Sports retail, and in fact retail market in general, is changing at the fastest pace in history.
For many retailers and brands this is a scary proposition as one of the reasons for change is that the power has shifted to the consumer.
In the 1970′s and 80′s it was the brands that dominated but by the 1990′s retailers such as Tesco had taken control and were experiencing aggressive growth and exploiting increasing connectivity to the end user through data capture and analysis through schemes such as Club Card.
In today’s world the power is firmly in the hands of the consumer and no where was this more apparent than Christmas 2013.
Brian Hume, Founder and CEO of Martec, believes that Christmas 2013 was the first “Omni Channel” Christmas – “Consumers got it and many retailers didn’t”!
Retailers in general reported good online business throughout the Christmas period as consumers were able to exploit multiple ways of gathering price and product information, however many retailers reported disappointing store sales – they weren’t able to join up online and store sales.
From data analysis it appears that many consumers researched in November and purchased in December.
This was fine for those businesses that could react accordingly, however it was the clicks and bricks retailers that were caught out most by this change in consumer behaviour.
Stores started to stress about poor sales and potentially heavy terminal stocks and some, such as M&S, began their sales period in early December- unprecedented in recent times – leading to margin erosion.
By mid December, having completed their research, many consumers headed to the High Street only to be confronted by long checkout queues thus driving them back to purchase online and further away from bricks and mortar retailers.
The smarter consumers learned to select products in store and order online, using their mobile devices, as “click and collect” orders where the lines at collection points were much shorter.
When it was too late to be sure of on time home delivery the consumers finally switched to buying in store..
THE ALL POWERFUL CONSUMER
These shifting usage consumer shopping patterns and, more importantly, the way that technology was used to adapt to circumstances caught many retailers by surprise and gives us some interesting pointers towards future customer shopping patterns.
Consumers now have the power to research product and price seamlessly whether browsing in store (through 3 and 4G as well as wifi) or at home online.
They can choose whether to have home delivery or click and collect and even, through online stores such as Net a Porter decide when their goods are delivered within a one hour delivery slot.
Drop box sites are growing all over the country giving the consumer additional places to collect or drop parcels.
IN STORE WIFI
Many retailers are debating the benefits of offering free in store wifi in a bid to embrace these changes and to enable consumers to have an even stronger in store experience. However the jury is out as to whether the greater benefit is for the retailer or the consumer.
From a consumer perspective free wifi allows them to research, photograph and email/upload products to friends/family/ peers for purchasing advice and, perhaps most notably, price compare.
From a retailer point of view they can understand exactly who is shopping in store, where they are in store, can communicate whilst they are in store and also reconnect once they have left the store.
The price comparison element of this issue is perhaps the most controversial and appears to be driving an increasing own label or SMU strategy for many brands and retailers where products cannot be compared and this retail price points and margins can be maintained.
Retailers are also looking at potentially rolling out digital displays where prices can be changed centrally at head office across all stores to react to dynamic online price changes.
TWO PRICE MANAGEMENT SCENARIOS
Ultimately this is likely to lead to two price management scenarios:
a) the consumer price checks and item that they want to buy and requests a price match from the retailer.
The sales assistant uses a wireless device to access an internal application which decides whether to price match in full or how far to go using rules relating to CRM data such as is this customer a frequent shopper.
b) the retailers agrees or not to price match and automatically sends and alert to the company pricing manager who can review whether to make this price change across the chain/region in real time through digital displays enabling them to react to price pressures whether they be on or offline.
What is clear, with either of these scenarios, is that the consumer is instrumental in driving these changes and that the speed with which retailers can react to such situations will become ever more vital in this fast paced world.
This type of approach does not need to be limited to a chain however. There is no reason why an independent sports retailer with a solid stock control and margin reporting system, cannot react in a similar way when faced with price comparison information.
Advances in technology mean ever increasing transparency and, for those that can embrace these changes and develop systems to react accordingly, does not necessarily mean the death of the High Street retailers – sport or otherwise.