What Next for Retail After Worst Year for Quarter of a Century? Four Experts Discuss

January 21, 20209min

The first annual sales drop since 1995 is a blow to British retail, but it’s only the latest in a series of setbacks.

In the past 10 years, high street institutions such as BHS, and Barratts and Maplin have toppled like dominos, with Mothercare UK the latest to enter administration in 2019. Now, the news that retail is suffering its leanest time in decades comes as more confirmation of the obvious than a reason to hit the alarm bell.

Blame for this decline is typically laid at one door: ecommerce. Offering limitless choice, low prices and greater convenience, online shopping has rapidly won consumer hearts and purchases. But while it accounts for a sizeable slice of spend, ecommerce doesn’t have a monopoly – accounting for 19 percent of UK sales.

So, why is retail struggling?

According to the experts, the industry’s current plight isn’t just about online versus offline; it’s also about the evolution of consumer habits. To survive, retailers must adapt their strategies and experiences to the new world of multi-media shopping.

CXM spoke to industry experts to gauge their thoughts on what’s next for retail…

Sandra Loeffler, Regional Vice President, EMEA, Nielsen Marketing Effectiveness

“Amongst political and economic uncertainty, rising competition from ecommerce, and a new generation of hyper-connected consumers who are making fewer trips to bricks and mortar locations, the current challenges facing the retail sector are understandable.

“At Nielsen we have been surprised to see that some marketing strategy is still being driven by perceptions and old school metrics rather than hard data, leading to budget waste and missed opportunities. But in today’s highly competitive world, this approach won’t provide brands with the insight they need to uncover the consumer decision process, which is influenced by many factors long before the shopper sets foot in the store. 

“Tapping into data generated from consumer-brand interactions, online and offline, enriched by meaningful and actionable analytics is critical to not only understand shopping habits and improve marketing effectiveness, but to also make more informed decisions in areas such as forecasting products with higher return, optimising retail assortment, improving customer loyalty, and securing the right store location. 

“Retailers who smartly analyse and adapt to the purchase behaviour of consumers – anticipating their wants and needs, offering the right product, in the right place, at the right time, and for the right price – will have a better chance to withstand the challenges.”

Andrew Morsy, Managing Director International at Peer39

“Last year’s poor retail performance, particularly during the festive months, is further reason for e-commerce and all retail brands to focus on placing their seasonal ad campaigns in the right environments. Customers are increasingly cautious with their purchasing habits, which means retailers need to be certain their offerings are highly relevant to consumers – reaching them at the right place and time to drive a sale.

“The best way to optimise ad placements is by ensuring they appear in the right environment. As an example, when individuals consume online content about holiday destinations, in that moment they are more likely to be responsive to brands offering airline tickets, travel insurance, or accommodation. Understanding and analysing context and sentiment is key to targeting consumers, and for marketers to determine the most relevant environments for digital campaigns. With effective placements, retailers can be sure to not miss out on revenue during the prime months when consumers are looking to spend.”

John Squire, CEO at DynamicAction

“While 2019 saw bright spots for customers, with free shipping more available than ever and delivery times cut dramatically, this didn’t translate into success for retailers. In addition, initial indicators are showing that vital Christmas profits have also taken a hit, with returns in 2019 starting as early as November (up an average of 11 percent 17th of Nov through the end of 2019), kicking off the ‘Retail Vortex’ of increased returns, higher marketing costs, and inventory concerns.

“Retailers continued to up their marketing spend per order during the ever-earlier ramp up to Christmas, offering incentives of free shipping and discounts that monumentally impacted their already thin margins. 

“These factors highlight retailers’ increasing efforts to compete with retail giants like Amazon and innovative DTCs like Birchbox. But attempting to emulate its offerings without understanding the value to your unique shopper can be costly. Retailers must ensure they balance the rising costs of luring in customers with the significant impact of high promotions and numerous returns. 

“The retailers who are going to survive are the ones that understand the key elements eroding their profit, allowing them to steer away from the “Retail Vortex” and create strategies to understand the tactics that will truly drive profit. To achieve this, retailers in 2020 must move away from the antiquated goals of the high street’s heyday to embrace the necessities of the digital age.”

Jeff Pfefferkorn, Head of UK Sales at MainAd

“The biggest decrease in retail sales in 25 years is disappointing and highlights a disconnect between consumer spending and brands’ marketing budgets, as the latter has remained stable in the past year. For retailers, this strongly suggests their marketing strategies could be improved to be more effective at generating conversions.

To recapture consumer attention and counteract this dip in sales retailers should adopt highly tailored, dynamic targeting methods to deliver impactful digital ads, and strengthen their brand message across their wider marketing channels. They should also turn to alternative platforms, such as in-app advertising, which have the potential to reach a more receptive consumer and produce a greater response.” 


CXM Editorial Team

CXM Editorial Team

Published for all CX professionals, the digital Customer Experience Magazine is packed full of industry news, blogs, features, video bites and international stories all focusing on customer experience. CXM will help you learn what makes an outstanding customer experience that wins both awards and the hearts of customers. And sometimes we share some cool music as well.




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