With 2017 looming, wholesalers are geared up for a number of challenges and opportunities that the year ahead offers, a number of which were profiled in the most recent print edition of Better Wholesaling.
But wholesalers also need to be aware of the more specific issues that their retail customers will be facing up to in the next 12 months.
After a year of mixed fortunes for the retail sector, Rupert Eastell, head of retail at auditor RSM, looks ahead to seven of the biggest issues that retail businesses – although some of these points very much apply to wholesale businesses, too – will face in 2017:
It’s the people that matter
Without great people, products simply will not sell. The challenge in 2017 will come from the impact of higher costs arising from the National Living Wage and the Apprenticeship Levy. The winners will be those that don’t lose the trust of their teams by trying to recoup through subtle and not-so-subtle changes to the employee proposition.
2. Further cost headwinds ahead
The current economic climate may make for uncertain times. At RSM, we expect to see upward pressure on costs and downward pressure on margins as the sector factors in changes to exchange rates. The recent business rates review and impact of upward only rent reviews will also play a part too. When forecasting, ignore the impact of these at your peril.
3. Getting it right from the first touch to the last
The customer journey will move from being a nice ‘to-do’, to being a top priority. Retailers must review and improve the entire customer journey, and not just the final mile. Every touchpoint has to be right. Technology is a factor, but equally important is company culture. This will challenge the department store models and others where the brand does not control the customer proposition.
4. Beware the millennials
The millennials are coming of age, as both consumers and as employees. In 2017, they will really start to challenge senior management, who did not grow up as digital natives. ‘Watch out’, is the cry.
5. Growth through innovation and content
Customers need to be invited in, and the critical role of content will become more acute for all retailers. How and what do customers need to know to allow them to build a relationship with retailers? The key word here and elsewhere is ‘digital’. The key question will be ‘which customers provide the best lifetime value vs cost of acquisition?’.
6. The new axis of power
Great customer data will drive decisions about what to sell, how to price, where to sell, and so on. This will be required to secure investment in technology, and more importantly, change how the business operates. Without this focus, a business risks falling behind the curve.
7. Post-Brexit challenges
It is too early to predict with any certainty what the impact of Brexit on the economy might be, particularly without clarity on exit terms. However, there are three areas which Brexit may affect in the medium to long-term: changes in consumer confidence and thus, behaviour; changes to employment and immigration laws; and changes to input costs. All three should be on the agenda for both wholesalers and retailers.