By Dr Sarah Montano, Department of Marketing, University of Birmingham
Primark has recently announced that it is on course to report annual sales and profit growth. The Co-Op has also reported significant sales growth, this is in contrast to the frequent reports of decline in the high street. John Lewis, on the other hand presents a mixed picture with recent loses of £25.9 million. The company notes that they have seen growth in Fashion and Beauty but a marginal decline in Waitrose’s yearly like for like sales. How are some retailers managing to succeed in this challenging economic climate?
As John Lewis note, the key reason for retail success in the current climate is differentiation. Differentiation can take many forms, this may be product, experience or price based. In particular, when shopping on the high street customers are seeking an experience that cannot be gained elsewhere. To a certain extent, the role of the store is changing, and stores are no longer just about the functionality of buying a product as that activity can be carried out online. Stores are now turning into a showroom for goods and offering experiences, rather than just being a primary vehicle for purchase. When we go in-store we are often browsing and viewing products that we will note to buy online later.
Primark has successfully differentiated on all three points. The key is to offer customers something that they cannot get easily elsewhere. If we look at the new Primark store in Birmingham, which is the world’s largest Primark offering an “enhanced shopping experience”, we can see that they offer unique low cost fashionable products and innovative experiences. For example, I’m sure to the delight of younger children and adults alike, the store has a Disney Café, this is something that cannot easily be replicated and keeps customers in-store for longer. Critically for Primark, customers cannot buy online however, the experiences they are creating in-store is driving customers to shop with them.
We can also consider the recent success of Lakeland UK, best showcased by their Windermere store, with its state of the art product demonstration kitchen and café overlooking the Lakeland Fells. Recently, Selfridges Birmingham, hosted a Live + Loud event with Beauty Masterclasses, Music Moments and a Space Party for children that offered learning fun facts from experts at the Birmingham Museum, alien photo moments and a zero gravity dance floor. More unique experience that cannot be offered elsewhere.
With Brexit on the horizon, many retailers note the challenge that no deal would bring; John Lewis states “Brexit continues to weigh on consumer sentiment at a crucial time for the sector as we enter the peak trading period.” Whilst, there is little doubt that both a Brexit deal or no deal would impact retail activity, we do need to acknowledge that there has been a fundamental shift in how consumers approach retail activity. Therefore, the critical way forward for all retailers, is to focus on experiential differentiation to drive customer engagement.