What we think
This is where you can peer into our minds and learn a bit more about us as recruiters, consultants and humans. Expect plenty of insight into Consumer, Retail, Recruitment, and life in our Leeds and London spaces. Some tips from the top and the odd guest appearance. Enjoy and please feel free to leave us a comment!
High street habits: 20 years of change in retail1st February 2022
Milestone birthdays give us an excuse to do two things; celebrate and reminisce! Today it’s the latter as we delve into the retail sector back in 2002 and look at some of the major changes we’ve seen, and the brands that have been and gone. The way we shop has obviously been transformed by the digital revolution and the rise of ecommerce, as well as the explosion of the supermarkets and waves of new trends. So how has this moulded our high streets and habits over the last 20 years?
“…The variety of articles obtainable is infinite” was written about Woolworths on its opening in 1909, but it remained true about the high street favourite until the closure of its 800 stores in 2008. In 2002 no high street was complete without a Woolworths. A purveyor of pick ‘n’ mix, random household gadgets and pretty much anything else, there really was something for everyone. Interestingly, it was partly the rise of self-service concepts that slowed the growth of Woolworths; after WW2 they were slow to do away with the traditional counter-serve concept and competitors including supermarkets evolved faster to allow customers to pick up their own goods (remind you of anything?!), eating into their profits. The same could be said for Debenhams (more about that later); although there was a considerable difference in their target market and pricing strategies, they had in common the range of goods they sold. By 2008 Woolworths had ceased trading and became UK high street history. It was the first domino of the physical retail Armageddon and in 2012 Debenhams was cursed with a similar fate with complete closure by 2021.
The growth of ecommerce reinvented the retail landscape bringing both threats and opportunities. Having launched in 1994, Amazon books quickly expanded into selling consumer electronics, home-improvement items, toys, games and much more. Customers no longer needed to nip into Woolworths or Debenhams, they could buy a Barbie Doll or a kettle from their local Tesco. Thus began the battle of convenience. ‘Click and collect’ was seen by Amazon as purely clicking and delivering, but Tesco soon returned the punches with their own delivery service and the two brands helped render stores like Woolworths irrelevant, while Tesco became the leading UK retailer in 2021. Debenhams hung on for longer; it was competing in a slightly different, high-end arena offering Urban Decay and Ted Baker among others, and there is still the customer desire for the sensory experience of shopping that is missing from online. However the product range just wasn’t appealing enough and nor did the customer experience offer the range or excitement needed to drive footfall. Once the product range reduced the department stores to franchise houses and stores were sold off to Sports Direct in 2014, it was too hard for the retailing giant to compete.
Supermarkets play an intrinsic role to the UK economy, employing millions of people nationwide. In the naughties, the supermarkets’ profit margins were a world-leading 7%, and they were dismissive of Aldi and Lidl as challengers; “We can live quite happily in our part of the market and they can live in theirs”, said Tesco’s MD at the time. Of course this proved short-sighted as Aldi has gained a 7% market share over the last 20 years and drastically reduced the profit margins of its bigger competitors. The rise of the discounters has shaken up just about every category and supermarket, causing much of the grocery moving and shaking of our times. This brilliant article about the rise of Aldi makes several excellent points about how Aldi has innovated the UK shopping experience, with the ‘thrill of the till’ and the ‘Aisle of Wonder’ now a familiar concept to all of us.
Climate change coupled with the pandemic has accelerated the sustainability trend. The Lyst 2020 Conscious Fashion Report details “since the beginning of 2020, ‘sustainability’ searches have seen a 37% increase.” Shoppers’ concern with sustainability and provenance has perhaps led to increased support for local businesses as we’ve seen the first rise of independent shops in four years. Independent retailers have filled in some of the gaps left by empty chain stores; about half of the Topshop units have gone to independent operators as more small business owners venture onto the high street. Also, independent retailers no longer have to rely on their local market with more opportunities for digital expansion, as new websites such as Neartoo.co.uk allow small businesses to join an online marketplace and reach larger audiences. With the younger demographic driving the sustainability trend, the movement has been able to gain momentum as social media hastens its reach into mainstream consciousness. Established retailers have also started placing sustainability at the core of brand development; Asda has launched the UK’s largest refill store, Tesco has begun to reduce its plastic packaging, Sainsbury’s was the Principal Supermarket Partner of COP26 and Aldi has been carbon neutral since 2019. Increased social awareness around ethically produced fashion is another driver of the sustainability trend. The realisation that the success of outlets such as Primark – who bought us the £1 t-shirt – was facilitating the idea of disposable clothing destined for landfill, began to shift priorities for some consumers that fashion should not be at the expense of the planet or people.
British supermarket retail is among the most competitive on the planet and retailers are in a constant search for smart ideas to gain an edge. The best example of this over the last 20 years is the loyalty scheme. We all love a bargain, and the introduction of the Tesco Clubcard in 1995 appeased that desire. A year after the launch, “Clubcard holders were spending 28% more at Tesco and 16% less in arch-rival Sainsbury’s” and others soon followed, with shops offering reward cards and the launch of the Nectar scheme in 2002. In 2021 a Tesco Clubcard is used by over 20 million households in the UK, but the key change since its early days is the ability to track individual customer behaviour. Each swipe sends your purchases as well as location and method of payment into a databank, allowing retailers to analyse your consumer habits. It might save you money in your local Tesco, but where is really comes into its own is online; tech leaders Ocado use data to tailor web content around specific interests such as purchase history and grocery preferences, now making a targeted effort of customer retention. Ocado is also successful in utilising customer data to deliver more relevant messages across their digital channels; last December the retailer sent out personalised videos to their customers, summarising their year in shopping. The MyOcado2021 campaign jumped on the sustainability trend by sharing how customers have helped contribute to their sustainability mission, with options to share on social media. This understanding of customer intentions and preferences enabled more meaningful and widespread engagement. The final stand-out loyalty programme worth a mention is Amazon Prime. Core to Amazon’s growth, Prime addressed the biggest pest of ecommerce – delivery costs. Amazon Prime gives members the benefits within 24 hours, arguably giving them the edge over reward schemes where the aim is to collect points over time. There is no programme as successful, with Prime members spending twice as much as non-Prime members.
Without a doubt the changes of the last twenty years have been largely driven by advancements in technology and as we can see from the decline of Woolworths, the need for speed and convenience enabled by that technology has determined which brands have thrived and which have disappeared. Now that technology is acting as an extension of ourselves – permanently in our hands and pockets – speed and convenience are priorities and it’s the retailers who can deliver this without compromising service that will thrive over the next twenty years. Next month we will explore the role of technology advancement to the way we shop in 2022.