It is easy to feel depressed by the news over the past few days that Jessop’s, HMV and Blockbuster have all gone into administration, leading to the media speculating that the future of retail on the high street is in terminal decline.The truth however is that most high-street retailers performed well over the Christmas period: Next up 4%; Debenhams up 3%; John Lewis up 13%; Primark up 25%; Argos up 2%; Burberry up 13%; Tesco up 2%; Sainsburys up 3%; Dixons up +7%; ASOS up 34%; Marks & Spencer up 0.3%.
So what are the key reasons for these differences in performance, and how does the future of retail look for 2013?
The Future of Retail in 2013
The future is online
One obvious factor has been how different retailers have responded to the opportunity presented by the internet and shopping online. John Lewis reported that its online sales rose 44% year-on-year in the five weeks before Christmas, and Debenhams had a similar year-on-year increase of +39%. Next grew its Directory online business by 11%. Argos reports that online now represents 42% of its sales. Tesco’s online grocery business grew by 18% and Tesco Direct by 16%. Online at Sainsburys grew by 15%. Multi-channel at M&S was up 11%. Interestingly, highest performer Primark makes no reference to online in its trading statement. A rough analysis of these facts suggests that to have stood still in the 2012 retail market required growth in online sales of around 13%. And 2013 looks challenging again, but with a few added factors that all who want to survive must consider:
One of the biggest selling products last Christmas was tablet computers. Dixons reported it was selling 5 tablets every second in the week before Christmas. Obviously their owners will now want to use them, and because tablets are mobile they’ll want to use them in-store - researching features and benefits, reading product reviews, comparing prices, perhaps even making the purchase. Retailers need to be one step ahead in the future of retail, making sure fast broadband Wi-Fi is freely and easily available in all departments of all their stores.
Consumers are becoming more price-savvy and technology is giving a helping hand. After being investigated by the Office of Fair Trading, eight of the major supermarkets have agreed to adopt a set of principles on special offers and promotions, hopefully putting an end to misleading price claims. There are also websites now that allow you quickly and easily to compare the price of a basket of shopping across several supermarkets, and go with the cheapest one.
Same Day Delivery
Online retail is evolving all the time and competition is becoming fiercer. In the US, Amazon and Walmart are gearing up to offer same-day delivery in major cities for online purchases, with eBay and (would you believe it) Google rumoured to be not far behind. It is only a matter of time before we have the same thing here in the UK.
2013 will no doubt be another fascinating year of changes in retail. And even with these developments, the future of retail will still also be about making sure that you have the right people – interim or permanent – in place to implement the correct strategy. It’s an exciting time, but perhaps not a time for the faint-hearted!