Being Clear On The ‘Retail Channel Of The Future’ Matters
With Brexit now behind them, cost reduction is the flavour of the month in the retail trade at the moment On the one hand suppliers are being asked for either direct selling price reductions or increased ‘contributions’ to this or that. On the other, jobs are being removed from an increasingly bland retail store estate.
For instance, 1,000 jobs are to go in Sainsbury’s where removing in store counters is puzzlingly part of a plan described by Simon Roberts as ‘putting food first’. Can I be the only one wondering how removing counters increases the customer experience in store? Yes price is key, but so is service. If you create a dry, sterile retail environment don’t be surprised if people who can, choose to shop elsewhere.
That Elsewhere Is Often Online
Over 15% of total grocery is now online – an all-time high. We are helping a number of brands manage this new ‘omni-channel’ world and starting to see some great results. Brands are wondering how to maximise their online revenues from the major multiples on the one hand and also thinking through how to ramp up their own Direct to Consumer models on the other. Gone are the days of retailers being able to arm twist suppliers not to sell direct. And lastly, they are digging into the detail of optimising Ocado and Amazon sales. Grappling with these questions and establishing a workable e-commerce strategy for brands is a lot of fun for the team.
Of Course Not All Retailers Are Fixated On Digital Sales
At the other end of the market, the discounters continue to invest in physical store space, catering for the ‘old school’ in store shopping market. Aldi will have 1,200 stores by 2025 (up from 600 in 2017), so it’s clear where they think the majority of shopper spend will be. Together with LIDL and NETTO they are focusing on store infrastructure and price, undistracted by online. Refits improve lighting, give more space to fresh produce, fish, in store bakery, meat, dairy and common sense measures like wider aisles and new trolley parks compliment an increasingly strong product offering.
One Thing That Retail Is Starting To get Right Is In Store Refilling
There are some very interesting and commercially viable examples in the beauty world of how this works, as Poppy Rucki explains in her article Get The Spill On Beauty Refill. There are some strong parallels to food and drink, so well worth a read to consider how your brand could work on a refillable basis.
On The New Amazon Fresh Checkout-Less Store In Ealing, I’m In Two Minds
Of course, I am impressed with its ‘just walk out’ proposition. After all, who wants to queue if you are in a rush? But this doesn’t feel like a mass proposition for the rest of the multiples. There is still a place for service, range and dare I say it, human interaction. I enjoy that unscripted moment when the checkout staff pick up something in my shop and comment on it. We have a little chat while I pack my bags and they scan the items.
We keep reading that people as a whole feel isolated right now so do we really need more impersonal transactions? Sure, I am impressed with the tech and no doubt some multiples will have a dabble with their own versions of checkout-less stores, but I can’t see this reaching a tipping point too soon. But Amazon really is a tech company that happens to sell things. So they can round out the information they already hold on you with your fresh shopping preferences in terms of items, time of day and location. They can add this to your online profile, thus allowing more personalisation and tailoring of the product proposition. This is all good as long as you are happy to be the product.
Perhaps we should ask shoppers what they actually want in the store of the future. Jess Blake has put together a really simple but effective guide on quantitative surveys, the gold standard of research. I think when we do ask shoppers they would want retailers to deliver a modern take on the ancient grocery arts of value for money, the in store shopping experience and service.
Of course, whatever the retail store format of the future, you’ll still need to pitch product and brand concepts to the gatekeepers of that channel and a recent video from Roseanna Evans and I on selling into the multiples, is a short and punchy watch.
Stay safe and best wishes until next month.
Hamish
