BDO Predicting 2015 – Retail trading update January 2015
Christine de Largy attended the BDO Retail Forecast 2015 conference on Tuesday 27th of January. Here Christine shares her notes from the day of how the retail sector has fared in 2014, featuring predictions for the coming year.
- Interest rates remained low, unemployment continued to fall and retailer confidence improved
- We saw a return to growth in real earnings for only the second quarter in last three years.
- Consumer habits are evolving – 72% thinking more about what they are buying, 55% looking for quality products that will last, 41% will pay more for something that is right, 37.9% are buying cheaper if available and 34% are buying fewer luxury items like clothing.
- Christmas came early in 2014 and late in 2013 – discounting in 2013 held off till Boxing Day but Black Friday brought it forward in 2014.
- Even JLP footfall flat and overall High St Tracker -1.4%.
- Waitrose and Fortnum and Mason did well where major supermarkets struggled.
- Jigsaw and Fat Face did well and held their nerve over discounting with limited discounts on Black Friday.
Key trends of 2014:
- Merging of online and physical retail
- Home categories returned to growth
- Discounters were ingrained in retail culture
- Black Friday gave high profile boost to late 2014
- Boom in corporate activity and IPO’s
- Increased retailer investment in systems and data analytics.
Key lessons 2014
- True importance of getting the logistics right, especially in online fulfilment at the extreme peaks in trade. (James Cox COO/ FD Dune) requires robust web site and infrastructure.
- Need to have laser-like focus on the customer quality service and customer wants.
Christmas 2014 Winners:
- Third party logistics due to online increased activity
- Value retailers, e.g. appealing to the dedicated Waitrose shopper introducing organic ranges at Lidl
- Toy retailers
- Wearable technology e.g. trackers and smart watches
- M-commerce, enabled by reduced prices on tablets.
Christmas 2014 Losers:
- Mainstream supermarkets,
- Secondary high street retailers
- Retailers with no online presence
- Fashion retailers and
- Early discounters
- 2 % growth vs. 2.1% last year
- Fashion 3.9% but fast fashion and starting off lower base. 3.6% health and beauty good throughout recession for affordable treats and Homewares 2.5% but Grocery and DIY 1%.
- Lack of wage growth an obstacle to spending
- General uncertainty with election
- Mainstream retailers respond to discounters. But discounters will expand into other sectors.
- New social role for modern retail stores eg wine tasting at Waitrose
- The fulfilment arms race. Any time, any place, anywhere eg lockers and doddle.co.uk
The agenda for 2015
- Smoothing the customer journey, seamless and consistent to brand.
- Harnessing the power of data, how customers shop and what they want.
- Being transparent on price, customers can research and understand value.
- Supply chain visibility, links to all the above have to remain nimble and flexible to respond to uncertain demand. Need one view of stock, easy to say difficult to deliver but will protect margin.
Predictions for 2015:
- Retailers will adopt Big data
- More widespread use of mobile marketing facilitated by wearable tech
- Retailers will follow click and collect evolution – e.g. introduction of fitting rooms at collection points
- Retailers will adopt dynamic pricing making it more mainstream integrating ipads and digital shopping instore.
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