This morning I attended the PwC annual ‘Retail Insights’ business briefing in London. Firstly, my thanks to PwC for the invite and the great summary of the events of 2018 and what we might expect in 2019. This annual event was led by Lisa Hooker, John Hawksworth and Kien Tan.PwC’s vast dataset was summarised eloquently and my commendations to the speakers for honing in on the key messages. The event left me applying the stats and findings to my field of responsible sourcing and sustainability in retail.
It is fundamentally important for all CSR professionals to take heed of these kind of insights to help formulate their own plans and deliverables over the coming year - so often we are led by the desire to make a difference by what ‘needs’ to be done, but without the ‘buy-in’ from the rest of the business it may be difficult to implement change. Without a credible business case our sustainability improvements won’t get traction. If we are smart, we can use such insights to flex and change our direction to achieve maximum output from our efforts (or impact).
Before the briefing, I can’t deny the news of declining growth and poor sales on top of the general misery that has been reported on the high street has impacted my own business as two of my clients have succumbed to market forces in the last 12 months. The good news is that overall the reality is not as cataclysmic as what is being reported in the media, and whilst sales figures are generally down, they are not quite as bad as we might think - here are some areas of optimism:
The PwC team went on to share ways in which the consumer is spending differently and gave predictions for consumer behavior change in 2019. Highly insightful surveys carried out by PwC show a real change in mindset, here a few that stood out to me:
Perhaps consumer caution is partly from an unknown Brexit outcome which could have a negative economic impact greater than the financial crisis of 2007 - I don't think anyone in the room dared to think too much about what devastation a ‘hard-Brexit’ could do to the high street, which is already finding conditions difficult. In tandem with the unknowns of a disorderly Brexit scenario is the predicted global growth slowdown over 2019.
There was a discussion around trends and I was nicely surprised to see the word ‘sustainability’ was noted as a trend. This seemed to be primarily promoted by retailers (rather than the consumer) and it wasn't specific as to supply chain or else. There was little mention of consumers wanting to invest their money in sustainable products or brands - and it felt that the sustainability trend was driven by retailers.
Overall, with sustainability being ‘on-trend’ in these discussions (and note, as ‘trendy’ as Artificial Intelligence and Predictive Analytics) retailers will have to be more innovative and targeted to deliver more on their sustainability agendas with most retailers suffering from restricted budgets due to lower sales and profit margins.
I hope the investment is not just in PR and Marketing for the purpose of making a little effort seem impressive! Conversely, I do hope that PR and marketing continue to engage and inform consumers of relevant issues - even if it is to document a baseline of where they are or commitments they have made. The banned Iceland tv commercial on Palm Oil which had nearly 6 million views on Youtube over Christmas is a good example of retailers improving their abilty to communicate with the consumer. It seems like a great time to engage the consumer, I’m excited to see more like this in 2019.
In technology application trends - an example was given of how Walmart are now using Blockchain to provide traceability of a lettuce in a matter of seconds, great that the item can be so easily and quickly traced back to its source farm, but my thought is what is the consumer going to ask next ‘was this made ethically and sustainably’?
Reading between the lines, I noted that the majority of consumers are finally starting to move away from ‘fast and rash’ to ‘slow and considered’. Albeit, this is not always true for the young fashionistas - they can’t get enough fast fashion!
There is no doubt it is a challenging trading environment, but there will be some clear winners and areas of opportunity from a sales perspective, but also through sustainability achievements. Those that can adapt quickly and respond to new demands will clearly be the winners in 2019 and beyond.
My top 5 takeaways:
It is fundamentally important for all CSR professionals to take heed of these kind of insights to help formulate their own plans and deliverables over the coming year - so often we are led by the desire to make a difference by what ‘needs’ to be done, but without the ‘buy-in’ from the rest of the business it may be difficult to implement change. Without a credible business case our sustainability improvements won’t get traction. If we are smart, we can use such insights to flex and change our direction to achieve maximum output from our efforts (or impact).
Before the briefing, I can’t deny the news of declining growth and poor sales on top of the general misery that has been reported on the high street has impacted my own business as two of my clients have succumbed to market forces in the last 12 months. The good news is that overall the reality is not as cataclysmic as what is being reported in the media, and whilst sales figures are generally down, they are not quite as bad as we might think - here are some areas of optimism:
- Less than a 1% fall in foot fall in 2018 when compared to 2017
- Black Friday sales are becoming stronger than Boxing Day sales
- Pubs and leisure saw a 4% growth
- Fast fashion for the younger market is still leading in terms of sales
- Personalised gifts and customisation did really well
- Some department stores were up - Selfridges top of the list
The PwC team went on to share ways in which the consumer is spending differently and gave predictions for consumer behavior change in 2019. Highly insightful surveys carried out by PwC show a real change in mindset, here a few that stood out to me:
- More cautious purchases
- Hunting for value for money
- Eat in more
- Overall looking to spend less
Perhaps consumer caution is partly from an unknown Brexit outcome which could have a negative economic impact greater than the financial crisis of 2007 - I don't think anyone in the room dared to think too much about what devastation a ‘hard-Brexit’ could do to the high street, which is already finding conditions difficult. In tandem with the unknowns of a disorderly Brexit scenario is the predicted global growth slowdown over 2019.
There was a discussion around trends and I was nicely surprised to see the word ‘sustainability’ was noted as a trend. This seemed to be primarily promoted by retailers (rather than the consumer) and it wasn't specific as to supply chain or else. There was little mention of consumers wanting to invest their money in sustainable products or brands - and it felt that the sustainability trend was driven by retailers.
Overall, with sustainability being ‘on-trend’ in these discussions (and note, as ‘trendy’ as Artificial Intelligence and Predictive Analytics) retailers will have to be more innovative and targeted to deliver more on their sustainability agendas with most retailers suffering from restricted budgets due to lower sales and profit margins.
I hope the investment is not just in PR and Marketing for the purpose of making a little effort seem impressive! Conversely, I do hope that PR and marketing continue to engage and inform consumers of relevant issues - even if it is to document a baseline of where they are or commitments they have made. The banned Iceland tv commercial on Palm Oil which had nearly 6 million views on Youtube over Christmas is a good example of retailers improving their abilty to communicate with the consumer. It seems like a great time to engage the consumer, I’m excited to see more like this in 2019.
In technology application trends - an example was given of how Walmart are now using Blockchain to provide traceability of a lettuce in a matter of seconds, great that the item can be so easily and quickly traced back to its source farm, but my thought is what is the consumer going to ask next ‘was this made ethically and sustainably’?
Reading between the lines, I noted that the majority of consumers are finally starting to move away from ‘fast and rash’ to ‘slow and considered’. Albeit, this is not always true for the young fashionistas - they can’t get enough fast fashion!
There is no doubt it is a challenging trading environment, but there will be some clear winners and areas of opportunity from a sales perspective, but also through sustainability achievements. Those that can adapt quickly and respond to new demands will clearly be the winners in 2019 and beyond.
My top 5 takeaways:
- Think about retail and consumer changes, how will your own business respond and therefore how can you flex your sustainability activities in the coming year?
- Tap into the fact cautious consumers might be more considered and potentially want more information on sustainability, but ensure it is balanced with credible commitments and achievements made - not just hot air and sugar-coated glossy reports!
- Keep innovating on fast fashion - it's not going away and actually there is a potential for fast and slow to co-exist - just let’s make fast highly recyclable garments for fast fashion and well made reusable ones for slow fashion.
- Harness the fact that buyers want customised or personalised - they may have a stronger relationship with it and keep it for longer.
- Take traceability to another level – if we know where it comes from so what?….what does this mean to the consumer and also what are we doing to ensure that farm or factory is getting better (sustainability wise) because soon the consumer will want to know!
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