Retailers stand out in the Product Value Chain when they offer a broad range of products and show as many of these items as possible to consumers who are browsing retail websites
Retailers are most profitable when they sell as many full-price products from their ranges as possible. That’s why net margin is the most important KPI (key performance indicator) for the Product Value Chain. By showing as many products as possible, retailers offer both volume and choice, both also among the KPIs used to assess performance in this value chain. Retailers conserve value – and reduce waste – by recommending items that may be more relevant to shoppers. Retailers protect margins by encouraging full-price purchases and reducing the need to discounts later.
Within this value chain, RetailX researchers look at how retailers show off the breadth of their range
to customers, and how effectively they ensure that visitors to their website have every opportunity to see as many relevant products as possible. Their main findings are gathered via two questions:
• How do Top500 retailers enable shoppers to find out if products are relevant to them?
• How do Top500 retailers approach offering recommendations to shoppers?
SECTION ONE HOW DO TOP500 RETAILERS ENABLE SHOPPERS TO FIND OUT IF PRODUCTS ARE RELEVANT?
Every time a retailer offers more information about a product – whether that’s what it’s made of or where it’s available to buy – they boost the chances of a full-price sale. That helps support the Product Value Chain KPIs of volume and of margin.
STORE STOCK CHECKER
By enabling shoppers to check whether an item is currently in stock in a nearby shop, retailers make it more likely they will sell more of that product.
Slightly more retailers do so this year (+2pp to 16%), making it easier for customers to go out and buy the item locally, or to buy it online for collection at a convenient time. That’s up from 14% last year. Jewellers (35%) and DIY and trade retailers (31%) are most likely to offer this service, while those selling flowers and gifts (4%), multi-sector retailers (8%) and marketplace hosts (9%) are least likely.
PRODUCT INFORMATION
When retailers show a customer what a product is and why it is relevant to the customer through descriptions, it is more likely the retailer will make a sale. Product data may, for example, include technical information and detail about sizes and materials. In making this information available, retailers focus on margin and the related importance of making more from every contact with customers.
Since researchers judging the quality of product information on a website make subjective decisions, each website is assessed by multiple RetailX researchers on a scale out of four, with their findings moderated and normalised.
The median score came in at 3.0, unchanged on the previous year. Researchers judged consumer electronics retailers (median 3.42), supermarkets (3.21) and cosmetic retailers (3.18) to have the most informative product pages, while those selling flowers and gifts and hobby products (both 2.96) were found to have less useful information.
SECTION TWO HOW DO TOP500 RETAILERS APPROACH OFFERING RECOMMENDATIONS?
Effective use of recommendations helps shoppers to see more of a retailer’s range – something that’s particularly important when shoppers are viewing a site through a small screen.
By showing similar products, traders boost the likelihood that shoppers will see something they want to buy – reducing waste and conserving value as a result. Upselling widens the choice available to shoppers. Recommending complementary products encourages shoppers both to buy more and to make the most of the products they buy.
RECOMMEND SIMILAR PRODUCTS
Only 30% of 481 retailers assessed on this metric both this year and last offer a choice of similar items to customers looking at a product on their websites. That’s a significant 43 percentage points (pp) down from 73% a year earlier. Recommendations for similar products are more likely to be offered on marketplaces (46%), by retailers selling maternity and children’s products (46%) and hobby supplies (42%) – and less often found on supermarket websites (12%) and on sites selling jewellery (17%).
UPSELL
Just over a quarter (27%) of retailers and brands suggest more expensive alternatives – or upsell – to shoppers viewing a product on their website. That’s unchanged on the same time last year. Cosmetics retailers and brands are by some way the most likely to use this tactic, with 43% of Top500 retailers selling in this category doing so, followed by supermarkets (33%) and retailers selling either hobby supplies or maternity and children’s products (both 32%). DIY and trade retailers (15%) and, perhaps surprisingly, jewellers (17%) are less likely to take this approach.
RECOMMEND COMPLEMENTARY PRODUCTS
Thirty per cent of retailers now recommend products that go with another product to customers, unchanged on last year. Marketplaces and websites selling maternity and children’s products (both 46%) are most likely to do so, followed by those selling hobby supplies (42%) and homewares and consumer electronics (both 34%). Supermarkets (12%) and jewellers (17%) appear less likely to do so.
The Product Value Chain analysis comes from the 2023 RetailX UK Top500 report. Download it here to see the graphics and list of leading retailers and brands in this value chain, as well as this year’s full Top500 listing.
