Once we are through Christmas present returns, rent quarter day and January sales (over in a blink of an eye), the retail sector will have to do everything it can to motivate consumers to open their wallets. But let us not forget, retail sales are still forecast to be in excess of £290bn, with food and drink accounting for £120bn, a 1.5% and 4.5% increase respectively on 2008 [Datamonitor] – sizeable opportunities for those who can capture them.
IGD research suggests consumers are shopping around, trying different supermarkets and seeking out promotions. Some of these habits will remain after the economy recovers. The imperative for all retailers is to invest in understanding consumer behaviour. And grocers are best placed to do this, because the high frequency of food shopping trips provides a wealth of data.
Armed with customer insight, grocers can do what comes naturally – constant innovation and refinement of the product and service offering, tweaking the balance of ranges and offering good value at all price points and across all ranges. They will continuously optimise their pricing, promotions, range, space and marketing spend. Provided their supply chains are dynamic and flexible, their investments in sophisticated IT systems (and the odd PhD statistician) will pay for themselves many times over during the year by making trade-offs that maximise profitability.
On the cost side, the pressure will be to increase sustainability. The good news is that it is directly aligned with cost saving: reducing CO2, energy, water, food miles, packaging and waste. Savings can be reinvested in pricing to ensure customer value is maintained.
The inevitable demise of some non-food retailers will present opportunities for grocers to pick up additional sales and in some cases even acquire sites. After all, they already have enviable non-food footfall – both in-store and online.
Yes, it is going to be a hard-fought year. But the grocery sector is the best place to be.
Stephen Zatland is head of retail practice at Accenture UK.