Despite prices rising by 9.1 per cent a year in the UK - the highest rate for 40 years, and the Bank of England warning that inflation might reach 11 per cent within months, consumers are still looking to enjoy the summer months, making the most of the hospitality, retail and travel industries being fully reopened.
In fact, thanks to high employment, wage inflation and bumper savings amassed during various lockdowns, the health of the retail sector remained robust at the start of 2022, as consumer demand slowed less than expected, according to KPMG/Ipsos Retail Think Tank (RTT) members.
Monitoring consumer demand
Despite this, there’s no denying that the cost of living crisis will lead many consumers to rein in non-essential spending as we approach the winter, meaning retailers need to do everything they can to attract shoppers in-store.
At the same time, the cost of doing business continues to increase thanks to the return of full business rates, utility bill price hikes and a national insurance rise.
With profit margins tight, many have realised that the basic assumptions and theories they might have relied upon pre-pandemic to predict demand, footfall and sales are no longer sufficient, with reliable data now a vital aspect of future planning.
For example, footfall counting systems that can record the exact number of people entering and leaving the store on an hourly, daily, weekly and year-on-year basis will help retailers gauge the number of staff required in-store, allowing them to quickly pivot should demand suddenly change.
These systems can also provide a clearer picture of customer behaviour, how it’s changed and how it might continue to change over the coming months. With this insight, retailers can take action to decrease things like dwell times or prevent shoppers leaving the store empty handed, perhaps reconfiguring the layout or grouping certain products together.
Looking beyond this, footfall counters enable retailers to make the best long-term strategic and operational decisions, including improving merchandising and store displays, optimising staff resources, and maximising sales and conversion rates.
Providing an experience
It’s important to remember that there will be strong competition from the hospitality and leisure sectors as these industries also look to capitalise on pent up consumer demand, potentially leading to spending being diverted away from the retail sector.
To combat this, retailers should consider putting on special events, displays or deals, as many did over the Jubilee Bank Holiday weekend. These small touches can go a long way in providing the much needed escapism sought by consumers.
Of course, these events take time and resources to plan so it’s important to know if they’ve been a success. With the right technology in place, retailers can effectively track a range of KPIs, such as any sales increases or the impact on footfall to help decide if they are worth pursuing throughout the year.
Personalising customer interactions
Throughout the COVID-19 pandemic, data-driven personalisation became synonymous with online retail. Now, online retailers, such as Amazon, can remember previous orders, suggest items that may also be of interest or alternatives if a person’s first-choice item is out of stock.
For bricks-and-mortar retailers offering this level of personalisation isn’t always as straightforward. Smaller retailers may know their regular and most loyal customers by name and potentially remember what they tend to buy, but this relies a lot on the in-store associates memory.
The application of AI to shopper footfall data can help calculate the split of customers in terms of gender, dwell time and sentiment and is proving effective in allowing retailers to deliver the kind of personalised experiences shoppers receive online.
The technology allows brands to channel their sales and marketing efforts towards those customers who are most likely to convert and achieve better ROI at a time when your own budgets might be stretched. Similarly, this insight can be used to offer consumers the opportunity to attend store events or sign-up to deals that they might be interested in - creating powerful personalised experiences.
Ultimately, with so much uncertainty on the horizon, retailers need to be doing everything they can to not only capitalise on consumers' current desire to spend, but also put measures in place to help combat the challenges we are likely to face over the winter months.
For more information on Ipsos Retail Performance, visit www.ipsos-retailperformance.com.
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This article was also published in The Retailer, our quarterly online magazine providing thought-leading insights from BRC experts and Associate Members.