Retailers are set for a bumper income in the coming months, with more than £18bn extra expected to land in the coffers of non-food retailers this year. The trouble is, the huge earnings boost is almost squarely the result of the record levels of inflation currently being seen.
However, while this obviously is a mixed blessing – more money, but with consumers actually buying less as they watch their dwindling pounds – the retail industry in the UK remains surprisingly bullish. Just 20% of them expect weakened consumer demand in the year ahead.
What is going to change, however, is how shoppers shop, what they do buy and, as a result, what retailers themselves do about purchasing and planning.
Keeping costs down, making delivery more competitive and tapping into the continued consumer demand for sustainable goods are all very much on the agenda. Operating costs, energy costs, delivery costs and staffing costs are all very much front and centre for retailers, with all not only tied directly to the bottom line, but also helping drive their sustainability pledges.
While delivery costs are seen as possibly the most important conversion factor in 2023, doing that cheaply, more efficiently and with lowest environmental impact is where many retailers are focussing their attention.
The twin drivers of efficiency and sustainability are also seeing some interesting new ways for retailers to operate. With consumer perception of second hand and reconditioned pre-loved goods shifting month by month to the positive, retailers have a huge opportunity to start looking at how to collect and resell goods. This is especially true in the fashion sector and, increasingly, in the luxury apparel market.
It is also having an impact on the charity sector. The Salvation Army, for instance, is on the march to use retailers and even ecommerce sites to help collect clothing for resale to raise money.
This week it announced an audacious plan with independent fashion brand Dancing Leopard has become the latest retailer to team up with SATCol, the Salvation Army’s trading company, to use its site to collect pre-loved fashion for the charity. It doesn’t even have to ber Dancing Leopard’s own stuff, it can be from anywhere. And those that donate get 10%.
This move follows an earlier tie up with Hera, a denim brand, which is also working with SATCol to collect items in its stores for the charity in a similar manner.
The move is interesting as the Salvation Army is targeting smaller, indy retailers to act as agents, not to sell, but to collect. It is easy to see the appeal. The charity gets a way in to collecting garments and goods – even tapping into the online boom – while the brands get the warm fuzzy feeling of doing something good and no doubt more traffic and sales as a result.
This is very much an example of the new business models and partnerships that are being forced into existence in the brave new world that we find ourselves in in 2023. Another change that is afoot is the rise of ChatGPT and the real use of AI to create new things. The generative AI service – which if you have school aged kids is no doubt doing their homework for them as you read this – not only creates a great essay, but is slowly starting to find use in customer service scripting, writing killer marketing materials, being used to own SEO rich content and, thanks to one company, tentatively setting itself up as the future of search.
While there is a lot of hype around the technology, it is one worth watching. The world of retail is changing fast and there is a push to use tech in new ways to get the edge. ChatGPT and its kind may well be just what is needed. Even JD.com has announced that it is playing with it. It will be interesting to see what comes of that.
