Reflection on Retail Performance:Multichannel the big story of the Christmas season

By: Vera Ndecaj BA(Hons), BA(Hons), MBA, MCIPS, PGCert, FHEA

Retail sales growth is being driven by the click of a mouse, rather than the ring of the tills (McCorquodale, 2013).

According to the British Retail Consortium (BRC) UK retail sales were up 0.4% on a like-for-like basis that represents a good overall result in 2013, when they had increased 0.3% on the preceding year. On a total basis, sales were up 1.8%, against a 1.5% increase in December 2012, the lowest growth of 2013. Online sales on health/  beauty, clothing and fashion in the UK grew 19.2% in December 2013 versus December 2012, the highest growth in four years. The online penetration rate achieved 18.6% in December 2013 (BRC 2014). This happened not as a result of economic growth, despite the higher customer confidence level than previous year but as a result of successful marketing strategies that enable retailers to boost sales.  Online sales in December representing almost one in five items sold, proving that retail sales growth is being driven by the click of a mouse, rather than the ring of the tills.

     Multichannel retailing: traditionally retailers used a single channel of customer interaction a physical store expanding to multiple channels including e-mails, phone calls and catalogues. Technology development has lead to innovative way of interpersonal interaction,  in internet and social media,  embedded in our social culture that subsequently open new channels for offering products and services. This is driven by internal and external factors but most important factors are; strategic competitive advantage, differentiation, customer demand, cost reduction, and regulatory pressures.

    Retailing consists all activities involved in the selling process of goods and services to consumers for their personal, family or household use. It is the final stage in a channel of distribution that adds sufficient value that customers are willing to pay a premium for their product or service and this assures profitability.

 Factors that influence the industry.

Large multiples and independent retailers have become more vibrant and customer focus, analyzing industry trends and consumer behaviour during the decision making process has proven to be essential for the industry. The retailing industry paradigm is changing as the global and regional economies are transforming worldwide. It is also in threshold of a big revolution after the social media, internet and technology development.  Physical store improvement and availability of quality retail space, wider brand choices and better marketing communication are some of the factors driving UK retail despite budgets still under pressure. Other factors that influence the retail industry are:

  1. Demographic changes: UK population increase, number of householders increase, householders size decrease, age of population increased, young shoppers facing higher university fees, higher housing costs, but they are more computer literate and spend more on-line.
  2. Changing trends and customers behaviour
  3. Income and expenditure: Retail expenditure is growing faster than income, high level of consumers’ debt, low saving ration, a week housing market, with long working hours plus internet and technology have lead to the huge expenditure concentration in non-store shopping.
  4. Government legislation

These changes required an effective competitive advantage strategy and innovative approach to satisfy customers’ needs and expectations. However, due to increased affluence and mobility, and the rise of internet shoppers who not only shop to satisfy needs, they increasingly shop to satisfy wants as well.  As the retail paradigm change retailing in high street is becoming a queasy leisure experience, which poses a threat to small centres.  Quality restaurants, coffee shops, cafes and bars, as well as health and fitness centres and multiplexes in larger centres, are therefore important to attract shoppers and encourage longer stays and higher spending. Better integration of retail and leisure facilities mutually benefits both sectors.

SIRs have been burdened by the costs associated with new legislation and regulation. They cannot compete with the scale economies achieved by the chain-stores and multi nationals nor can they access comparable global supply chains.  This has pushed them to close stores and invest in their websites and improve delivery time. Although, in order to increase their profit they are using on-line channel that enable them to enter global market and also find innovative approach such click and collect and other approaches  to make a virtue of both their websites and their physical shops.

The Head of Retail at KPMG, David McCorquodale (2013) stated  “December 2013 was all about nerve, retailers who held their nerve and provided a seamless service between channels will feel pleased, whilst those who discounted heavily to force sales will count the cost in margin”.  Multichannel is the big story of the season. This Christmas experience will lead retailers to invest more in multichannel capabilities as a prospect of the future.

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