Interesting news from the Uk where Tesco shares tumbled 16% after it said it was “disappointed” by its seasonal trading in the UK. Like-for-like sales, which exclude the effects of new store openings, fell 2.3%, excluding fuel and VAT. Tesco warned that it expected “minimal” profit growth for the current year as it increases investment, especially in the UK. Total group sales for the seven weeks to 7 January rose 5.2% including petrol and 4.0% excluding petrol. The supermarket warned that its profits for the year would be “around the low end of the current consensus range”.
So what accounts for the travails of the retail behemoth?
Well,as this piece from the Gurdian last week suggets, quite a lot and things are unlikely to be the same again.
According to leading retail analysts, more of us – cash- and time-poor – will be turning to the internet. And major retailers are already adapting.
The admission by Tesco’s chief executive, Philip Clarke, that the potency of out-of-town hypermarkets was waning, and the internet is now dictating strategies, is no surprise to those with an eye on the behaviour of British consumers.
The Interactive Media in Retail Group (IMRG) estimate a £68.2bn online spend in the UK in 2011 – a 16% growth on 2010. “Compared to offline, it is a massive thing,” said the IMRG spokesman Andy Mulcahy.
“Click and collect”, where customers can reserve items online and pick up in store, represented 10.4% of all orders placed in the third quarter, up from 7.4% the previous quarter.
Mobile shopping is also increasing rapidly. Around 15% of Google search queries now go through mobile devices – including iPads and internet-enabled Kindles, said Mulcahy. “Both sold really well over Christmas, so expect that to rise.”
Shops hoping to capitalise on this are offering free wireless connections. Mulcahy said John Lewis is “really going after the mobile online sale” by inviting customers to do an in-store price match. In-store “virtual mirrors” are turning shopping into a social network, he added, where customers can drag clothing items on to their reflected virtual image, post this to Facebook or other networking sites, and get instant feedback from friends.
Technology is also being developed into the tracking of mobile phone users in shopping centres, as well as enabling viewers to buy items through digital TV and interact with adverts. Contactless NFC (near field communication) technology in smartphones enables shoppers to pay without using cash or a card.
But, said Mulcahy, the growth of online will not see the end of bricks-and-mortar shops. “It’s just going to become more blurred. The two will fuse together.”
David Gray, retail analyst at Planet Retail, agrees there will be an acceleration of click and collect. “It’s really taking off because it is more convenient than having a home delivery.”
The indications are that more grocery shopping is also shifting to online. He predicts more “dark stores” – supermarkets where the public are banned as staff fill trolleys for thousands of online orders. Retailers will be forced to compete heavily on delivery prices.
“The home delivery market has been growing at double digits. It’s going to continue growing for the foreseeable future,” said Gray.
He believed that the likelihood is that, in five years’ time, more people would be having a fortnightly shop delivered, and topping up from convenience stores such as Tesco Express and Sainsbury’s Local stores.
“Out-of-town hypermarkets are having less impact because people are buying online, and then they are topping up in convenience stores,” said Sarah Peters, lead retail analyst at Verdict Research.
“Transport costs are that bit more expensive so people don’t want to have to drive … there will still be out-of-town supermarkets, but there will be more of a focus online. More ‘click and collect’, more buying under one roof with people shopping for non-food and food at the same time. It will be the specialists that will suffer.”
Andrew Simms, of the New Economics Foundation, and author of Tescopoly, believes supermarkets of the future will also be influenced by so-called “amateur economics” and a backlash against “the big, impersonal, alien shopping experience”.
“One of the mantras of the amateur economy has been the need to repair, reuse, renew, recycle. Initiatives such as Freecycle will have an impact,” he said.
“In the future I think shopping patterns will be more diverse. It is entirely possible you will be doing more shopping online, and entirely possible you will be doing more shopping locally, from more different players as well.
“The age of the monthly or fortnightly super-shop is gone. And the future, driven by both choice and necessity, will be one of greater diversity and greater plurality.”
He added: “The supermarkets will not have it their own way in the future, in the way that they have had it for the last 15 years.”
So that’s the view from the Uk. As we know Retail in Ireland is struggling badly and the recession has laid the Main street’s of many an Irish town to waste. The future while different will be challenging but will also present opportunities. What do you think these will be and how will the retail landscape in West Cork change in the future?
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