The first half of 2009 has been a mixture of lows and not-so-lows for the retail industry. Dr Tim Denison, Director of Knowledge Management at Synovate Retail Performance and Clare Kemsley, Managing Director at Hays Retail, look back and dare to look forward.
As retailers start preparing for Christmas 09, so comes the temptation to start making predictions. However, following an extraordinary start to the year preceded by an even more extraordinary Christmas 08/09, trying to stab guesses at what we can expect next is likely to be no more reliable than a British Summer weather forecast.
Unpredictable consumer behaviour has left retail professionals unwilling to hedge their bets in 2009. Months of dismal sales across the majority of retail sectors have then been followed by the odd renaissance – March and April in particular – only for sales to start falling away again with little explanation of why. “Retail is a volatile environment and is a reflection of the fragility of the customers’ moods. Job security, the weather - it can all affect the state of flux and there really is no stable trend. The fact that this is then coupled with a recession makes for a bumpy ride,” says Denison.
A number of retailers are bringing in new customers and reinforcing customer loyalty with a certain necessary evil, says Denison: “Promotions are successful but are usually at the expense of retailers’ margins. However, in this climate they do what they say on the tin. Overall, lower prices are the new reality. Consumers are looking for special promotions before spending and retailers have to be much more creative in marketing their business.”
In response to market conditions, retailers’ expectations of staff have grown and they are being very specific when recruiting. Kemsley says while it might seem obvious, retail professionals need to be savvier than ever before: “In a market like this retailers can only survive with top quality employees. Particular attention is being paid to the recruitment of store managers and trainee store managers, where the criteria has become much more challenging. We are seeing evidence of longer interview processes, more probing questions, and a need from employers to see solid evidence that candidates understand the product and the market.”
Denison agrees that retail professionals must move towards being much more adaptable: “It is more crucial than ever for retailers to be able to engage with a customer, appreciating that what the customer wants and needs is changing on a daily basis. A successful retailer will have a shortcut through to the shopper’s mind and is simultaneously adaptable in their business processes - what worked one week, might not work the next. Retailers and retail professionals must look at everything with fresh eyes again, again and again.”
The demise of familiar high street brands such as Woolworths was a sore reminder that nothing is forever and Denison says it has been a huge reality check: “While the news is old, the scars are still there. Retailers have had a harsh reminder that they cannot exist on sentimental attachment alone – if people aren’t shopping, they can’t trade.” It’s not all bad news though, says Kemsley, as those retailers that were better prepared continue to do well, “Retailers that have remained focused and disciplined, know there client base and stay true to their brand are all showing resilience.”
In terms of roles available for retail professionals, Kemsley says that some employers are using the recession to upskill their workforce, bringing in new talent to not only see them through the downturn, but also to ensure longevity of the brand in the future: “A steady flow of jobs over the last three months has given us reason to be positive. There has been an increase in the number of head office roles – namely buyers and merchandisers. Junior roles have fallen slightly, as has the interest for them, and we expect that this is largely because of negative press around the industry. Young people are perhaps cautious of starting a career in retail because they are aware that there are fewer jobs in the market.”
Recruitment levels vary regionally across the UK. The South East (with the exception of London) has suffered the most. Much of the financial sector and multiple retailers are based in the South East and as jobs have been lost, less people have been spending. Denison reports that in some areas of the UK footfall has actually improved: “Tourist areas including the South Coast, Snowdonia and the Lake District have been privy to an influx of people on ‘Staycations,’” [a term coined for UK holidaymakers looking for a cheaper holiday alternative than going abroad]. “The exchange rate has worked in favour of the retail market – as a tourist there has never been a better time to come and spend in the UK.”
Denison says there are three key things for retailers to focus on right now: “Retailers must focus on their product, price and service above all. While all equally important, service is the easiest to get right, however get it wrong and you could lose a customer forever.” Kemsley agrees, indicating that the more stringent interview processes are retailers way of tackling this: “Not only must a candidate be able to back up any successful revenue increases with data, both in their CV and in interview, they must, must, must be able to demonstrate strong communication skills and an empathy toward the customer.”
Both Kemsley and Denison agree that those retailers who will survive the downturn and come out even stronger, are those who looked at cost reductions early on. “When the writing was on the wall, these were the employers analysing their property, rent and people spend,” says Denison. “Commercially-savvy retailers would have seriously addressed those costs and made sure that what they had in place was feasible for the climate, however long it is set to last.”
For further information about job opportunities visit www.hays.com/retail