*Clarity In Marketing

Downturn could be the key to true multi-channel retailing says retail think tankA new white paper from the KPMG/SPSL Retail Think Tank takes a look at how the current credit crunch compares with earlier recessions and downturns to discover what impact those previous economic events had on retailing and what that might mean for retailers navigating their way through the current crisis.

Based on this analysis, RTT says that:

• Consumers will now have more power than ever and retailers will have to be more market driven - more understanding of the needs of customers

• Competition will become more intense creating 'price wars'; genuine promotions will attract consumers; ranges will be enhanced; customer service is likely to improve; environment issues will offer differentiation of retailers' offers, stores and websites. A 'best of breed' will emerge
• Some sectors will be less affected than others; discounters will do well. DIY retailers will have scope for growth as people carry out their own improvements. Retailers which cater for 'recession proof' and less economy-sensitive sectors such as teens, high net worth individuals, wealthy tourists etc, will do well
• Retailers will become 'truly multi-channel' as a recession tends to accelerate trends, such as online shopping. Rising fuel prices may also accelerate this trend
• The need to find cost savings will move higher up the strategic agenda. Retailers will approach this in a number of ways, including refining 'just-in-time' stock systems to minimise dead stock; operating shared transport and warehouse facilities as Alliance Boots does; or signing up to the 'speed-dating' sessions that IGD runs on shared transport
• There will be rent structure change. The British Retail Consortium, as well as industry figures like Arcadia's Sir Philip Green, Next's Simon Wolfson and Lord Harris, of Carpetright, are asking landlords to collect rents on a monthly rather than quarterly basis. Landlords are coming under pressure for change and Hermes has just agreed to this in certain cases
• Retailers looking for investment will become more realistic, their business case more compelling in order to secure required funding in a 'credit squeezed' market and this could help to create more sustained, stable business development. The need for retailers to maintain good communication with their banks becomes even greater and helps to create a 'no surprises' culture
• The new recessionary environment will lead to the acceleration of structural changes such as even greater economies of scale and new formats for different customer segments. The RTT agreed that we would see retailers focus their strategies around how to get the benefit of these. We are now also seeing the effects of convergence of information and communication technologies such as the internationalisation of operations and to extend them into new areas of retail services, such as financial services, health services and specialist leisure services. Retailers will be further encouraged to obtain and use information on individual consumer's behaviour, as well as the items in the store
• Good will get better and potentially bigger, whilst the weaker ones will not survive. Getting bigger brings the bonus of reduction in buying costs, energy costs and the ability to negotiate with property owners etc.
• The downturn will create the impetus to expand overseas, offsetting UK market pressures.

In conclusion, says RTT, the current downturn will lead to:

• A shift in power from retailers to consumers
• An enhancement of the retail experience
• Increased globalisation of retail
• More efficient retailers
• New, ground breaking strategies

The full white paper on the KPMG/SPSL Retail Think Tank website.

*Clarity In Marketing works with a number of retail clients helping them to grow their businesses through:

• consumer research to provide insight into what your customers really think and really want
• developing sound strategic marketing plans to deliver you goals with the resources available to you
• developing creative on and offline campaigns to deliver revenue growth.

To find out how we have helped our existing clients and how we can help your business thrive in the recession contact Gillian Angel on 020 7520 9404.