When the United Kingdom's National Statistics Office announced a 3.6% increase in monthly retail sales volume during May 2008, it came as an unexpected and pleasant surprise to many, especially considering the weakening British economy. However, the joy was short-lived as retail sales volume plummeted 3.9% in June 2008 (down 2.2% on an annualized comparison), and like-for-like sales value declined 0.9% during July 2008, vis-à-vis same period last year; resurfacing concerns pertaining to the health of UK's retail market (valued at close to GBP 265 billion during 2007).
Worst hit by the economic downturn has been the non-food sector (including household goods, textile, clothing and shoes), which has experienced a strong decline in sales.
With the demand-side economics (including economic environment, consumer confidence and spending) in the U.K. not likely to improve in the next few years, retailers must deploy a use a combination of strategies (refer to "Leverage actionable insights to increase competitiveness in UK's retail industry") to succeed in the marketplace.
Is there one single strategy that can be adopted across the board? The answer is 'not really'. For example, competing through heavy price cuts and discount promotions may not be the best strategy for a premium, up-market retailer, as compared to offering more differentiated products and services. Similarly, inorganic growth (through mergers and acquisitions) may not be feasible for all retailers because liquidity issues and resultant low return on investments. The impact and efficacy of any strategy pertaining to pricing, mergers and acquisitions or multi-format offerings will vary across retailers and will ultimately depend upon the retailer's ability to proactively and effectively map and understand
■ Underlying and underserved consumer needs – whether they revolves around price, product variation, or convenience
■ Evolving competitive landscape - go-to-market strategy of competitors (targeted consumers, product categories, pricing, and mode of promotion)
■ Retailer's own past performance - efficacy of retailer's promotion, pricing campaigns and formats
■ Market opportunities - entering/exiting geographic and consumer markets; potential merger and acquisition targets.
In short, the success mantra for retailers lies in gaining better and faster insights pertaining to market, consumer, self and competitors and then using these insights to develop and execute business strategies. Identifying and developing these insights to define and sharpen their strategy is impacted by the paucity of talent, time, and analytical expertise. Successful retailers have recognized the power of outsourcing this capability to develop actionable insights.
By Himanshu Pal
http://www.wns.com/Insights/Blogs/tabid/44163/entryid/8/default.aspx?smo=ab-bl-rcpg
