4 minute read
Now that Article 50 has been triggered, the two-year countdown to Britain’s exit from the EU has begun. The Retail Gazette recently reported that 68% of retailers have no plan for Brexit and 51% believe that the vote to leave has already impacted sales. While 30% of retailers have had a reduction in sales, many UK retailers that export have seen an increase in exports as shoppers from outside the UK make the most of the weakened pound.
Mike Cherry, National Chairman of the FSB remarked that small businesses are calling out for clarity on how Article 50 will impact their business. It’s not just small businesses; large retailers are being effected too. Paula Nickolds, new Chief of John Lewis, recently told the BBC that John Lewis is in really good shape but that changes will need to be made. She remarked that this is a “pretty challenging” time and that the input prices are rising and that it is it currently unclear how much of that will be passed on.
So, what will the triggering of Article 50 mean for retail? Immediately After The Trigger
Maru/edr took a real-time poll in the moments after Article 50 was triggered. They discovered that 49% of British consumers expect to cut their spending over the next six months. Only 26% of the participants reported having no plans to cut their spend, while a further 26% remained on the fence.
The survey also discovered that leisure, eating out, clothing, holidays and electrical goods would be likely to see the biggest reduction in spend. Maru/edr suggests that customer experience needs to be a priority in retailers’ strategies. Visit Maru/edr for the full poll results.
As the first country to have triggered Article 50, there are many unknowns. Even just after the vote, KPMG found that consumers had lost confidence. But as the situation develops, the cost of goods from overseas will rise and there will be some unsettled times as retailers decide whether to increase their prices or whether to take a hit on their margins.
The British Retail Consortium has said that the number one priority for retailers in the Brexit talks should be trying to establish no new tariffs on EU goods. There are concerns that there is a limit to the amount of increased costs that retailers can absorb. Particularly when costs such as business rates and the living wage are set to increase.
There is much to be decided in the negotiations. Theresa May has called for early talks on what she is calling a “bold and ambitious free trade agreement”. It is currently expected that as part of Brexit, the UK will need to pay the €60bn that Brussels believes the UK owes the EU.
Prior to the vote, Neil Saunders, managing director of Conlumino told Retail Week that “Good businesses will find a way to succeed and make a profit – just like they always do.”
And post the triggering of Article 50, this does seem to be the attitude of many retailers. Despite all of the Brexit concerns, retailers are positive about the future. 62% of UK retailers said that they feel confident or very confident that they can continue to flourish internationally post the Article 50 trigger. In addition, despite forecasting seeing international e-commerce becoming more complex, 23% of international retailers are planning to invest more money into growing their export trade.
While there are many unknowns surrounding the retail industry and it’s interaction with Brexit – there are also many knowns. The things that we can be sure of, are that the basics of retail must be maintained. Excellent customer service and the right product ranges will continue to be a must. But in addition, many of the newer principles and 2017 retail trends are likely to continue to be important.
Enhancing Retail Experience
Often you will find on our blogs that we discuss the importance of embracing experiential retail. This is because in recent years, customer spend has shifted away from retail and towards experiences. There have been many responses to this including pop-up shops and using rich in-store experiences that encourage product trials.
Much of this is attributed to the way that a shop looks and feels. Retail design is increasingly being driven by the customer’s desire to have an enhanced brand experience. Simple things like a highly creative window display can help to capture the attention of passers-by. It is taking more and more to capture the attention of customers and stagnant vinyls are no longer cutting it.
Why It’s Important:
Customers expect more from brands. They expect to be entertained and engage. It is easy for customers to move from shop to shop while webrooming online. To encourage footfall, things like events and activations are important for driving engagement.
There are many experiential marketing tips that retailers can learn from marketers; and they don’t have to be expensive.
Many retailers have been trying to up their Omnichannel game for some time now. Omnichannel strategies aim to integrate communications to provide a seamless experience that is easy and consistent across all channels and devices. In addition, a true Omnichannel strategy seeks to satisfy customers by allowing 24/7 access to a brand.
For example, when it comes to social media, 74% of customers expect a response from a message within an hour and this is often regardless of the time of day (or night!). So, the presence of a social media account is not enough. In addition to having an account that posts and is active, it is also becoming a customer expectation that these social accounts will be manned 24 hours a day. This is just one of the many challenges that an omnichannel strategy faces.
Why It’s Important:
The customer retention rate for those not adopting an omnichannel approach was just 33%. In contrast, the businesses with an omnichannel strategy were achieving an average of 88% retention. In uncertain times, increasing the likelihood of retaining more customers seems like a sensible strategy.
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