Collaboration is key to reviving retail

13th March 2014
From Chris Morrison

Sale[1]At the moment, news on whether the recession is easing off is mixed. In December the Office of National Statistics showed an increase in retail sales of 5.3% against the equivalent figures for 2012, the fastest increase in sales in over 9 years. However, February showed a 1% drop against 2013’s figures: showing that we may not be out of the woods yet. The simple fact is that a changing populace, the rise of online shopping, increases in property prices and the continued growth of out-of-town superstores are all combining to pressure retailers. Notable casualties have already included Tie Rack and Blockbuster. In order to survive, and adapt to this brave new world, retailers and suppliers need two things: knowledge of what consumers want and need; and the ability to collaborate and actually provide it.

The simple fact is, consumers are most likely to visit retailers (and buy products) that they trust to give them what they want or need at a price they can afford. Essentially, the more retailers understand about their customers, the more they can meet this demand. In particular, special offers and promotions can both give consumers the products they’re demanding and ideally entice them to spend more once they are in-store.

However, this isn’t a sure-fire way to win back business and increase margins: it requires collaboration at all levels, from manufacturers through to suppliers. Retailers should be able to quickly share their needs with partners who should in turn be able to quickly provide the products needed. If the community between retailers and their partners is working as planned, all parties should be able to see exactly what is needed and when, meaning that manufacturing can be stepped up as needed.

This community is also essential to ensure the products that retailers are offering provide the best possible margins. After all, if a retailer cannot agree deals and terms for products with its suppliers then any reduced prices will cause reduced margins, or even make products into loss leaders. This can become even more fraught if there is a dispute; if the only evidence of a deal is a verbal agreement and a handshake, disputes between both parties can drag on and cost even more than the product brings in. Having a full, confirmed record of all deals and terms agreed will help keep things amicable.

Of course, even with the happiest community around, retailers must be sure that they can respond to opportunities as they occur. While some seasonal offers and products will be easy to plan and predict, such as increased demand for chocolate around Easter, others will require swift action in order to make the most of an opportunity. For example, a single product may suddenly increase in popularity; whether the age-old example of Buzz Lightyear toys, or the current interest in ‘superfoods’. Whatever the peak in demand, retailers need to be able to capitalise on these demands in real-time and agree terms of any promotions quickly with partners so all parties benefit.

Competitive prices alone are not going to save the high street: however, they are a vital element in helping many retailers keep running. If retailers can maintain collaborative, flexible communities they will have a much better chance of survival.

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