It seems a common occurrence that a large retailer goes into administration, leaving yet more ‘To Let’ signs. Town centres saw 406 net shop closures compared to 209 in the same period last year. It’s a gloomy statistic and paints a troubling picture for UK retailers.
It’s matched by worrying signs in the supermarket sector: last month showed the slowest sales growth in 10 years, Tesco is mothballing superstores, while Sainsbury’s is subletting by converting parts of their stores into Jessops shops.
Yet there’s no reason for grocery retailers to panic – quite the opposite. While growth is down to 0.3 per cent, the sector is still growing.
Overall, consumer appetite is on a roll, with the retail sector in general showing 17 months of consecutive growth. What we’re witnessing is a shift in how consumers are buying their goods. Much is made of consumers moving online, but as ONS reminds us, 9 out of 10 retail purchases are still made in-store. Consumers are simply becoming savvier about where to find the best deals or the highest quality products. This is a huge opportunity for those grocers who respond shrewdly to the new market conditions.
Consumer loyalty to one supermarket has been overthrown by the disruptive influence of budget supermarket chains like Aldi and Lidl. The loyal Tesco shopper of a decade ago is now popping into Tesco for their main shop, but then heading to a Lidl or an Aldi to pick up some extras at a lower price.
They might even head to Waitrose or M&S later in the week to pick up a couple of premium items for the weekend. The ‘one stop shop’ of old has been replaced by the new consumer shopping trend of top-up shopping, explaining why Tesco is mothballing Extra stores.
There is now a backlash as consumers no longer find this approach to shopping a good experience or one of value; and increasingly are seeking out specialist retailers for not only the increased choice on offer but also better prices.
More importantly, consumers are also now expecting expert advice when buying non-food products in particular. Perhaps a strategy online retailers such as Amazon will need to start incorporating.
It’s a fragmented consumer journey, but it also provides grocery retailers with the chance to win the loyalty of these new shoppers entering their stores.
First and foremost, building this loyalty has to start on the shop floor. Supermarkets which can’t compete on price need to create appealing and engaging environments while offering their customers the level of care and quality they expect.
Yet research we conducted at Gekko, shows during the last couple of years of expansion – the big grocers haven’t been investing in the areas they should have been. Instead, consumers have been met with decreasing numbers of staff in-store, leaving their experience and relationship with the store to be undervalued as a consequence.
Before its accountancy mishap, new Tesco CEO Dave Lewis recognised the need to shift the focus away from cost-saving towards offering a better service, by increasing the number of staff on the shop floor.
Interestingly, Waitrose, with a proven track record of excellent customer service, is the only non-budget supermarket brand to have increased its market share last month. Clearly investing in the in-store environment is long overdue for some of the big supermarket chains.
Those who ensure that consumers who enter their stores are met with an all-round shopping experience can start to rebuild bridges with consumers. When literally ‘every little helps’ it’s time to stop paying lip service to customer’s journey in-store and put shoppers first.