It is perhaps not surprising that the conference speakers focused on the hard times ahead, with the BRC reporting a 15-year low in consumer confidence. Yet, despite this and maybe because of this the tone of the event was very upbeat and actionable advice plentiful.
The presentation of Richard Hammond, the bestselling author of Smart Retail, visibly energised the audience. Using the combined wisdom of hundreds of retailers whom he interviewed for his book, he asked independents
- not to compete on price,
- appeal to consumer emotions by focusing not on product features but on consumer benefits, and
- consider the reasons why the consumers buy from them.
He stressed that competing on price with supermarkets and multiples is a shortcut to bankruptcy. The customer is prepared to pay top price if product meets their needs and aspirations. To illustrate this Richard used an example of the Apple store in Regent Street in London.
Other examples of businesses moving away from price included Selfridges, which introduced theatrical flavour to its store shopping experience. Introducing emotions to the store environment is a winning formula proved by many successful retailers, such as Carphone Warehouse which prides itself in selling ‘honest answers’.
Opportunities in CE
Next James Randall, GfK commercial director, pointed out the opportunities created by the consumer electronics sector.
Despite falling demand, the European CE sector delivered 7% growth rate in 2007. The UK is the largest CE market, with Brits spending on average r211 on CE products a year, in comparison with French households spending r141 and the Italians only r91. Moreover in 2007, 21% of UK households purchased HDTV sets while only 12% of the French did so. This created a massive opportunity for attachment sales.
James also stressed that technological progress is the biggest single driver which is going to shore this industry in the future. While 62% of Europeans are interested in the latest technology, 63% of the Brits expressed such an interest.
This translates into 7.7 million ‘interested’ UK households which still don’t have an HD ready flat panel; an opportunity worth £4.8bn.
While demonstrating the rate of price erosion, James said that this also means that consumers are getting more features and benefits for their money, which is up to retailers to demonstrate.
Surviving the downturn
A great deal of attention received John Clare’s (former CE of DSG International) ‘advice in the downturn’ who encouraged retailers to:
- focus on cash and margins,
- not to chase sales with discounts,
- pay bills later, taking advantage of the varying payment terms structure in Europe and
- reduce stock levels and marketing and advertising expenditure.
He also urged the retailers to join a buying group to take advantage of the cost and stock efficiencies or to align with a major supply group, such as Sony Centres, to receive preferential trading terms.
John also stressed the importance of an efficient and informative website which could render a great service to retailers in the Internet age when 60% of people surf the web for information and 25% of them compare prices online. Through a ‘website window’ retailers could sell their services and use it to collect web addresses of potential customers.
A smart independent should also differentiate themself by focusing on higher price and technology products, and new products with superior benefits, while selling a wide range of accessories and services.
All presenters agreed that investing time and effort in product knowledge and sales skills of staff will become even more important in recessionary times. As Peter Bowden, Sony Centre retailer, said to his colleague complaining that he trained his staff and then they left: “Think what would have happened if you didn’t train them and they stayed.”
Opportunities in SKA
Jamie Lennox, managing director of Home-tek International, and champion of small appliances reminded that they represent considerable opportunities for a retailer and help to build footfall into the store. Small appliance manufacturers make considerable investment in product innovation, and although cheap imports from the Far East spoil the game for everyone, there are plenty of products on the market with a ‘wow’ factor and good margin for the retailer. Many of them need to be demonstrated (such as steam cleaning products or irons) and this would help to introduce a bit of theatre to the store, which Peter Hammond encouraged earlier.
Next, Peter Bowden demonstrated how tracking the effectiveness of all store operations and salesmen performance can help in identifying problem areas which if addressed immediately could turn a problem into an opportunity.
Retail market – a larger picture
Steven Robertson, director general of the British Retail Consortium, painted a sobering picture of the global economy slowly rolling into recession. He analysed the factors which are influencing the performance of the retail market, such as tax increases, reductions in the availability of credit, growing price of commodities, the housing market slowdown and the resulting erosion of consumer confidence. However, despite these challenges, he confidently stated that there is and will be plenty of business for good retailers. He encouraged all the retailers to bear in mind the following:
- using leverage to improve buying terms,
- sourcing direct from the Far East and
- reducing staffing costs.
The conference was closed by retra’s President Elect, Robert Hughes of Hughes Electrical, who advised the audience “to hope for the best, but plan for the worst” and reminded everyone that the next retra conference will take place on 27 April 2009 in London.