Retail in 2012: the holistic approach

This short piece was originally published earlier today by My Retail Media, in their “Insight” section.  myretailmedia.com is a website dedicated to the Retail Sector, covering all the major retail categories, and offering finance news, videos, comment and insight.  They also produce News at Nine, a free daily eNewsletter, and offer bespoke subscription services, aggregating retail news from over 4,000 sources, and tailored for individual subscribers.

As we enter 2012, we asked Philip Downer, the owner of retail consultancy Front of Store and former CEO of Borders UK to tell us where he thought the major trends and shifts for the year ahead would appear.

The retail industry enters 2012 in the throes of profound change driven by two factors:

  • The continuing belt-tightening of Britain’s consumers, which will continue into the mid-decade, as cuts in government spending and the rebalancing of the global economy continue to change our working lives.
  • Along with this, the channel shift from physical stores to online provision, in which the UK – according to Bain & Co – leads the world, with over 9 per cent of all retail transactions now taking place online. None of us can predict where or when retail behaviour will “settle” as technological change continues to accelerate.

Many established retailers found themselves in difficulties in December 2011, with profit warnings, administrations and rumours of collapse circulating across the industry. Here are some key pointers for 2012 – all equally applicable to major chains and to indies/start-ups:

First up, it’s no longer feasible for any retailer not to have an active online presence. And “active” doesn’t simply mean an online store; customers expect integrated online and instore browsing and purchasing. The rise of click-and-collect underlines this change.

Thanks to the power of web research, consumers are now often better informed than sales staff instore, both on product specification, price and value. Poorly trained or unmotivated sales staff are a greater liability in physical stores than ever – some retailers are recognising this, others still don’t “get it”.

What’s more it’s become a truism that a chain now only needs 50-80 stores to achieve national coverage – where 20 years ago they needed 300 or above. Understanding which centres or towns will be winners, and which are the also-rans, is going to be critical for retailers and for legislators. It’s telling that Grant Shapps, the new “Minister for Retail” – who has to deliver the Government’s response to the Portas report – is attached to Eric Pickles’ Communities and Local Government department, and not to the Department for Business, Innovation & Skills. High street revival is, perhaps rightly, viewed as a whole-community strategy, rather than simply a commercial challenge. This should at least mean that a holistic approach is taken to the many good points that Mary Portas raised.

Finally, things will get worse before they get better – but as the structure of the retail industry undergoes a once-in-a-generation change, the opportunities for entrepreneurs and visionaries to create retail success stores for next decade is wide open.


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