SWL's Retail Radar - 26/02/24

Retail Radar, from SWL, provides you with a snapshot of the latest retail news from the UK and around the globe. These narratives highlight key events, emerging trends, and notable advancements, providing a deep dive into the dynamic retail landscape.

DTC brands are rethinking their strategies

The 2024 National Retail Federation 's Big Show explored how the evolution of brands, consumer demands and the trading environment has contributed to rapidly changing industry. Wholesale has traditionally offered a window into how a brand may perform in different markets, and a platform for rapid growth. While, for others, wholesale has been secondary, or even avoided, with the promise of passing savings onto customers by eliminating the intermediary.

Now, in an era where Gen Z prefer unique experiences and personalised service, brands are increasingly investing in DTC models and creating a cohesive, continuous shopping experience. With as many as 64% of customers buying directly from brands, and 49% likely to become a repeat buyer after a personalised shopping experience, a strategy which champions loyalty and ‘customer first’ is a fundamental requirement.?

Walmart reports strong sales growth driven by omnichannel model

沃尔玛 the US retail powerhouse, has disclosed robust revenue growth for its fourth quarter, driven by robust consumer spending both in physical stores and online.

With ecommerce sales surpassing the $1 billion mark (￡790 million), Walmart achieved a notable 5.7% revenue surge, totalling $173.4 billion (￡137.3 billion).

The company credits this impressive performance to the enduring appeal of its omnichannel approach, which effectively caters to evolving consumer preferences.

Frictionless commerce will remain a small part of retail despite new technology

Despite advancements in sensor and AI technology driving down costs, a new report suggests that frictionless commerce is unlikely to capture more than 1% of the global in-store retail market. GlobalData Plc Frictionless Commerce 2024 report forecasts a modest market size of barely $1 billion by 2029, despite a projected 17.8% Compound Annual Growth Rate (CAGR) between 2023 and 2030.

亚马逊 has been at the forefront of frictionless shopping with its Amazon Go stores, leveraging shelf-based sensors, cameras, and AI to enable seamless checkout experiences. However, the historically high cost of sensors and tracking technology has hindered widespread adoption. GlobalData anticipates that the declining cost of microelectromechanical systems (MEMs) sensors will pave the way for smaller brands to enter the fray.

While a GlobalData poll revealed strong consumer interest in checkout-free grocery stores, real-world performance has been less impressive, with growth plateauing between 2022 and 2023 due to international store closures, including nine Amazon Go stores in the US. Concerns over the lack of in-store customer support and potential job losses to automation remain significant barriers to widespread adoption.

Sainsbury’s trails electronic security cabinets for premium spirits to prevent theft

Sainsbury's is introducing electronic security cabinets to safeguard premium spirits and combat theft in its stores. This trial, initially launched in select stores, entails certain high-value alcohol items like scotch whisky being securely stored in self-service cabinets. To access these spirits, customers must navigate a four-step process using a touchscreen interface.

The trial incorporates the Freedom Case by American retail tech company Indyme , leveraging tracking technology to monitor cabinet activity, including item removal, duration of cabinet access, and frequency.

A Sainsbury’s spokesperson noted, “We regularly review security measures in our stores and are currently trialling cabinets in a small number of branches.”

This initiative aligns with calls from the British Retail Consortium urging the government to bolster measures addressing violence and abuse against retail staff, as incidents surged by 50% to 1,300 daily in 2023.

Russian discounter MyPrice is making a second attempt to crack the Belgian market

Russian hard discounter MyPrice, formerly known as Mere, is giving the Belgian market another shot, hoping for success this time around.

Despite a previous setback, the parent company has launched two MyPrice stores in Opwijk (Flemish Brabant) and Boussu (Hainaut). These stores feature pre-packaged meat, dry goods, and assorted non-food items, all offered at significantly lower prices, reportedly 20% cheaper than competitors like German discounter Aldi. Embracing a minimalist approach, both outlets boast a pared-down selection of products displayed on pallets.

MyPrice proudly advertises itself as the “largest discount chain operating in Eastern Europe,” with a presence in over 10 countries. Despite challenges, the chain remains committed to the Belgian market since 2020, aiming to expand in line with customer demands and preferences.

Pepco to exit the Austrian market

Pepco , the discount retailer, and owner of Poundland & Dealz , revealed plans to withdraw from the Austrian market, marking an exit after slightly over two years of operations in the country.

The decision stems from Pepco’s continuous evaluation of its growth strategy and ongoing monitoring of operational performance. In an official statement, Pepco explained, “As part of these ongoing and in-depth performance reviews, the Group has today concluded that it will cease its operations in Austria, as it does not foresee that the Austrian market will reach the appropriate level of returns expected.”

Lidl seeks investors to build 12 new stores

Lidl GB is on the hunt for investors willing to invest ￡91.1 million in constructing 12 new supermarkets nationwide, aiming to expand its store network. In a unique move, the discount retailer seeks investors to build these new shops, which Lidl will then lease from them. This marks the first time Lidl has pursued such an approach, considering that only around 20% of its 960 UK stores are currently leasehold properties.

A Lidl spokesperson emphasised their commitment to ensuring widespread access to Lidl stores, stating, “We have long taken a flexible approach to delivering new sites with the core aim of giving all households access to a Lidl store.”

This initiative coincides with Lidl’s decision to scale back its expansion plans, reducing the number of new stores planned annually from 50 to 25. This strategic shift allows the retailer to concentrate on bolstering its warehouse capacity for future growth.

Aldi pledges to create over 5,000 new jobs in 2024

Aldi UK has unveiled ambitious plans to significantly expand its workforce in the UK this year, aiming to sustain its rapid growth trajectory in 2024.

The supermarket chain intends to add a substantial 5,500 new staff positions to its existing workforce of 45,000 employees across the country, underscoring its commitment to bolstering its presence in the UK market.

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