We are seeing incredible changes influencing the UK retail landscape. 2012 proved to be a challenging year in which the currencies of sales, share and profit were traded with greater competition than ever. The impact of the internet and the interactive consumer contributed greatly to this.
As consumers, we have never been more in control of the purchasing journey and this rapidly evolving dynamic has produced a paradigm shift in the way Microsoft Advertising is approaching advertising and advertisers. The pervasion of multi-screen interactive devices, the rapid explosion in cloud computing, the ubiquity of always-on connectivity and the development of natural user interfaces is changing the way retailers engage with their customers. In 2013 Microsoft Advertising is offering retailers the opportunity to build innovative and measured experiences with engaged consumers at scale through a suite of premium products and devices.
To give you a flavour of the impact of changing consumer behaviour on the UK retail sector here are my predictions for 2013. I Look forward to your comments.
1. It’s all about Me
Consumers are driving the retail relationship and will look to take even more control in 2013. They have already become publishers of their own web sites, videos, social sites and are fluent in how to seek, hunt and purchase at the push of a button. Their opinions and reviews within social communities are also key to influencing the choice of retailer and maintaining loyalty. The winners will be those retailers who best understand the consumer journey and proactively track and react to changing consumer behavior as a means to garnering customer attention and loyalty.
2. For CMO read Chief Metric Officer
With ever tightening margins, tougher competition and more powerful consumers CEO’s are demanding a new type of ROI from their CMO’s. Traditional reporting metrics such as brand equity and social exposure will still be key but retail CMO’s will be expected to be able to demonstrate deeper consumer appreciation of their brands and more importantly reports results in real time. In effect they are fast becoming their company’s new Chief Metric Officers.
3. Multi-Channel Becomes the Norm
The lines between offline and online blurred significantly in 2012. The challenge for retailers in 2013 will continue to be how to create and measure a seamless brand experience across all channels: brick, click, social and mobile. RSR Research in November 2012 reported retailers naming their top 3 operational challenges: 59% of retailers surveyed pointed to coordination with other channels to create a seamless brand experience, 52% were focused on optimizing inventory across all channels, while 49% are focused on how to best understand and capitalize on how different consumer audiences engage in varying channels. Christine Cross, Chief Retail and Consumer Advisor to PricewaterhouseCoopers and a Non-Executive Director at Next, commented that “Christmas results are showing a robust performance for retailers with an online presence, but in particular those who could use their stores to leverage this through click and collect. This will be the Christmas defined as one where consumers became truly ‘Omni channel’ and the winners responded to this need. Online has been the main non-food battleground.”
4. Push and Pull Retailing
Consumers have for years enjoy instant ownership of the shopping experience by searching for product information, selecting their brand and then instantly “pulling” the trigger to buy on the internet spot. 2013 will see retailers more aggressively use their push and pull prowess across all trigger points to best capitalize on their brand equity and deliver their brand promise and position. In effect, the last step of the sale for retailers will be everywhere and anywhere as opposed to somewhere.
5. Arrival of 4G
Although price will be a barrier to entry in the short term, the impact of 4G on retail in 2013 will be far reaching. From engaging shoppers in-store via Wi-Fi, implementing augmented reality and barcodes, to digital offers distributed via mobile devices, retailers have a unique opportunity next year to drive footfall and reach consumers in a more contextually, relevant and contextual way than ever before using intelligent data. Think how the advent of 3G was a game changer for smartphone and the development of 3G will allow point-of-sale to become truly mobile.
6. Mobile Drives Loyalty
The latest research from IAB reveals that 69% of UK consumers expect their mobile usage to increase by 2015, so mobile retail is only going to increase as we move into 2013. UK users are becoming increasingly adept with using mobile as part of their in-store shopping experience, in terms of making payment and loyalty. Savvy retailers are adapting their point of sale (POS) in order to accept these digitally savvy customers, and gather a wealth of data on their behavior in order to personalize offers and complete the digital circle. As customers respond more positively to the immediacy and convenience that mobile devices bring, this type of retailer offer is going to grow rapidly in 2013.
Showrooming’ is where people use mobile devices in-store to compare prices either in rival shops or online and it will become even more ubiquitous in 2013. Experience design agency Foolproof found 24% of UK shoppers ‘showroomed’ in the lead-up to Christmas 2012, and 40% of those (one in 10 of all shoppers) then bought items from a competitor. However, in the 18-to-39-year-old age group, those engaging in ‘showrooming’ leapt to 39%, and a fifth of all shoppers said they went into a store specifically to check something they planned to buy online. We will see retailers further integrating consumer offline and online experiences to ensure they do not lose price driven customers to their competitors.
8. Price Inflation driving Growth
According to a report from SAS and Verdict Research called ‘How the UK will shop in 2013’ UK retail is predicted to grow by 1.8% in 2013 with total retail spend hitting £300.7bn. Food will remain the biggest driver next year however DIY and gardening is set to be retail’s strongest performing sector after a recovery from the wettest summer on record in 2012. SAS and Verdict also predict that there will be a shift towards the more mature market as 16 to 24 year olds continue to suffer economic woes, while more over 65s are working longer. The report reveals that the 55+ demographic will be the fastest growing among online shoppers. Ruth Jackson, retail consultant, SAS UK & Ireland, added: “Retailers need to consider a myriad of external influencing factors happening in the market when planning their strategies for the year ahead. Shoppers want a consistent customer experience and so retailers must adopt an Omni-channel approach to understand their behaviour, and successfully deploy strategies across all channels.
9. Story Led Advertising
Christmas 2012 saw a discernible shift away from price-led campaigns to story-led adverts. This is likely to continue in 2013 and the key to success will be brands staying true to themselves and to their customers. Craig Inglis, John Lewis Marketing Director, certainly thinks so. “If I look at retail brands this Christmas I would say overall the retail industry has upped its game. The ads are provoking a reaction and trying to tell a story, which is a good thing.” There is no doubt that today’s savvy consumer knows what a retailer stands for and expects to receive that brand experience, no matter what channel they are engaging with.
2012 was a challenging year, but with a defined multi-channel internet strategy there is still huge potential for retailers in 2013.
Nigel Ashton, Vertical Partnership Manager – Retail and FMCG, Microsoft Advertising UK