The retail industry has faced many challenges over the years. Whether it be the rise of internet shopping, COVID-19, Brexit, the cost of living crisis or any number of other economic headwinds, the sector has had to adapt – experiencing the loss of even some of the most well-established operators such as Paperchase and Wilko.
Despite this, the market continues to show remarkable resilience – and retailers are capitalising on the rationalisation of the high street, easing supply chain pressures and recalibrated rental values by pivoting their approach to secure more favourable lease terms/pitches and investing in their customer offering. They are also embedding experiences and partnerships into their stores to drive footfall, increase dwell time and create a more distinct offering. Great examples are the Central Perks in Primark, and the Costa café in Next stores, respectively.
Retailers have seen seismic shifts in customer behaviour over the last two decades and have had to adapt their offering to move online, accepting the change in shopper habits, and embracing the opportunities created. Omnichannel retailers have had to ensure brand consistency across their platforms. Their bricks and mortar offering must reflect their online brand – and vice versa. But there is an ever-increasing need to continuously realign their stores to augment customer experience to tempt people back to the high street. Loyalty schemes have enjoyed a return to fashion to try to create customer stickiness, offering cheaper prices and personalised offers in exchange for total digital transparency on their shopping habits. Increasingly those with a physical footprint are engaging retail media content in store, as well as online. The digital battle for customer loyalty has never been so fierce.
Current challenges
There are myriad factors contributing to the increasingly challenging landscape faced by the retail sector including:
- Rising inflation and interest rate
- War in Ukraine
- Cost of living
- Increased energy prices
- Supply chain disruption/costs
- Brexit
But with these challenges come opportunities, and the need to be reactive is greater than ever. And social media and instant data availability mean that market changes can be observed in real time. By reacting quickly to social media trends and reflecting them in brand messaging (where appropriate to the brand's own values), retailers can heighten customer experience to enforce their authenticity, grow market share and attract the new generation of shoppers.
Where is retail heading?
Changes in consumer behaviour – such as the rise in shopping through social media, a reappearance of TV shopping channels, and a heightened sense of social/environmental responsibility - have seen the retail sector adapt and those who have failed to adapt, have failed. One thing customers continue to be though is demanding – expecting speed of service, ease of returns, brand consistency and value.
Through a series of articles, we will be delving into the trends within the industry to explore what helps businesses survive, and thrive, in today's climate and look to what the future of retail holds.
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