Retail leaders are presented with endless shopping lists of potential investments, with winning strategies a delicate balance between reaching for the immediate low-hanging fruit and keeping one eye on what is on the horizon.
As we have discussed, new stores or store refurbishments are paramount for the industry going into 2024, despite the ongoing influence of digital on the shopping experience and ecommerce’s growth as a percentage of total sales since the pandemic.
More than half of the retailers surveyed cited some kind of investment in stores as a top three priority for next year. For Jigsaw, a few more stores will be added to its existing 46 sites in 2024, with chief executive Butterwick citing the importance of continuing to surprise and delight customers in the physical space.
She says: “We have trained our teams in stores to give a phenomenal service and provide the narrative that goes around the collection. A lot of our customers are people that know those store teams well, so they like to come in to visit them; they feel like they are part of the family.
“And I think there’s so much more we can do around product knowledge, entertainment, experience.”
ONS figures show the number of retail staff at the end of 2022 was down by 14,000 year on year, highlighting the influx of people leaving the industry in the aftermath of the pandemic. The British Retail Consortium (BRC) said the reduction in the workforce was also due to retailers trying to keep operational costs – and therefore prices – down during the cost-of-living squeeze.
The industry clearly must do all it can to keep staff motivated and engaged. The BRC said not all sectors have been impacted by staff departures, pointing out how “ongoing digital transformation has led to the creation of many new well-paid and exciting jobs”. Nevertheless, the retail leaders questioned are prioritising staff development to help retain the best workers.
The BRC has talked up the notion of “fewer but better jobs” as digital continues to reshape the retail industry. This is something the chief executive of a premium fashion retailer is addressing by not constraining the company’s talent to solely traditional retail.
“We’ve trained and tooled up our store teams to be able to handle all the online customer contacts,” they say.
“They are in the store and maybe there are not as many people visiting stores as there used to be. So, the whole model of sitting with your fingers crossed, hoping that someone is going to visit the store – that’s what we've changed. This is about tasks that we traditionally performed in head office; why can’t we give those tasks to teams that are based in stores around the world?
“The big prize is allowing our store teams to do more for the business – that’s a really good productivity thing. We’re connecting store-based teams with customers, regardless of how customers shop the brand.”
Suleyman says Hawes & Curtis is putting more customer service-related staff in its stores. “We are putting in more staff for customer service for suits,” he explains.
“So, as a business, what we decided is the costs might go up a little bit in relation to those stores, but we think in the long term they will pay off.”
Julie Abraham, chief executive of Richer Sounds, said staff training and development is “always a top priority” because the business has identified that the “better and happier our colleagues are, the better the business is”.
“Whether it’s [investing in] customer service or selling skills or product knowledge or an Excel course – and we’ve got a few people on different courses this year – that’s always a top priority. We don’t open our stores until 12.00 and that gives staff time to train,” she says.
For Jollyes’ Wykes, one of the top investments is “not passing on the price rises that we’re getting from our suppliers to maintain that pricing edge versus our competition”.
This is another example of a retailer seeing the route to success in 2024 as really focusing on value for money for the financially squeezed consumer.
“We have trained our teams in stores to give a phenomenal service and provide the narrative that goes around the collection. A lot of our customers are people that know those store teams well; they feel like part of the family”
“The better and happier our colleagues are, the better the business is. That's always a top priority”
“We consciously build significant capability and investment in that space. Because, in the past, we didn’t do much of that and it was not good commercially”
Getting the message out
A notable number of retailers cited brand messaging and marketing as a priority for 2024.
Last year, when we asked retailers which marketing channels they spent any budget on, 86% of retailers said pay-per-click (PPC), 84% said SEO and 82% referenced Instagram and email marketing. Facebook made up the top five, with 76% using it.
This year, SEO and email marketing (both 93%) topped the list, followed by Facebook (90%), Instagram (85%), and PPC and affiliate marketing (both 83%).
Although this is in a different order to 12 months ago, this year’s interviews show digital marketing continues to rule the roost among UK retailers.
PPC, email and SEO are the channels where the most money is currently being spent.
Henrietta Rix, chief executive and co-founder of womenswear brand Rixo, says it is important to tailor ads on different channels and to different cohorts of customers.
“We target our content in different ways for where they are in the journey,” she notes.
“If someone’s only just discovered Rixo, they'll get a lovely brand message. At consideration, they’ll get something that might tempt them a little bit more and then when they go into purchase it really is the whole free returns message.”
Avon is currently embarking on full-funnel marketing, with the brand back on TV ads for the first time in around 10 years. It is also investing in influencers, social media and other digital channels.
Kristof Neirynck, global chief marketing officer and managing director for western Europe at Avon, says Facebook, Instagram and TikTok drive a lot of conversion.
“We consciously build significant capability and investment in that space. For a brand like Avon that is built on community, showing up authentically on social media is a huge commercial opportunity.”
One convenience chain chief executive also talks of the increased sales within its stores due to TikTok activity. One such viral video led to more than 2 million views and resulted in “a sales increase and customers travelling across the UK to visit a specific shop”.
The Perfume Shop’s Smith says: “We see our strongest conversion and ROI coming from our affiliate network – we are seeing an increasing number of customers looking for great value and turning to voucher codes, cashback and rewards sites to stretch their wallets further.”
Digital remains a crucial marketing channel, but there are several changes influencing this landscape that will come into effect by the end of 2024, including the depreciation of online cookies on Google Chrome as the search giant looks to tighten privacy and user experience.
Retailers are aware of this change and the ongoing evolution of the overall digital ad space, and are closely tweaking strategy accordingly.
Noel Coyle, chief executive of Fraser Hart, hinted at a potentially more complex environment ahead, saying the retailer’s best-performing marketing channel is paid search.
“However, changes with Google Ads, Shopping and Performance Max, and the analysis algorithms are making this increasingly difficult to measure or quantify.”
Multichannel retailers should remember, though, that consumers don’t see channels. The more retailers can use their messaging on each platform to support other parts of the business, the stronger their brand can be.
As Benefit’s Bennett says: “As we see the role of social evolve at an accelerated pace, we see customers explore and discover through their preferred social channels and come to store to validate the results of their exploration.”
At Majestic, store managers run their own localised Instagram accounts to raise awareness of store events and promotions, which Colley says is a powerful way to engage with the communities the retailer’s stores reside in.
“We encourage our colleagues to engage with customers in their local market by posting if they have got a tasting going on, what is trending in their area or what their own favourite wines are,” he says.
“They might do videos or we give them collateral to use if they need it – this strategy has gone incredibly well and we will continue to invest in it.”
AI OK?
Generative artificial intelligence (AI) tool ChatGPT has been a hot topic of discussion online since it was launched in December 2022.
The brainchild of Elon Musk’s AI research and deployment company OpenAI, ChatGPT is a conversational AI chatbot that answers questions with sophisticated responsive prose. Retailers are interested in ChatGPT for generating web content and emails, and as a tool for teams to speed up research and creative functions.
Although AI has been deployed by IT teams for years to automate tasks and crunch data, ChatGPT marks the tech growing up into a tangible method for helping the wider retail business. This means AI is more on retail leaders’ radars than ever before.
We’ve picked out four retailers who identify it as an investment area going into 2024 and beyond.
AI as a priority
THG’s Moulding says the group will be using AI for “all forms of forecasting”. He says: “It’s a lot more complex than just stock – it’s the whole supply chain – but AI can chew through that data faster than humans can, so we will be using it.”
Another digital native business leader we spoke to was The Edit LDN’s Rashid, who says: “We’ve actually built our warehouse management system proprietary, so it has all of that [AI used for forecasting] included.”
AI in the pipeline
Ann Summers, which is currently building its IT team under the leadership of technology director Jeanette Copeland, says investment in AI is inevitable.
“We’re using data to build dashboards, which will improve our forecasting and make our warehousing and logistics operation more efficient,” explains Hollins.
“We’re looking at dimensions, volumes and frequency of purchase of our product, working out how to store it most effectively in the pickface, with regards to size, number and location of pick bins, which will optimise the efficiency of storage and picking. We are really at the start of this, but it will be data- and AI-led.”
Shona Jameson, chief marketing officer at Cotton Traders, says AI could influence the business in several ways.
“One area we are currently looking at is how we can support our creative team – we have a very strong internal creative department where we run all design, artwork and reprographics.
“But there are some significant developments in the AI technology that actually improve our ability and speed of image turnaround, which in turn retains the workforce but also improves efficiency and volume throughput.”
AI caution
There are words of warning about getting too carried away with technology hype, though, from Wiggle’s Crwys-Williams.
“It’s such a buzzword that a lot of the stuff out there that is called AI probably isn’t really AI,” he cautions.
“That stuff is going to get more and more advanced, so as Oracle updates its algorithms – we’re on their cloud product – it just immediately filters through to what we do.”
Reflecting many of the interviewees’ thought processes around AI, Richer Sounds’ Abraham notes: “I think it’s too soon to adopt AI. We are investigating but would rather sit back, watch others use it, and then we’ll get in when we feel more comfortable.”
For chapter 4, click on A global comparison below
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