Despite promises of growth, a gradual expansion of the nation’s economy and unemployment figures hitting record lows mean consumer spending continues to decline.
Retailers have a leading role to play in offsetting this slump in spending, especially when it comes to rebuilding consumer confidence during economic uncertainty. An effective way to tackle the problem is to adopt more innovative approaches to improving productivity, with the adoption and scaling of new technologies playing a major part in this. In the face of intense pressure in the market, it can sometimes be tempting to cut back on innovation and play it safe, but the rewards for implementing fresh methods can be significant.
Conversity has created a paper exploring the dual challenge of addressing the decline in productivity and consumer spending alongside the leading role that intelligent guided selling and technology has to play in improving sales conversion rate, average transaction values, employee knowledge, and the overall customer experience.
This blog is the first of three presenting a snapshot into what is a complex position for retailers across the UK. You can download the full paper ‘Mind the Gap: Overcoming the Consumer Spend and Productivity Squeeze’, here.
A retail organisation’s ability to maintain competitive advantage relies heavily on how effectively it can persuade customers to make purchases and to make them frequently. This blog focuses on ‘The Consumer Spending Gap’, aiming to paint a picture of today’s retail world in terms of how consumers approach it, and how their behaviour has evolved in recent years.
The Consumer Spending Slump – Painting A Picture Of Today’s Retail World
The inexorable rise of online
While the high street has taken steps to maintain its appeal to the modern-day consumer, online and mobile channels are increasingly dominant, and have subsequently come to have a defining role in how people shop. The rise of online and mobile has truly brought convenience to the fore: shopping habits have evolved due to the relative simplicity of the ordering process, and customers are free to shop at any time of day they wish. Consumers are more demanding than ever when it comes to the level of service and personalisation.
“44 per cent of consumers would make a repeat purchase after receiving a personalised experience.” – Survey by Segment
It is of paramount importance that retailers have the strategy, infrastructure and technology in place to make the most of the online and mobile channels. This does not mean simply providing personalised offers, but going a step further and making sure the entire shopping experience is tailored to the needs of each individual customer.
Takeaway: personalisation is now an expectation. Use strategies and technology such as IGS platforms to truly build exacting profiles of your individual customers.
The high street: down but by no means out
Forget the word on the street; it’s impossible – and naïve – to discount the role of the high street entirely. For many retailers, maintaining bricks-and-mortar stores is essential for ensuring that the needs of their consumer audience are addressed. Fashion retail, for example, thrives on the premise that customers often want to see and try on products in real life before making a purchase.
Demand for physical stores may not be as great as it once was, but there remains an appetite for it, and there are signs that positive evolution is taking place. Concept stores, plus the many retailers looking to reconfigure the experience and increase footfall by opening additional leisure facilities, such as coffee shops and restaurants, within their stores means that other retailers should consider it as an important area where the decline in consumer spending can be tackled.
Takeaway: if approached correctly, maintaining bricks and mortar stores should be viewed as a huge opportunity for retailers, but it’s time to do away with traditional shop models. Be disruptive and reconfigure consumer experiences in store.
The consumer spending conundrum
Despite the wealth of options consumers now have when it comes to shopping, consumer spending is far from positive, or indeed, predictable.
Black Friday, for example, was highly anticipated by retailers as being the busiest shopping weekend of the year, with customers expected to flock to physical stores, websites and mobile apps in order to take advantage of a plethora of discounted products and special offers. The reality was very different, with the latest Retail Sales Monitor showing like-for-like retail sales rising by just 0.6% in November compared to the same period in 2016, with this small growth attributed largely to food sales.
Takeaway: Brexit uncertainty, spiralling inflation and declining real average weekly earnings mean consumers are really feeling the squeeze. The spending conundrum continues and retailers need to enhance the customer experience so it goes well beyond an attractive product image or compelling special offer. This applies not just to promotional events such as Black Friday, but also to a company’s year-round focus on securing and maintaining customers.
Levelling the playing field
Of course, consumer spending is being affected by factors well beyond the direct control of the retail sector, but this is not the time for retailers to roll over and accept what they may deem inevitable.
Attracting customers during difficult times requires retailers to free themselves from traditional shackles, and instead start thinking about creating an element of theatre – wherein shopping for and buying products is a highly informative, personalised experience. Retailers must demonstrate a genuine desire to take customer experience to a new level.
Speed is also crucial to customers: service needs to be delivered to customers in a manner, which is streamlined, efficient and hassle-free.
The modern customer is much more likely to demand a tailored, seamless shopping experience and this is where intelligent guided selling technology comes to the fore; customers can receive comprehensive advice on the products in which they are interested, which guides them through complex purchases, speeds up their decision-making and increases the chances of initial interest being converted into a sale.
Takeaway: IGS tech is a retailer’s best friend if they want to drive loyalty, purchases and a seamless shopping experience – start researching and investing.
We hope you enjoyed this first delve into the consumer spending gap. Remember you can also download the full paper, ‘Mind the Gap: Overcoming the Consumer Spend and Productivity Squeeze’.
Up next week, ‘Mind the Gap – The Power of Productivity.’
To discuss any aspect of your guided selling strategy and technology, get in touch with our team here at Conversity
The Conversity Team