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Two thirds of UK retailers use secondary revenue methods to tackle margin squeeze


New research has found that more than two thirds of retailers are now exploring secondary revenue options to boost their profitability


The Beyond the Core study from the British Retail Consortium, which was conducted by Webloyalty, has revealed how secondary - or ancillary - revenue options are becoming common practice as retailers face unprecedented pressure on their margins. In the survey of UK retailers, 67%


of businesses reported that at least 1% of their revenue now comes from secondary sources, with 18% deriving at least a fifth of their turnover from non-core profit lines. Secondary revenue methods used by retailers included affiliate marketing, selling advertising space, cross-selling additional products and services, offering credit as well as loyalty and reward programmes. Rachel Lund, head of insight and


analytics at the BRC, said: “Studies such as Beyond the Core provide an important contribution to the evidence base on innovation in retail. The survey gives insight into the application of secondary revenue generation amongst UK retailers, a practice widely implemented in the airline industry when faced with a similar situation to that faced by UK retailers today – low and falling margins on core products. This report should provide food for thought for retailers of all sizes and types.” Although the study found that


secondary revenue strategies are being adopted by businesses of all


sizes, it is the larger retailers that are capitalising most, with 22% of businesses earning more than £1 million in turnover generating 20% or more from secondary sources. Furthermore, businesses turning over £100,000 or less reported the use of only four different methods of secondary revenue generation, whilst those with a turnover of more than £100 million reported using seven. Guy Chiswick, managing director of Webloyalty, Northern Europe,


added: “The retail landscape is facing one of its biggest challenges to date; remaining profitable during times of change. “Our research shows that


secondary revenue strategies have the potential to combat low margins. However, whilst they can be easily incorporated into retailers’ overall marketing agenda, to maximise revenue through these sources it is important they are relevant to the brand and introduced at the right stage of the customer journey.”


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