Business opportunities


Adding zest to the bricks and mortar retail


In the early days of online, many retailers enjoyed incremen- tal revenues while continuing growth and profits in their bricks- and-mortar outlets. But declining consumer spending and cutthroat competition has seen traditional retailers turning to technology to give customers a reason to visit their local stores.


It is with no small irony that this piece is passing through the editorial process on the day that Marks and Spencer an- nounced a 62% decline in pre- tax profits and 100 store clo- sures. Consumers interviewed for BBC television cited the decline in household incomes, premium pricing and old-fash- ioned clothing styles as reasons why they had fallen out of love with their local M&S.


But M&S is not alone; UK retailers suffered the sharp- est sales drop for 22 years in the month of April. Immediate negative factors included bad weather, the squeeze on house- hold budgets and the timing of Easter which all contributed to a hefty cut in consumer spend- ing, according to a report from the British Retail Consortium (BRC) and KPMG. Sales were down by 3.1% in April, the big- gest decline since the survey was launched in 1995. Spending on non-food items has been particularly hard hit over the last three months, and retailers are braced for tough trading conditions to continue for the rest of the year even though wages have now started to rise more quickly than pric- es.


Closures Evidence of tough times in re-


lets also went into administra- tion in November.


And the story is unlikely to end there, the New Look chain is re- ported as having debts of more than £1bn and has lost some of its credit insurance cover. In the 10 months to Christmas, sales fell 11% and losses hit £123m. The company intends to close 60 stores and change its fashion ranges but faces a struggle to encourage new con- sumers into its stores. Deben- hams, a 178-store chain, is ax- ing one in four of its managers and is said to be considering closures to cut costs. Profits and margins are down as a re- sult of price cuts in the face of competition. Finally, House of Fraser's owners, Sanpower, are said to have injected capital to see the store through Christmas. Its debt is rated as junk. The retailer is attempting to reduce the size of its stores by 30% and is said to have asked land- lords to cut rents.


Market factors


Already struggling retailers have been affected by a range of factors on top of the squeeze on spending. These include: higher labour costs (as a result of increases in the minimum wage); consumers moving to


nior Retail Analyst, Mamequa Boafo, has highlighted a fun- damental change in consumer behaviour: “The prioritisation of leisure spending and prefer- ence for experiences over ‘stuff’ will see consumers shopping from their own wardrobes this year, utilising what they have already and only buying cloth- ing items they can truly justify spending money on.”


UK phenomenon


According to AVIXA's Industry Outlook and Trends Analysis (IOTA), retail is expected to generate $19.6 billion in pro- AV solution revenue globally in 2018. AVIXA's new 2018 Market Opportunity Analysis Report (MOAR) covering retail, investigates the opportunities and challenges for providers of pro-AV solutions and technolo- gies.


MOAR starts by attempting to understand consumers on their journey through the retail expe- rience. The report then focuses on the clients of AV solutions - often referred to as end-us- ers - including the influencers and decision-makers involved in pro-AV systems integration projects. For the retail vertical, this includes those who are responsible for the consumer experience and/or the audiovi- sual technologies deployed in stores. Finally, the study pro- vides a view from pro-AV inte- grators on their successes and challenges working in retail.


Staying competitive Looking


to stay competitive


tail were supplied in the form of closures since the beginning of last year: • Toys R Us: closed 180 stores employing 3,000 staff. • Maplin: closed 200 electron- ics and gadget stores. • Warren Evans: closed in Feb- ruary this year


• East: shut nearly 50 outlets when it folded in January. •Juice Corporation: (with brands including Elizabeth Emanuel and Joe Bloggs) closed in January.


• Multiyork: 50 stores went into administration in November. • Feather & Black: with 25 out-


P6 AV News June 2018


online shopping; increased de- mand for home delivery (even same day delivery); increased marketing costs; and price competition from the discount- ers.


These special factors, the


overall trend in UK retail sales is downwards. The BRC/KPMG survey showed an even bigger drop in monthly sales once the figures were adjusted for changes in the amount of shop- floor space over the past year. On a like-for-like basis spend- ing fell by 4.2%. Market


data and analytics company Global Data’s Se-


The extent to which this retail decline is a UK-only phenome- non has been raised by AVIXA. They say, from a U.S. perspec- tive, that: “Contrary to popular belief, retail is healthy, reach- ing approximately $5.1 trillion in revenue in 2017 and growing 4 percent annually for the past 8 years, according to the U.S. Census, the Bureau of Labour Statistics, and the National Re- tail Federation. With less than 10 percent of revenue captured online, brick-and-mortar stores still present an industry rich with opportunities for pro-AV providers.”


against the rise of e-com- merce, brick-and-mortar re- tailers are evolving into more experiential locations with AV as a strong component. Sur- vey results show large capital improvement plans among re- tailers in support of this trend, generating about $6 billion in projected AV related spending in North America alone. Surprisingly, only about half


of AV providers are currently active in retail. Reasons vary, but lack of knowledge about the space plays a key role. Retailers say they often will work with more traditional IT firms, general contractors, or architects instead. This may keep some AV providers out of the mix, noting they are less familiar with the category and unsure how to break into the


market.


The majority of retailers sur- veyed are planning to integrate mature technology, such as audio equipment and video displays. The same is true of the bundling of technologies into solutions such as secu- rity, point of sale, and digital signage. Retailers are not yet investing in newer technolo- gies like augmented or virtual reality, although the interest is there.


Both end-users and providers


of AV solutions agree the two biggest challenges faced by retailers are technology selec- tion and adherence to budget. Retailers rely on AV providers' knowledge of the various op- tions to help them determine how to efficiently and effective- ly create exceptional consumer experiences.


"As shown in this report, a large portion of AV providers are not playing in the retail space. And with a thriving industry,


they're doing them-


selves a disservice," said Sean Wargo, Senior Director of Mar- ket Intelligence, AVIXA. "This is leading retailers to rely on service


providers deliver that experiential


necessarily have AV expertise to


don't retail


environments. This report will outline the opportunities retail presents for pro-AV providers and offer thoughts on success- fully breaking into the market."


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