Following yesterday’s news of the fall in Christmas sales for Morrisons, Tesco and Marks and Spencer, The Drum speaks to key figures in the retail industry about what retailers could do in order to turn around sales, and if Christmas advertising is redundant if it does not lead to people changing where they shop.
Research from Netmums released before Christmas found that one in nine mums said that they would change where they shopped if a Christmas ad impressed them, while 17 per cent of mums claimed the commercials influence where they shop.
However, the three retailers who reported their figures yesterday all have one thing in common, according to Danielle Pinnington, MD at Shoppercentric: “They can be classified at sitting in the ‘squeeze middle ground’ of their sectors, and as such are facing stiff competition discounters at the bottom end, and the likes of John Lewis / Waitrose at the top end.”
She stressed that this means that none of these retailers can take shopper loyalty for granted, adding “Many retailers put a lot of effort into their advertising campaigns this year, and given the media interest in each new campaign it is bound to have had an impact on shoppers. But for the established retailers like M&S and Tesco there is a question as to whether their campaigns were product focused enough to tempt shoppers into their stores. And once in-store was there, was enough effort made to showcase key lines and tempt shoppers?”
George MacDonald, executive editor of Retail Week, agreed, but insisted that adverts are not all that should be considered as part of a retailer’s performance.He told The Drum: “The general point I would make is a retailers performance is not only about its adverts. You can have great advertising but if someone goes into the shop and the products not there or the promise of service isn’t delivered on and all these sorts of things that isn’t because of the advert it’s because you’re fundamentally failing in what you’re meant to be delivering to the consumer. “Look at those companies and I think there are particular reasons in each case why they’re finding it tough in a tough market. Morrison’s has only just started getting into convenience
and literally now launching online so if you look at the results from Sainsbury’s and Tesco in both cases their convenience chains reported very strong growth…the whole way of doing business is changing you can’t afford to not be in online and you also can’t afford to not be in convenience in grocery.
“Everyone who has done well, is very good at multi-channel, it’s not just about [grocery] shops, that was the case with John Lewis as well. John Lewis has click-and-collect and the fact that they can also use Waitrose stores gives them a much bigger distribution chain as they can offer shoppers much more convenience with all the other branches they can use.”Figures released from the British Retail Consortium and KPMG this morning back this, reporting a 19.2 per cent increase in online sales, with the food sector still proving the most competitive.Online sales surged in December representing almost one in five items sold, according to the research, suggested that retail sales growth is being driven by the click of a mouse, rather than the ring of the tills.David McCorquodale, head of retail at KPMG, said: “December 2013 was all about nerve, margin and multi-channel. After competitive campaigns run by the major retailers, those retailers who held their nerve and provided a seamless service between channels will feel pleased, whilst those who discounted heavily to force sales will count the cost in margin. Overall, the month was slightly positive, particularly in fashion and health and beauty, with traditional gifts playing their part.”
Phil Dorrell, director of the retail consultancy Retail Remedy, was very cynical about Morrisons’ online presence, saying: “Morrisons’ stores look dated and the brand is digitally nowhere. 2014 is set to be the year of its great online push, but it is coming to the party embarrassingly late."And if it markets its online proposition like it has been marketing its stores, then it will be on a hiding to nothing. Then there's the awkward fact that it has the oldest shoppers of the Big Four grocers, who are not exactly known for online retailing.”He also spoke frankly about where he thinks Tesco went wrong: “The problem Tesco has yet to fully address is that its marketing - both in-store and through the media - is still not capturing customers’ imagination.“It is failing to deliver both the footfall and the sales needed to keep Tesco competitive.”MacDonald suggests that if paying for advertising, retailers should make sure that it plays its part and a strategy of what the retailer wants to achieve is clear: “Retailers have got to work out are they getting bang for their buck with what they’ve done and what do they want to do with their advertising -is it primarily about deals and bargains and driving people into the shop at a particular time for a particular product or is it conjuring up a whole host of associations with the brand that people can carry about in their minds subconsciously making them more inclined to shop with a particular retailer.”One thing is clear: while advertising can help promote brands and retailers, it is important that these retailers make sure they provide what the customers wants how they want it. E-commerce and m-commerce are continuing to grow, and all stores must make sure they are ready for this in 2014.