2017 looks like being a challenging year for retailers, but whilst external pressures mean margins are likely to be tight, there is some good news.
Online erosion of high street sales seems to be slowing and clearer strategies are emerging for tackling it. These are the dominant factors in shaping the behaviour of retailers for the year ahead. Three key trends are emerging that everybody in the retail sector should be alert to.
Sales strategies will be dominated by price
The impact of Brexit on product availability and price, and the rising cost of fuel, which in turn impacts on the cost of transporting goods, mean that inflation is expected to increase over the next year and could do so considerably. This means that, inevitably, prices will go up and retailers will need to pass some of this on to the consumer. Sales strategies will have to be adjusted accordingly. Retailers are likely to start focusing on showcase displays of a few discounted products rather than on trying to keep overall prices low. Bulk buying will become all the more important in order to preserve profit margins, which means more investment will be needed up front on each product line. This will increase the element of risk involved in trialling new products, so is likely to encourage retailers to stick to what they know.
Retailers will slim down and simplify
As retailers look for ways to reduce their overheads in order to protect their margins, staff losses are a strong possibility, as is the dropping of bonuses and employee benefits. Some may consider wage cuts but this is always risky because of the impact it can have on public relations. A more likely approach is to try to save money by simplifying the way stores and the businesses behind them are run, which has an additional upside. As consumers get used to simple, speedy shopping online, they’re looking for this on the high street, too. The two are expected to merge further over the course of this year, with click and collect schemes gaining in popularity.
Everybody is promoting the high street experience
Where the high street has a distinct advantage over online shopping is in the experience it can offer to the consumer, and this is something many retailers are concentrating on enhancing this year. This means an increase in the number of stores inviting customers to linger by offering tea and coffee, and places to sit down and relax. It also means that retailers are promoting the expertise of their staff, with an increasing number of fashion outlets offering fittings, for instance, whilst electronics outlets can help customers talk through their priorities to find the products that are right for them.
It’s important to preserve flexibility in a challenging retail environment like this, but smart business owners will get ahead by taking account of these trends and working out how best to position their companies in relation to them. Good planning and paying close attention to the numbers will be the key to getting through 2017’s ups and downs.