whereas high street and out of town shopping park footfall only reduced by 2%.

Even Black Friday failed to revive the number of shoppers pounding the pavements and Super Saturday (22nd December) was flatter than expected. However, New Year Day sales bounced back helped by unseasonably warm weather.

Despite the headlines, it wasn’t just high street stores that were hit: some online retailers, like fashion brands ASOS, also felt the pinch with shares tumbling 40%.

Retail experts Springboard sum up the Christmas trading situation:

“Footfall performance over the first half of December deteriorated rapidly as shoppers reined in their spending in response to low consumer confidence and high debt levels, plus an increasing appetite for experience-based intangibles that is diluting spend that previously would have been captured by bricks and mortar stores.”

Who Performed?

Given the rise of online and a trend towards positive results for food retailers, it’s hardly surprising that online shopping delivery service, Ocado, delivered a 97.88% shareholder return and topped the FTSE 100. Other supermarkets, particularly two of the major discounters, also had positive Christmas periods with increases in year-on-year sales:

  • Lidl 8%
  • Aldi 10%
  • Tesco 2.2%
  • Morrisons 0.6%

Also demonstrating good year-on-year sales were Greggs (5.5%) and, boosted by sales of unicorn-themed items, Dunelm (10%), prompting the home furnishings group to upgrade its full-year profit expectations.

Who Trod Water?

Those who managed to keep their heads above water include fashion retailer Next and department store John Lewis.

Next enjoyed a better than expected Christmas thanks to a late surge in online sales which rose 15.2% over the period balancing out high street sales which were down 9.2%. John Lewis may have achieved an increase of 1.4% in comparison to the same period in 2017. But, due to their ‘never knowingly undersold’ promise, they were forced to compete with discount stores putting them in a difficult position.

Who Struggled?

At the bottom of the FTSE 250 were clothing brand Superdry who recorded a drop in share value of 11.7% and a loss of almost 80%. All thanks to discounter competition, warmer weather, changing consumer behaviour and political uncertainty. Also struggling were Thomas Cook with a loss of 76.6% as more consumers decided to stay at home due to the hot summer weather.

Other struggling businesses include Kingfisher (owners of B&Q and Screwfix), whose shares dropped by 34.7%. And struggling high street music seller HMV have been forced to call in the administrators for the second time in six years. Another big name, Debenhams is also struggling and looking for investment.

As BBC business analyst Jonty Bloom notes:

“With hundreds of stores in expensive locations and with a constant squeeze on the average shoppers’ spending power, Debenhams is caught in a classic bind. Online and discount retailers are attracting increasing amounts of spending power and Debenhams is in a constant race to adapt quickly enough to a rapidly changing retail market.”

High street retailers know that they need to adapt to survive and many have taken drastic action during 2018. Responses range from the traditional – reducing costs and an increase in administration – to more innovative responses like consolidating space at larger retailers and investing in innovation. As we explore in the next section.

Your 2019 Retail Resolutions

While online retailers might have the benefit of low overheads, they can’t provide human interaction in the same way as bricks and mortar stores. That’s why retail analysts are recommending an increase in experiential shopping. Which means providing an in-store experience that’s:

  • Intuitive – easy for shoppers to find the products they want and then transact them efficiently
  • Humanbeing able to interact with knowledgeable, friendly staff
  • Meaningfulsocially conscious consumers want to feel like their purchase made a difference
  • Immersive – an experience that’s distinct, aesthetically pleasing, inviting and stimulating
  • Accessible – consumers want to be able to make payment, checkout and find products faster using mobile technology
  • Personalised – shoppers want deals tailored to products they actually buy

Underlying these principles is a need for high-quality employees. People who:

  • know your products intimately
  • can provide insight to customers
  • make shopping experiences unique
  • live your brand values and help customers understand what they are and how your products reflect them
  • are informed about every customer who walks through the door
  • know what each consumer likes to buy and the offers you have on that match

Attaining this level of customer focus relies on freeing up managers and staff from repetitive tasks and ensuring the right employees and skill sets are on the shop floor when you need them. All of which depends on modern technology, like workforce management systems and artificial intelligence, that remove time-consuming tasks.

By automating basic, rules-based work, technology frees managers and staff to focus on value-adding activity. The sort of activity that turns shopping into an experience.

The Retailers Already Delivering Experiences

Lush is well ahead of the experiential shopping trend. Their in-store theatre and friendly, knowledgeable staff demonstrating soaps and bath bombs, create a talking point by getting customers involved in handling the products.

Lush also ensures that their back office staff are equipped to take on board feedback from shops, act on it and get new products out to market quickly.

As Lush co-founder, Rowena Bird says in an interview with the BBC: “We’re quick off the mark. It doesn’t take us a long time to perfect anything or turn things around because, when customers talk to you, they want it now … If you’re not listening to them or not providing them with what they’re asking for, or surprising them with something they didn’t know they needed, they soon get bored and move on.”

Another major retailer embracing the experiential shopping challenge is John Lewis.

Customer Experience Director, Peter Cross, describes the future of shopping at John Lewis: “When you’re thinking about your Saturday, going to John Lewis is on your list and not just to buy the toaster. It’s on my list because I want a personal styling appointment, I want to go to the cinema, I want to go to that fantastic restaurant that’s opened and I want to go to that class on haberdashery. All those things I can do and I’m going to stay in John Lewis for three hours to do them all.”

Happy Employee Handing a Bag

Intensifying your focus on consumers in this way relies on having happy, effective staff. And this means personalising their employment experience in much the same way as you personalise the retail experience for your customers. 

Delivering quality of life for each employee at scale relies on leveraging the big data, mobile technology, cloud computing and artificial intelligence (AI) that’s on offer in WFM software. AI will also be making its presence felt in merchandising and customer service scenarios by helping managers reach better decisions backed up by data. Data that is being continuously analysed, interpreted and learned from to give increasingly accurate analyses.

Armed with detailed insight, leaders can add data-based decision making to their management toolkit. Helping them to improve profitability by knowing when to act and how.

With so much at stake for retailers in 2019, it’s time to grasp the innovation nettle. Working with the right technology partner will make the transition painless and put you in a position to deliver the shopping experiences your customers want.

As Peter Cross notes: “You can’t take the risk of not doing this stuff in shops now. If I’m going to leave my tablet and my computer at home and go and shop offline in a shop, I expect more.”

To deliver more for your customers in 2019, get in touch with our team of experts on +44 (0) 808 200 7375.