United Kingdom: Striving for Relevance After the Crowds Have Gone

By Graham Hales and Caitlin Collins

All eyes were on Britain in 2012. The Jubilee year enticed large numbers of tourists while the London Summer Olympics and Paralympics attracted the highest audience in history. In preparation for the influx of visitors from around the world, the government extended shopping hours, encouraged retailers to open pop-up shops and pledged to support young entrepreneurs by facilitating loans. Retailers stocked up on extra staff to deal with the expected summer rush but, as we now know, the demand never came.

British high streets were already suffering and these events failed to bolster demand. Retail administrations were up by 6 percent, according to Deloitte, including high-profile retailers like Comet, Peacocks, Game, Jessops, HMV, La Senza and Clinton Cards. According to the Local Data Company, in the first half of the year 20 chain stores closed daily in the 500 biggest U.K. town centers.

In response to increased competition and the grim economic climate, retailers are re-assessing store portfolios and continuing to focus on multichannel strategies. Investment in improving the overall shopping experience across platforms has been evident with many stores upgrading online and offline channels. Store revamps have been prevalent across the likes of The Body Shop, Primark, Debenhams and B&Q. For supermarkets, there continues to be a growing trend toward convenience formats as seen by Little Waitrose, M Local and Tesco Express. The role of brick and mortar stores is being assessed by many brands, particularly Argos.

Online shopping has been a growth driver in 2012 with ASOS notably being the first online-only retailer to break into the U.K. top ten. This is no surprise for savvy U.K. shoppers, who make up the highest proportion of online sales in the world, estimated to be around 13 percent in 2012. Brands are revolutionizing the shopping experience by truly unifying the online and offline offers. Burberry is a leader in this regard, having launched its Regent Street London flagship store as a digitally integrated experience. Already we see other retailers inspired by this shift in thinking. Topshop can be noted for bringing a more holistic experience to the high street through initiatives like its “Trick or Tweet” Halloween campaign. The challenge is to get the balance right; those that succeed will be able to target their customers more effectively through multiple channels.

Combining a multichannel experience with a sustainability focus, M&S is a brand that is setting new precedents for the retail experience. Determined to become the world’s most sustainable retailer, M&S launched its third Eco-Store at Cheshire Oaks in 2012, one of the largest sustainable retail stores in the world. Designed to be the most carbon efficient store to date, it takes a holistic approach into key sustainability factors such as water, carbon, biodiversity, the community, materials and zero waste to landfill. Built with the multichannel customer in mind, M&S is using this space to showcase its vision for the next generation shopping experience, bringing together digital elements such as iPads and free Wi-Fi to make the store experience seamless.

From enhanced in-store experience to sustainability and next generation technology, the definition of value continues to evolve from being entirely based on price to a balance between price, quality and features that goes beyond standard expectations. In the grocery market shoppers are attracted to discounters such as Aldi and Lidl, while also seeking more premium purchases at Sainsbury’s and Waitrose, whose respective market shares increased in 2012. As a result of this tendency to go for either lowest price or best quality, brands in the middle, like Tesco and Morrisons, are being squeezed.

While 2012 was a great year for the nation, the retail sector suffered despite such high hopes for an Olympic year. Tough economic times have produced much price-based competition and a somewhat confused sector—which makes the role of brand that much more important. Now is the time to invest in and strengthen the retail brand’s competitive position. With stores competing in price matches and discount wars, there is a clear opportunity to show how brands create value. Indeed, determined to make the most of less-than-ideal conditions, a number of British brands have already upped their marketing and branding strategies this past year (most notably Debenhams and The Body Shop). In uncertain times, this is a smart move. Those with the commitment to invest in their brand now will gain a competitive edge, while those relying on cost-cutting and hoping to ride out the storm will get left behind.