Retailers need performance in an ever-changing industry
The retail industry is facing dramatic change. Toys R Us and Maplin were the latest high street retailers to enter administration this month, while Mothercare has just issued a stark profit warning that suggests it may be facing a similar fate.
New Look is shutting 60 stores, and even brands as strong as John Lewis – which has enjoyed outstanding customer loyalty for so many years – appear to be struggling. The John Lewis Partnership, which also owns Waitrose, has reported a 77 per cent drop in annual profits.
One thing is clear: physical shops aren’t what they used to be. Today, they’re more experience centres than places people go to buy – they’re rarely the place for product discovery or impulse purchases. Instead, they act as a validation point for customer decisions.
Retailers of all shapes and sizes are frantically searching for ways to navigate this new landscape
In the grocery space, stores maintain footfall for now, with people still preferring to buy food and FMCG in person, but they’re not safe from disruption. Online options continue to gather pace – and the rise of same-day delivery will re-define consumer expectations. What’s more, 54 per cent of the world’s population now lives in an urban environment, where the proliferation of convenience stores means the traditional ‘weekly shop’ is on the wane.
Understandably, retailers of all shapes and sizes are frantically searching for ways to navigate this new landscape. It’s widely accepted that brands’ budgets need to work harder than ever before, and marketers have begun paring back spend that can’t be evidenced as delivering real business impact.
It’s easy to say retailers and brands are crying out for innovation in the face of such threats, but the word ‘innovation’ is unhelpful – it conjures up images of ground-breaking technology and grandiose ideas. Besides, it’s subjective – what might be innovative to one person might not be to the next, while another might say ‘wow, I’ve never seen that before’.
One thing is clear: physical shops aren’t what they used to be
At its heart, true innovation – whether an augmented reality experience or the harmonisation of a global product portfolio – is about finding new ways to boost the bottom line. It’s not about flashy technology or ‘blue sky’ thinking; it’s about sales.
What retailers really need is not innovation; it’s performance. Performance in conversion rate or sales, in footfall, or in profit margins.
That might sound odd coming from someone whose job title for the past three years literally included the word ‘innovation’, but recently there’s been a clear need to evolve the role to meet the ever-changing demands of our clients. If we’re to avoid another round of Maplins and Mothercares, performance should be the purpose of innovation. That’s where real gains can be made.
With that in mind, I’m delighted to announce my new position as Konica Minolta Marketing Services’ Head of Retail Performance. My team will be driving retail performance for clients worldwide, offering optimisation, creative ideation, design activation and the associated buying, logistics and installation.
We’re also working on an exciting new retail proposition to better analyse consumer behaviour in physical environments. The modular approach will take in
– Evaluation and optimisation
– Shopper insight and strategy
– Creative ideation
– Design activation
– Buying, logistics and installation
I’ll tell you more about that soon. In the meantime, if you’re a retailer and want to hear more about performance, drop me a note.