The festive season is traditionally the busiest time of the year for retailers. However, this was not the case for Morrisons, one of the UK’s biggest retailers, who saw sales declining by 3.1%. In January sales continued to decline and on the back of this the CEO has resigned. According to an article on foodmanufacture.co.uk, it is the big four that are in trouble. Sainsbury, Tesco and Asda all appear to be consistently losing market share too.
By contrast, smaller retailers such as Aldi and Lidl have reported strong sales growth. Similarly it appears the demand for specialist and luxury goods is also on the increase as Marks & Spencers and Waitrose continue to show positive sales figures.
But what does this mean for the UK retail market? Is it in decline or is the market simply changing?
The fact that smaller and specialist retailers are showing strong growth is indeed a positive indicator for the industry. There are many people that feel that the retail industry has been dominated by the big four for far too long. Now as smaller retailers start to make their presence felt there are many that stand to benefit.
Consumers hold the clues
Consumers who are driving this market shift perhaps have the most to gain. Trends show that consumers do not necessarily always decide by price, but rather that quality, value and customer experience also play an important role. With online stores and social media it’s incredibly easy for customers to shop around and compare prices and service, without even leaving their front door. There is an increased focus on convenience, offering products and services that help make the customer’s life easier. Customers are consistently asking: “What’s in it for me?” They are wising up to loyalty programmes that only pay lip service to benefits and won’t waste their time shopping in a store that has long queues, inefficient systems or poor service.
Opportunities for suppliers
More importantly though is what it means for industry suppliers. As with customers the shift to smaller or specialist retailers is good news. This shift is expanding the market and providing opportunities to expand markets share. When the bigger retailers dominated the industry it was difficult to launch new products or expand product lines as the retailers operated by their own set of rules – which the suppliers most often had to comply with or risk losing supply contracts. Now with new and more innovative retailers making inroads into the retail market, suppliers may have more room to manoeuvre when setting up new supply contracts.
While the big retailers might be grumbling about the shake up, they are also the ones being left to play catch up while the smaller retailers are leading the change. For anyone working in the industry this can have positive spin off’s as it is opening up new opportunities for innovative thinkers and savvy marketers. By daring to step outside the traditional retail mould and offer products and services that are in line with trends, smaller suppliers and retailers can help stimulate growth that in the end will benefit the industry as a whole.