UK retail in 2024: What differentiates the successes and failures?
May 31, 2024
For the overwhelming majority of retailers, the festive season is make or break. Christmas and New Year 2024 may have delivered surprisingly buoyant top-line revenues, given the consumer cost-of-living crisis, but profitability was another matter.
The result has been another crop of high-profile failures, including Ted Baker, Matchesfashion, the Body Shop and FarFetch. Retailers account for 9% of all UK insolvencies, despite the sector only contributing 6% of the nation’s GDP. This is an above-average risk industry. A catalogue of major retail collapses all the way back to 2007 is published by the Centre for Retail Research.
So what makes the difference between the businesses that survive and thrive and those that end up in the high street gutter? What do the winners have that the losers lack?
Happy customers
Customers now expect to be able to shop via whichever channel they choose and for their journey to be entirely connected, reliably consistent and utterly personalised.
The only way this level of positive customer experience can be created is to run the business from a centralized platform, which combines online sales, stores, order fulfilment, inventory management, customer relationship management, point of sale (POS) and the many other key features of retail operations into one unified system.
This means that retailers can synchronise their inventory availability across all platforms, share information seamlessly right across the different parts of their business and build comprehensive profiles of their customers. Done properly, the end result is a top-class customer offering of connected experiences that span every channel.
Happy shopping experiences
As the online phenomenon threatened to overwhelm physical shopping, retailers were forced to reassess the role of their stores. Initially, the mantra was that bricks-and-mortar retail was a thing of the past. Now, it is accepted that physical stores are a key element of the customer retail experience.
More and more retailers are re-creating their bricks-and-mortar network as experience hubs, where customers can see, feel, hear or taste products. They are creating places designed as much if not more for engagement and entertainment rather than just a purchase transaction. Nevertheless, these sites must be aligned to the retailer’s brand values, provide added value for consumers but also deliver a commercial return in relation to their cost. They can’t just offer experience for experience’s sake.
Happy staff
Business’s with happy employees generally perform better. Companies with a strong reputation for looking after their employees also tend to be the most successful. Satisfied staff are more productive with their time at work and much more likely to do all they can to help the company succeed.
Although pay is important, especially in the midst of a cost of living crisis, it’s often engagement that is the vital element in motivating staff. It creates commitment, but it requires retailers to give their employees clear goals and expectations, to remember always to praise them for a job well done and to make sure they have the tools and support to do their best work.
Research by the business advisors, Gallup has shown that businesses with highly engaged employees achieve a 10% increase in customer ratings and a 20% increase in sales.
Happy about change
The pace of change, accelerated first by the pandemic and most recently by technology such as AI, is forcing retailers constantly to revisit their business strategies. Bitter experience has taught them that they must build greater resilience into their supply chains.
Even more importantly, they must know their customers sufficiently well to deliver the goods and services they want, when they want them and how they want them. This means upping the pace at which they process information and develop new offerings, which is where technology is increasingly playing a core role.
As consumer behaviour changes, retailers need to find ways of launching new ideas at scale and at pace. They must be nimble and flexible enough to meet their customers’ ever-evolving needs, which in turn means working with consumers to understand what their needs may be ahead of time.
Happily sustainable
Despite the push back from some business leaders and investors against the ESG movement, sustainability issues are here to stay. Successful retailers are those committed to doing more to create a sustainable future, even if it means rethinking their whole business model to achieve this.
Customers demand it, too. Recent research by the consultants Forrester has confirmed that consumers, especially younger generations, increasingly consider a corporation’s values and commitment to social and environmental sustainability when selecting brands and products. Moreover, they want to see retailers do more than just setting aspirational goals. They are looking for tangible outcomes.
The cost of success
While these positive measures will not come cheaply, not investing could prove more expensive through jobs lost and unhappy creditors. Retail is a dynamic industry, and as such, it will require pro-active management in order to drive forward and succeed in today’s changing market conditions.
If you are seeking professional advice for your business, Opus is here to help. You can speak to one of our Partners who can discuss options with you. We have offices nationwide and by contacting us on 020 3326 6454, you will be able to get immediate assistance from our Partner-led team.