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Sony’s Chris Bowen


Graham Loosely of KPI


retra’s Andrew O’Gorman Defending the high street


In response to the fast changing nature of retail, independents need to adapt their product mix to maximise sales in growth areas and learn to use the web as an effective marketing tool, argued the speakers at retra’s 70th anniversary conference in Gateshead. Richard Stevenson reports.


etra’s 70th anniversary conference was marked by a background of the most difficult high street trading conditions in living memory. But it was clear from the near 300 delegates and 30 exhibiting manufacturers attending the two day event in Gateshead that the high street was not simply going to lay down and die. Through a series of presentations, from speakers as diverse as GfK, manufacturers and internet consultants, the need to embrace change, improve marketing and concentrate on stronger performing market sectors was a common theme. As retra president Andrew O’Gorman remarked in his opening keynote address, “The last few years have been the most turbulent in the last 30 years and those who survive will be those who adapt.”


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He noted that, while the price of major appliances and major CE products has plummeted over the last two decades, operating costs have soared. During this period customers have become more savvy and price-centric, while independents have been under constant attack from multiples, supermarkets and the internet. O’Gorman described the more recently emerging fulfilment operations, which allow non-electrical retailers to leverage their brand to sell electrical goods online, as “sucking the life out of the high street.” The conference theme of ‘The Winning Pitch’ was beginning to sound a little optimistic from the outset and by the time GfK’s business group director, Nigel Catlow took to the stage it was clear a more accurate theme would have been


‘Staying Alive’. At last year’s conference Catlow gave a bleak overview of the UK electrical markets, softened only by his laconic wit. His opening gambit this year was simply; “like last year, only worse”.


Market turbulence The GfK presentation starkly highlighted the serious decline in most major sectors, particularly CE, but also underlined where opportunities remained strong. Top line shock figures on the CE market showed a decline of nearly 20% in the last 12 months, equating to a staggering £1bn loss at retail. The photography sector had also been hit hard by the growth of smartphones, showing a 7% decline year on year. Major domestic appliance sales


remained fairly flat in volume over the last 12 months, with a small increase in average price point barely adding 1% to the overall market value. While there was some good news in the IT sector, which showed a healthy 5% increase in value, the majority of that growth has come from Apple iPads and other tablet devices that are not traditional fare for most CE independents. Perhaps the only beacon of light among this gloomy outlook was small domestic appliances, which due to soaring values in premium products, reported a solid 5% increase. However, taken as a whole the overall UK electrical market to February 2012 was down 5.5%.


Alongside the grim economic climate GfK identified the key issues responsible for driving the market down. The first is consumer confidence, currently at a 20 year low of -30%.


24 The Independent Electrical Retailer May 2012


Secondly, the UK consumer is traditionally an early adopter of technology, often way ahead of other EU countries, and in many cases we have reached saturation.


Shopping habits An even greater issue for independents is the changing nature of UK shopping habits. Nearly 16% of all retail goods are now sold online and this figure is likely to grow by at least 1% every year for the foreseeable future. It is even worse in key electrical sectors with online sales of white goods going from 16% of the total market to 23% in the last two years. This trend is not only likely to continue, it may even accelerate as UK consumers begin to leverage the 25m connected devices they bought last year alone. The average user already spends over four hours a week shopping from a tablet or smartphone and this figure is set to rise as more families become at ease with surfing a tablet while watching the TV. So what can possibly rectify this dire situation for independents? The answer according to GfK’s Catlow is in changing your product mix and capitalising on natural market opportunities. Independents should look into MDAs if they are not doing so already, SDAs and IT goods. SDA for example has shown consistent growth through the last few recessionary years, particularly at the premium end, such as bean to cup coffee makers and high value floorcare, and is worth well over £2bn at retail. Only 2.2% of the UK SDA market is sold by independents, which looking at it another way is a 97.8% growth opportunity.


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