A quiet retail revolution in our UK Christmas retail trading results

Fjord Family

Some much-anticipated figures about retail sales in the all-important month of December 2012 have hit the headlines this week, with results coming in from DebenhamsMorrisonsSainsbury’s, Tesco and now Marks and Spencer. In parallel, the British Retail Consortium has released its perspectives on what the figures really mean. In short, iAdd Workt really bears out our 2013 trend of ‘revolution in retail’, with online and offline continuing to merge and the successful players being the guys who can offer a holistic multi-channel experience.

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There’s a clear pattern emerging, at least for supermarkets and high street retailers:

  • Retail is tough, growth is slow and margins are tight. Not much change there, then.
  • Companies with good online / mobile capability are seeing more and more of their growth coming from this channel. Debenhams have posted an astonishing 39% growth from this area. M&S have seen overall growth of 10.8% with an incredible 90% increase in sales from mobile, Tesco have seen 18% rise in online food sales, and Sainsbury’s saw online growth in the third quarter of 2012 of 15%
  • Morrisons’ results have shown that without an online capability, the future is looking challenging
  • Supermarkets that are online only are struggling to turn a profit, in spite of the sheer brilliance of their online experience, speaking particularly of Ocado. For obvious reasons, it’s expensive to go to the customer, rather than expecting customers to come to you.

So it’s safe to conclude that it’s not online that’s making a real difference on its own, rather it’s the overall online/offline blended experience that’s making a big difference. Companies need to think carefully about developing an overall service experience, no matter what the channel, that complements their brand promise and delivers value to real people.

Let’s look more closely at Debenhams.

For some time now, Debenhams has developed a good, well-established mobile strategy, with 1.4m downloads across its different mobile platforms, recognising clearly that offering people a way to browse and buy on the move is a complex game, with people having a quick look as they go to work, maybe looking at the website during the day, then browsing and buying on tablets in the evening. 10pm is the new peak shopping time, it has emerged.

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As a result of having this well thought through and available across many platforms, Debenhams online sales have gone up a fairly miraculous 39%. In turn, this has pushed up its overall like-for-like sales. It’s broadly the same pattern with M&S, although the strategic push isn’t as far along the track as Debenhams’.

Debenhams offers a fantastic example of a brand that deeply understands its customers’ needs and has tailored a set of online and mobile services around them. It’s easy to browse and buy using Debenhams’ services. And there’s a presence on different devices, device types, woven into an overall branded experience – everything’s recognisably Debenhams, and the usage figures bear out the fact that it’s useful and adds value.

And they have a brilliant opportunity to accelerate even further as they integrate more and more customer data together. All good, but there’s some challenges. Data is brilliant, and with it comes much insight. There’s a huge potential to build new, ‘living services’ that adapt and change, moulding to the needs of individuals. The risk, of course, is that this can feel creepy and get in the way of people just wanting to browse and buy. Be smart, yes, but think carefully about being too smart. The trick, as ever, is to develop an online and offline service experience for customers that is on-brand, delivers value, and that people just love to use.

Let’s now compare and contrast with Morrisons, the Bradford-based supermarket chain with historically strong local ties with the North of England.

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They announced this week a like-for-like sales drop of 2.5%, which has got a lot of people looking very closely at their lack of online presence, which it hasn’t been able to call upon to close its profitability gap.

Rather than shoot arrows, it’s important to focus on the fact that Morrisons has a brilliant, golden opportunity to consider a new approach to online retailing which learns from the successes and failures of its competitors. Tesco have been first to market for so long, and have a massive and complex offering. Sainsbury’s is similar, and both have an increasingly successful click and collect service, that is really making the most of people’s lifestyle, which is increasingly a mix of physical and digital. Morrisons’ initial forays into digital with a wine selector app has been greeted with some praise, but there’s clearly a way to go. Ant and Dec may solve an immediate marketing issue, but underpinning the brand there needs to be some clever service thinking about how to articulate their brand in new, digital and physical ways that play on the fact that real people want convenience, quality and value, with Morrisons particularly playing to the value angle. What about digital services that integrate people’s lifestyles better, be it meal planning, ingredients finding, click and collect, find the freshest produce, time your shopping to make the most of when particular products are going to be available and when the best discounts are available?

Economics aside, it’s now a given that online retail is growing very fast and commanding more of a slice of the UK retail pie. It’s also a given that mobile devices are becoming ubiquitous, with sales starting to outpace the traditional PC market.

So if online and mobile are becoming ubiquitous, retailers need to accelerate and optimise their forays into digital and have an extremely sharp, contextually-relevant online presence, but also a highly integrated online and offline approach that adds value for real people… The revolution in retail is here already, as we’ve pointed out in our trends. Let’s make it happen!

Fjord Family

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