The latest in InternetRetailing’s series of IRUK Top500 Dimension Reports focuses on Strategy and Innovation, a topic particularly timely in the wake of the UK’s decision to leave the European Union…
The results of the UK’s referendum was a momentous decision that has thrown into doubt ideas once held as near-certainties. Cross-border trade within the European Union has long been a straightforward way for British retailers to trade. Last year this was recognised by OC&C Strategy Consultants as the world’s strongest online export market. With the introduction of the digital single market, EU trade seemed set to get ever easier. Is that all about to change in the light of Brexit?
As yet, the answer to that isn’t clear. Retailers will no doubt be revisiting strategies as they consider how factors, including ongoing uncertainties and the continuing weakness of sterling, might affect multichannel and ecommerce growth strategies in years to come.
If it goes ahead, Brexit will no doubt come to be seen as one of the great disruptive events of the early 21st century for Britain. This is probably the moment at which multichannel retailers face the most significant strategic decisions they’ve had to make in more than a decade. But it’s from such moments of disruption and uncertainty that innovation can be born. For it’s from considering the needs of the customer as these new circumstances develop that ideas and practices of the future can emerge.
In this Dimension Report, sponsored by Barclaycard and PFS we’re considering the new leadership questions that face retailers in this brave new world, as well as mapping best practice in this Dimension across the UK.
Retailers in the Top500 were measured against the metrics that InternetRetailing judge to be the most strategic and innovative from the other five Performance Dimensions that make up the IRUK Top500 research. These include response times to customer queries, mobile load times, apps that are bug free, the ability to offer nominated-time delivery, search visibility and how retailers respond when no products match a shopper’s search. We’ve assessed which retailers offer international delivery, the number of payment options they use and whether retailers make it clear that payment is secure. We’ve also used Wiser data on pricing strategies to see which retailers compete with Amazon on price and which compete using other strategies. Its pricing review compares the relative prices of products that are sold both by the largest 50 retailers and by Amazon, and ranks our Top50 on their ability to beat Amazon.
As Researcher Polina Modenova explains: “Across the Top500, retailers in competitive markets stand out for a forward-thinking approach to strategic planning. Multichannel retailers that have created strong digital and mobile links between stores and online do well in this Dimension. Thus, House of Fraser stands out in this Dimension for a well-rounded strategic approach. It offers highly convenient delivery options that are planned around its customers’ needs. It performs strongly on mobile and responds quickly to customer enquiries. As well as this, it innovates by experimenting with new technologies such as augmented reality.” The full list of retailers classed as Elite in this Strategy and Innovation Dimension Report are: Amazon, Argos, Boots, House of Fraser, John Lewis, Mothercare and Screwfix.
The Dimension Report looks in case study detail at some of these successful companies, analysing what their example says about best practice in this area. Also, there are 12 hands-on examples of effective approaches that leading retailers and others in related industries are taking. Overall, the report sets the wider context through the Strategic Overview and looks ahead to the way this area looks likely to develop in future in its Emerging Practice feature.
Whatever lies ahead, though, retailers will of necessity have to cope. There are reasons to be optimistic even when the country is facing such an uncertain future. Most especially, we should remind ourselves that a nation of shopkeepers has become a nation of social media marketing experts, user-focused design gurus and ecommerce veterans whose expertise in these areas is so admired that Berlin is reportedly hatching plans to tempt disgruntled digital specialists of a Remain disposition to head east.
This expertise isn’t going to depart the country tomorrow. Rather, leading British retailers will continue to test new techniques; leading British brands will continue to target the growing number of affluent shoppers around the world; and innovative startups will still spring up in the country’s tech hotspots.
The role of those making strategic decisions within such a landscape is, at one level, simply to hold their collective nerve. If the government opts for a hard Brexit? A good reason to look at new markets and to be innovative. If the government opts for a soft Brexit? Well that may change, so there’s another reason to look at new markets and to be innovative.
Besides, whatever happens, retail is changing rapidly. It’s one of the reasons why a feature on point-of-sale technology has been included in this Dimension Report. It’s a reminder that companies still need to make big investments that take account of how shoppers’ behaviour will change because of new digital technologies. Indeed, in or out of Europe, change remains the only constant in modern retail.