clarks back foot

Is your retail strategy on the back foot?

Welcome to a week when retailers look back in hindsight and wish they had started the process sooner.

Clarks are reviewing their estate with a view to exiting sites that are no longer paying back. Asda are looking at another quarter of sales declines and are questioning decisions of times gone by, regretting being over-zealous when they trimmed muscle along with the fat.

clarks back foot

A retail strategy review is underway in both retailers, and will take them forward. The regret is that it is a reactive review and not proactive.

Hindsight is a marvellous thing.

The fact is it is typically when a retailer finds itself in a challenging position that we are called in. They are looking for an objective point of view and solutions to restore the business to growth, reactive rather than proactive. The back foot is an awkward position to push forward from and means you are off to a slower start and are playing catch up.

If it ain’t broke, don’t fix it.

But then inevitably it does break. Retailers should be continually revisiting its retail strategy, tweaking and testing to move into the next gear. A static strategic plan, is a static retailer. It does little to prepare a business for the future and does little to protect a business from what will be coming around the corner.

Preparation is key. No, actually evolution is key.

A business that is continually evolving, re-assessing the market and its customer’s needs is one that will out-pace its competitors. While it will not be 100% right 100% of the time, it will be better prepared for change, more agile and more proactive. It will be a business that doesn’t put up barriers. It will be a business that is positioned for growth.

Our advice to retailers in a reactive position is to identify the problem, address it but be proactive from here on and build in regular temperature checks when the retail strategy is assessed and tweaked.

While the retailers in this week’s headlines try to push off from the back foot, we would welcome the opportunity to help you get onto the front foot and help you discover the value of evolving.

 

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Asda leaving market share on table for Aldi

Research published this week by Shoppercentric reveals that customers rate quality and service over price as critical factors in determining where to shop.

In the same week, Aldi reach new highs in market share overtaking Co-op into 5th position in the UK grocery market.

Coincidence?

Aldi and Lidl were in the right place at the right time, with discount prices on everyday grocery items. Price was critical at the height of the economic crisis and those prices were hard to ignore. Asda held their position well in those early days also benefiting from their price positioning.

In today’s market however quality and service are taking a lead. And Asda’s market share is still dropping.

Aldi have found a sweet spot

Prices are low, quality messages and premium products are evident and have traction and customer service is acceptable. What Aldi lack in time at the till, they make up for in friendliness and well stocked shelves with staff on hand and willing to point you towards your desired produce.

Asda have relied too heavily on price and haven’t been keeping pace with customer’s need for quality and service.

In the same Shoppercentric research, convenience stores saw the biggest gains (47% of shoppers used them in the past month – an increase of 4% on 2016) compared to supermarkets. Asda are in need of a convenience format if they are to regain lost market share. It is highly unlikely that they will launch a new format directly, but it has been mooted that they might buy a facia to occupy that space.

Asda can buy into the convenience sector can they buy quality and service?

Service can be addressed. Our productivity model has saved retailers millions of pounds already that has been re-invested into the business to support customer service and operations. It allocates resource appropriately across stores and schedules labour hours to maximise efficiency at store and department level. In store availability is improved, customer service is optimised and margins are supported through cost reduction.

What productivity modelling can’t do on its own is change organisation culture and quality perception. If there isn’t a customer service culture, change must come from the top and quality perception can come through marketing and an adjustment in key messages.

Aldi operates a model that Asda can learn from. Asda has brand equity that can be leveraged and together with operational effectiveness can deliver the growth that has been lacking. Naturally there is the temptation to look forward and guess how close Aldi could get to Asda’s market share. Closer than it is now is a certainty, but how close depends on Asda.