A view of the contemporary retail industry
As one of the fastest-moving sectors of business, retail is often in the headlines. It is one that has been undergoing significant change in recent years. A key engine for such change has been an increasing acceptance and understanding of the concept of value amongst consumers.
The modern consumer is much less loyal than in previous decades. People are much more willing to shop around and are learning to trust their instincts more when assessing value for money. Consumers have more choice of products and retailers than ever before, and are more sophisticated when it comes to making informed decisions based on their own product selection criteria. People are considerably less reluctant to buy their clothes in supermarkets these days, and they are also increasingly willing to venture into discount retailers such as Aldi to buy their groceries.
Gone are the days when retail price alone was seen as the guarantee of product quality. At the same time, consumers have not lost their appetite for luxury goods and designer brands. Contemporary consumers run the gamut from “Prada to Primark”and they are not afraid of admitting it nowadays either.
This shift in perspective is largely due to the changing perception of value and because of the availability of ‘budget this’ or ‘no frills that’. The Internet has changed many of our shopping habits and we feel increasingly confident when ordering goods on-line. Nowhere is this more evident that branded electrical products which can be viewed and chosen in store, and then sourced and purchased on-line.
But product discounting and price wars with competitors are not a good basis for success in the long term. In order to thrive in this highly competitive sector, companies should instead look to make their brands even stronger in order to differentiate themselves in the minds of consumers. Buying a product to fulfil a functional need is one thing, creating a clearly differentiated consumer experience that has some emotional resonance is quite another. Many retailers are trying to strengthen this emotional connection with consumers by developing themselves as true brands – brands that give something extra, perhaps via in-store design and layout, customer service, store atmosphere, celebrity endorsement, or overall shopper experience - because if loyalty and premium pricing cannot be maintained, consumers have a widening array of credible alternatives. Increasingly short term experience outweighs long-term reputation when it comes to today’s promiscuous consumers.
Presentation is crucial. Many familiar High Street names have no sense of brand and present their goods to the public purely on the basis of price. Electrical retailers are particularly prone to this. People want inspiration from their products and the same from the shops that sell them. In the clothing and fashion sector, people expect to see something new in their shops more or less every week. Once upon a time, people brought in the Spring collection and that was that - until it had all been sold. Nowadays, you’ve got to ‘trade the season’, not just sell the range. Consequently, executives who have a strong understanding of brand are much sought after by the retail sector, and we find that the sector favours smaller, more boutique search firms to find them.
Smaller firms have the freedom and flexibility to search a huge variety of locations for suitable candidates. Global search firms have to maintain a lot of clients and rapid turnover is therefore the priority in most cases. Smaller firms are more nimble – they can keep on searching until they find the right people with brand aptitude.
A panoramic view of the contemporary retail industry reveals a booming value-based discount sector at one end, and a brand-based higher value sector at the other. The number one message for those in the middle must be: differentiate yourself, or the value end of the sector will eat your breakfast.