Finding Positives In Last Year's Retail Sales Decline

Finding positives in last year’s retail sales decline

Retail sales fell for the first time in 25 years last year, marking the first annual sales decline since 1995. The number of big retailers and brands that have faced declining sales or closures on the high street in 2019 mirrors this.

Last year, the Treasury committee called for a review on business rates to make the high street more competitive again. But the solution needs to be more radical than anything offered so far.

Jacyn Heavens, CEO of Epos Now, points out that Internet giants such as Amazon can afford to focus on customer acquisition rather than product sales. Reducing business rates or making adjustments to VAT in destination countries would change the cost of acquisition and enable companies of every size to compete on a more level playing field.

“However, to really succeed a change of retail mindset is also required,” he says.

“The high street must re-engineer its business proposition around customer lifetime value (LTV) rather than selling product. The way to achieve this is by truly embracing technology to give a similar online experience in-store, maximising the data retailers have to understand customers’ motivations and behaviours in-store, and building loyalty around that behaviour while providing the human in-store experience.

“The high street still has two advantages: experience and try-before-you-buy. And, crucially, the ability to turn their retail estate from more than just a set of stores into the experience consumers can’t get online.

“However, the government needs to step up and help make high street economics make sense in today’s ecommerce world.”

Meanwhile, new research from Capgemini reveals that bricks and mortar retailers have an enormous opportunity to leverage the distinct benefits of in-person shopping, as automation technology could help them find a competitive advantage for in-store retail and increase sales.

In fact, 56% of consumers overall and 63% of Millennials prefer going to stores over shopping online if automation makes the in-store experience fun and engaging.

Capgemini’s key findings include:

Consumers value the convenience and efficiency of automation, solving pain points in-store and boosting sustainability including long checkout queues (66%), difficulty in locating products (60%) and products being out of stock (56%).
Consumers surveyed said they would prefer to shop with retailers who use automation to reduce food waste (69%), reduce consumables such as printed receipts (63%) and improve energy efficiency (58%).
Retailers need to be rigorous about understanding customer needs and concerns. While 59% of customers said they would avoid a store if it was using facial recognition to identify them, just 23% of retailers thought this would be the case.