One of the big mysteries of the recession has been just how resilient retail spending has been. Contrary to expectations, we have not yet witnessed a dramatic slump in spending which seemed like a foregone conclusion at the start of the downturn. According to BDO Industry Watch, during 2010 and Q1 of 2011, there has been a marked reduction in the number of business failures across the retail sector with few high profile administrations.
However, trading conditions have become more difficult in recent months with the VAT rise and higher prices contributing to this slowdown. Our own High Street Sales Tracker survey, which measures like-for-like sales across 70 mid-market chains, has barely registered growth since the turn of the year. Although we don’t think that the high street is heading for meltdown, conditions are likely to be challenging in the immediate short-term.
“Know your Customer” has always been a key mantra within retailing. But what does the consumer of today look like? The consumer is evolving into a more astute and demanding customer – a canny if not cautious customer for whom the one-fit consumer model and pre-recession marketing of retail operators will increasingly not work. Retailers who are able and willing to evolve with the consumer, whilst still maintaining a focus on business essentials, are the ones who will survive and indeed thrive.
The fundamentals of business survival will be as relevant going forward as they have always been which means a sharp focus on key areas such as:
In addition retailers need to exercise their imaginations as well as their analytical skills, making the following worth considering:
There is opportunity for those businesses with the appetite to continually review and refresh operating models and market assumptions. The rewards are still there for those businesses that embrace a firm, clear and relentless focus on the consumers that are waiting to be enticed to spend. But underestimating the challenges ahead could be disastrous. Ignoring warning signs and not responding to the market quickly could result in irreparable damage to both finances and brand, which could ultimately result in business failure.