After a rough Christmas, how can retail survive the cost-of-living crisis?

0
20
F

or shopkeepers, the festive period has an existential function. The evolution of the entire industry has been defined by this annual event – ​​the pre-hibernation period when he must eat well to survive the cold of winter. An already demanding situation, pressure on retail performance this Christmas increased amid grim forecasts that usually low consumer spending in January would be further curtailed by pressures on disposable income, ever-present during the crisis of the cost of living.

The latest figures from the ONS offer no solace. While the head of a 3.8% increase in sales values ​​compared to last year may seem like a win for the industry, but this figure dwarfs inflation, which was found to have been at 10.5% in December. In summary, inflation-adjusted sales volumes this Christmas were poor and down 5.8% year on year.

Food performed relatively well, despite falling sales volumes 0.3% in December after a 1.0% increase in November. Many expect this to be because customers spread the Christmas shop over two months. M&S did indeed report a 10.2% sales increase in the thirteen weeks prior to the new year. However, this seems much less exceptional when we reason with the circumstances presented in December 2021: with the Omicron variant widespread, it was the year of smaller festivities as many avoided large gatherings in the hope of eating turkey around the table . Food sales were of course higher in the year when we were finally able to celebrate Christmas together again. But such realization also exacerbates the dismal performance of total sales volumes this year.

See also  Cramer's lightning round: I like WESCO very much

Finally, this Christmas marked the 9e consecutive month in which retail sales fell in real terms compared to the previous year. It was the culmination of a difficult year in which Every day, 150,000 retail jobs were lost and 50 stores closed.

Despite a gloomy analysis, the retail eulogy is not yet written. Still, the start of the new year gives little cause for celebration. January is notoriously tight on the wallet, but with inflation still running in the double digits, disposable incomes are all but down, exacerbating the challenges of an already difficult month.

Meanwhile, the mass migration of shoppers from in-store to online defies an industry that still relies on the storefront to convey brand identity and association. falling visitor numbers, 7.2% lower this Christmas compared to last according to Springboard, will be further affected by a Britain ravaged by large-scale industrial action. With parents staying home to care for children who haven’t gone on strike, employees working from home to avoid transportation complications, and patients dealing with delays in a struggling health care system, the effect on the storefront is visible to all.

See also  Shop attendance in December hit the highest level since the start of the pandemic

The cost-of-living crisis has done more damage to the national mood than a pandemic ever could. There is no denying that Britain is now a troubled soul. Such a realization, so tied to emotion, cannot predict a quantifiable impact on the retail sector with any accuracy, yet it doesn’t take a genius to recognize that the start of 2023 poses fundamental challenges for retail.

Retail has entered the era of survival of the fittest. In addition to consumers, the sector is facing rising costs, but it must be retailers who absorb the greatest impact. If you pass high overheads on to customers, you risk cutting off the hand that feeds and outselling target market products. In addition, brands must ensure that product development reflects their overall identity, ensuring that products meet the needs and expectations of those seeking them.

See also  M&S chairman says UK government's 'mind-boggling' post-Brexit plans will devastate trade

In short, retailers must stay sharp on the eternal P’s that have determined their success so far: product and price. By deflating disposable income, there is no room for error; wrong product development and price failure will alienate retailers from otherwise loyal customers.

Understanding how to meet these needs relies on customer insights and a broader understanding of market movements. Product-level store data will unlock this opportunity, allowing retailers to compete with more supporting products at fair prices.

Those who want to survive the cost-of-living crisis should be aware that the race for customer insight is on, but information needs to be properly adapted to inform products that meet consumer needs with an all-encompassing price.

Mohsin Rashid is the CEO and co-founder of ZIPZEROand app that allows users to earn money to pay bills.

.

LEAVE A REPLY

Please enter your comment!
Please enter your name here