The Retailer Winter Edition 2023

THE RE TA I L ER

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PRICE ISN’T EVERYTHING

Chris Field Managing Editor Retail Connections

P rice is only the start of the journey to retain and grow market share in a tough economy, says Chris Field, retail analyst and editor of Retail Connections.

Now consumers look for more; nearly two thirds of the respondents in a study by Pricer showed that they wanted more access to product information rather than just price. And even when they are looking for price, if it is inconsistent with the price on line, theywill oftenwalk away, nursing some big trust issues that may not see them return. Meanwhile, over half will walk away from a high consideration purchase if there is not enough information to help them. While they have been around for many years, and widely adopted in mainland Europe, it is only now that UK retailers are implementing elec tronic shelf labels (ESLs), because they are a key technology in helping to protect margin and grow market share. First of all, prices need changing not just day by day but often hour by hour, depending on what shopper demographic is in store. With ESLs this can be done universally and instantly, which is a huge labour saving over printing and replacing paper labels. The labour savings continue by adding flash technology that enables staff with hand held devices to identify products on shelf instantly, essential as more and more of them are now deployed to pick for on line orders. And because everything operates on the same platform, it is easy to report on the status and performance of every label and associated application, and to demonstrate how each is contributing to the organisation’s big KPIs – sales, margin, productivity. So it’s good for retailers, as they continue to struggle to find staff and are having to raise wages for those they have, as well as good for customers, whose shopping journey, that maywell have started on line, gives them the experience they now demand. The next leap forward for tech in retail is data and we are already seeing artificial intelligence (AI) transform the fundamentals of good retail operation, specifically replenishment to improve availability, ranging and assortment and waste management. The challenge right now for retailers in the midst of a cost of living crisis, is how to operate affordably while satisfying the needs of a consumer that has never been more demanding and hard to predict. The good news is, for those companies able to manage the politics that entrench the old siloedways of doing things, a newgeneration of retailers is emerging that is entirely at home with data-driven decision making and one that is not remotely threatened by the fact that the customer is shopping through more and more channels. Of course price will always sit high on the consideration list but those retailers able to communicate the whole value and values story, will have nothing to fear from those competitors for whom low price is their only weapon.

This introduction might have been written the same at any time over the last 30 odd years, so saying that price is the single determining purchasing factor has probably never been true. And while consumers clearly look harder for lower rises in a recession, a growing range of other factors now applies. Exactly ten years ago, a company called Shoppercentric did some research to show that while a quarter of the consumers they surveyed looked for the lowest absolute price, 28% sought value in getting the largest quantity for the money they planned to spend. Meanwhile, 21% saw value as getting the best quality within their budget. Today, the range of purchase factors has clearly grown and we can now see that they continue to apply even when budgets are tight. For instance, consumers’ desire to be more sustainable is already built into many of the decisions they make when shopping, even to the extent of paying more. Deloitte has found that about a third of consumers will choose brands with ethical practices and another third will stop buying products that are not. AYouGov survey adds that 54% of UK consumers will pay for environmentally friendly products Built into these decisions are other more recent factors such as saving money by repairing an item rather than replacing it; buying second hand because it is not just better for the environment or reflects my desire to stand out from the crowd, but is cheaper as well. Another factor is seasonality of produce with Deloitte in the same research discovering that 54% will buy more seasonal produce, rather than eat strawberries all year round. These are just some of the consideration factors that consumers consider consciously or unconsciouslywhen they buy andwhile most retailers will be more explicit on price, value is what those consumers are looking for. Therefore, key to competing is how retailers communicate both value and values, something that comprises a further subset of elements, including ingredients, diet suitability, pack size, brand, sustainability. What this all means is that the shelf edge has a lot of work to do and in a previous age, when consumer tastes were broadly similar, where they changed very slowly, where choice was limited, and where price was king, the humble paper label was about all that was required to communicate the one key message – price.