What Next For Retail Sales? After A Strong February, What Dangers Lie Ahead?

February saw retail sales grow at their fastest rate in over three years, up 4.4% on the same period last year and up 2.3% on January.

There is little doubt that reasonably fine weather brought more people onto the high street.

Sales were not necessarily small items either, with bigger ticket sales, electronics and white goods all showing a positive uplift, however general food and domestic consumables continued to be sluggish. The impact of the horsemeat scandal and concerns over meat and processed food undoubtedly had a negative effect.

However, it pays to take a closer look at what makes up this growth in sales. It is easy to associate shopping and retail with the high street, however on-line sales were 10.9% up on February 2012 which itself was 9.9% up on February 2011.

The trend toward internet shopping appears unabated and a permanent shift in buying habits appears to in place.

Why The Internet?

It is often thought that price is the main driver toward internet shopping. However, it is noticeable that there is often minimal difference in price, with the high street now competing with on-line retailers in the price stakes.

There is also little argument against the fact that the consumer still likes to touch and feel their goods, with clothing they like to see and hold the garment. This is a tangibility the internet cannot compete with, a high street USP.

The main successes on the high street also have a noticeable on-line presence. Take sportsdirect.com who have a significant high street and on-line presence, as do Next, Debenhams, John Lewis etc. There is certainly mileage in having a foot in both camps, exclusivity is no longer required.

The Net Generation

The younger shopper, or Net Generation, have far different attitudes to spending than their parents, or those before them.

It would be easy to think of the under 20’s being centered on internet shopping. However, research says that this generation actually appreciate the high street. The difference is that their expectations of it are different.

Touching and feeling the product is important, as is knowing more about it and seeking value. It is here that the internet comes into its own. With the high street competing on price, the next hurdle the retailer has is to offer value and for their frontline staff to know as much about their own product as their buyer does.

Service and Value will be core drivers of future high street success. The internet can offer both, a thank you when you purchase and a follow up to let you know your goods are on the way, this is often followed by another contact ensuring receipt and offering incentives for repeat business.

The question for high street retailers is ‘What are you doing to match this?’ The age of transactional retailing is gone, the age of relationship retailing is now here.

Is There No Turning Back Now?

A strong February is undoubtedly good news. Consumer confidence remained static in February, however confidence over personal finances rose, which might explain the shift in retail spending.

The next hurdle is the upcoming budget. If, and this is a big if, the consumer is left feeling confident and that they have more cash to spend then we may be able to see a brighter future in the retail sector, however to say that the uplift is permanent is far too early to call.

If we can add a sensible but positive budget to a retail environment that offer relationship selling, then maybe, just maybe, the UK retail sector could be on the road to permanent recovery.

What Next?

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