Marketing guru Martin Hayward, director of strategy and futures at Dunnhumby, also warned delegates at the Association of Convenience Stores conference in Warwickshire that plunging prices and running costs were in danger of breaking the industry. Hayward said there were three main ways to create value in business - reduce costs, buy profitable businesses and create more demand.
However, he warned: “We are now probably running out of steam in the costs that can be removed and it is beginning to show. If the only way you can make your business more effective is to remove costs, then something is going to break.”
Pointing to how prices in some sectors, such as the supermarkets’ budget own-label ranges and clothing, had plummeted, Hayward added: “It is probably time to reassert what value really means
“For things to keep getting cheaper, something has got to give. It may be the quality of the goods, it could be staffing levels being reduced, and there are opportunities to start to reassert why things could start to cost a bit more.”
The ploy of buying up profitable businesses as an instant way to grow was also nearing the end of its course, said Hayward.
“The only real long-term way to create value is to create more demand from customers. I think we have missed that opportunity over the past few years. We tend to focus on the short-term at the expense of the long term.
“Yes, we may have got some money out of consumers today, but will they come back?”