The retail sector is undergoing a significant transformation, characterised by shifting consumer behaviours amid a cost of living crisis. As we celebrate Independent Retailers’ Month this July, we’ve explored the big trends influencing our local shops this year…
Shifting spending behaviours
We can’t talk about the retail sector without talking about the cost of living crisis. It’s had a profound impact on consumer spending habits, with shoppers spending more cautiously and making more considered decisions when it comes to everyday items. A study from Forbes Advisor has revealed that four-in-five (82%) Brits have switched well-known brands for cheaper own-brand alternatives, as the cost-of-living crisis intensifies (1). And it wouldn’t be surprising if this had gone up since then as households continue to feel the squeeze.
Ability to participate in price wars
During the pandemic, ConvenienceStore.co.uk (2) reported that shoppers - unable or unwilling to use large supermarkets - flocked to high street convenience stores, resulting in mammoth sales and some reporting a 120% year on year jump in sales during the early Covid days. However, since restrictions were lifted, shopping behaviours have - in part - reverted back, as independent retailers struggled to compete with the big supermarket chains. But some shoppers have stayed loyal to their local. For independent retailers, price is often determined by wholesalers and the relationships held, but while price wars are a game that some are able to participate in, cost isn’t the only motivator for shoppers heading local.
A sense of community
Strong communities are a source of connection and offer a sense of togetherness; and this is where independent retailers have a competitive advantage. While high street shops may have less flexibility in their ability to slash prices, they can involve themselves in the community, tailoring their products, ranges or offers to what their local community wants and needs.
We’ve seen retailers of all sizes focus on experience over the last few years, with shoppers proactively seeking out fulfilling or exciting experiences when deciding where to shop - from nail bars in clothes shops, to coffee bars in supermarkets. While large retailers are moving fast in this space, independent retailers at the heart of their local community have the upper hand, with a better understanding of what will pull their customers through the door and fill their cup.
The importance of loyalty
Only a few years ago, retail business models were built entirely around customer acquisition and getting new people through the door. But those which are thriving today are holding fort and focusing on loyalty; looking at where and why customers are going elsewhere and doing what they can to keep them.
As the cost of living crisis continues to force customers to reconsider where their money is being spent and where the value is coming from, businesses are under more pressure than ever before. Retailers big and small are all in the same boat when it comes to keeping customers loyal, and the actions they can take are all the same. By working to reduce prices where they can, focusing on experience to draw customers in, and considering a rewards programme like Airtime Rewards to incentivise spending, they can be sure they’ve done what they can to keep ahead.