Blake Gladman looks at the issues that are keeping your retail customers up at night, at a time where they face pressure from all sides.
Many retailers must feel like they are stuck between a rock and a hard place in the current climate. Pressures from all sides can leave them feeling like they do not know where to turn or what to do.
On the one hand, they have the increasingly evolving demands of their customers, with shoppers looking for diversification in healthy options alongside greater clarity about the provenance and nutritional content of produce. Meanwhile, the rise of technologically-innovative competitors and the fast pace of modern life means that time is increasingly of the essence and convenience is paramount.
On the other hand, recent legislative changes and increases to the national living wage (NLW) and business rates continue to create downward pressure on retailers. This is before we even start to unravel the potential fallout from Brexit – a recent Him survey found that 22% of retailers believe Brexit will cause a decrease in their sales and 50% believe it will lead to an increase in red tape and time spent dealing with legislation rather than on the shop floor.
Other results from another recent Him survey of independent retailers show that NLW rises mean 20% of retailers are reducing staff numbers and 80% are reducing staff hours. This represents a concern, as we know from speaking to more than 20,000 convenience shoppers every year that the quality and helpfulness of store staff are consistently in the top three drivers to store. Cutting back on these key assets could cause lost sales and poor customer service, which has a knock-on effect for your businesses.
Grow the business
A better strategy for your retailer customers would be to focus on growing the business, rather than minimising the risk from declining sales. An important way to stimulate growth is to focus on those shoppers who best represent the future.
Generation Z and Millennials are the shoppers of tomorrow, today. While it is true that 91% of adults shop in convenience stores, this top-line figure masks what lies beneath. Him data suggests that although total penetration is high, visit-frequency drops as you get towards the younger generations. Compared to older demographics, these shoppers are less likely to be engaged with their local c-store and to see it as part of their lives.
Retailers need to start engaging with these shoppers now to ensure that they become their shoppers of the future. A key area of importance to these demographics is personalisation. These shoppers expect a tailored experience, whether that be through personalised communications, promotions or what they encounter in-store.
They have also grown up with technology. It is a part of life, as much as walking and talking, so they are not necessarily impressed by technology – it will not be a gimmick or a draw to them. Instead, they want frictionless technology that improves convenience and enhances the experience. They also have a social conscience and want to feel like they can give back in some way, through reducing food waste, involvement in the local community, sourcing locally or environmentally-friendly campaigns such as plastic reduction, for example.
Wholesalers, alongside manufacturers, need to support retailers and educate them about how to best tailor their stores to younger shoppers so as to protect future sales and footfall. It is crucial that the supply chain understands these shoppers of the future now, as they are the shoppers who will fuel convenience for the years to come.
Blake Gladman is content & innovation director at consultancy Him