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Reflecting the current financial climate, this year's retra annual conference in London was titled ‘From Gloom to Boom'. Kept to a tight schedule of six hours, it featured 14 presentations (which was a record in itself in the 49-year history of retra conferences). A wide range of speakers demonstrated to the audience of retailers, manufacturers and service suppliers that despite the downturn in the economy, the industry has plenty to offer to its customers and trade partners although at times some players may need to resort to ‘guerrilla marketing' (more about this later).
Convergence and switchover
The morning session of the conference, devoted to the developments in consumer electronics, began with Dave Tansley of Deloitte Consulting presenting on the nature of convergence of CE products, and the dangers and opportunities arising from it for retailers. The market is now flooded with propositions which have emerged as a result of extracting from generic products features which are useful for a particular purpose. For example from a PC emerged a laptop (light and portable to work and play); a PlayStation for gaming or an iPhone for wide and efficient communications. However, in Mr Tansely's opinion some of the recent results of convergence, such as the spate of electronic notebooks ("the chick-lit of technology") will not be commercially successful in the long term due to their limited spec and functionality. Moreover, successful, convergence has to be needs-led not technology-led and be fair - involving everyone.
Next, Danny Churchill of the Supply Chain Group argued that digital switchover is one of the greatest lifetime opportunities for electrical retailers. Its scale is reflected by £4.2 billion which is spent annually at the retail end on iDTV equipment, aerials, licence fees and subscriptions. It also provides retailers with opportunities to offer help with re-tuning of equipment, broadcasting signal overlap, upgradability and broadband advice. However, the voice of retail trade is still absent from the planning of the digital switchover process. As a result, many digital products, such as set-top boxes, are still not upgradable to accommodate new technological and broadcasting developments. Therefore Mr Churchill proposed setting up a retra digital switchover working group which would channel retailers' views and experience into planning of new technology.
Market leaders
An analysis of the consumer electronics market was presented by Nigel Catlow, GfK business group director for Consumer Electronics, who indicated the product areas which constitute the greatest retail opportunities. These are:
- HDTV (64% of TVs sold by the independent channel are not HD),
- Blu-ray players, showing 1,540% sales growth
- Home theatre systems
- HD camcorders
- Set-top boxes, especially in the digital switchover areas,
- DAB in all applications
- ‘Big' laundry - over 7kg.
Manufacturer's perspective
Giving examples of the latest product and communication developments, such as iPTV, viral communication and wireless home network systems, Andy Griffiths, vice-president of consumer electronics at Samsung, argued that there had never been a better time to get consumers engaged and enthralled with the CE products and demonstrate their potential, creating "retail theatre" around them. Many of them offer installation opportunities and lead to add-on sales, which give independents an advantage over mass merchandisers.
John Morrissey, commercial director of Indesit UK, called on independents to rethink the proportion of their retail space given to white goods. Two parts of the DA sector - the replacement market (taking around 60% share) and the upgrade market (around 20% share) are very stable and resistant to economic ups and downs. However, even despite the recessionary pressures, the prices of domestic appliances are rising as increasingly busy consumers are prepared to pay more for appliances which meet their lifestyle needs, such as steam laundry or large capacity refrigeration in a smaller footprint. Mr Morrissey also stressed the growing importance of brands in the marketplace populated with an increasing number of retailers' own brands. Behind an established brand there is consumer confidence, product innovation, promotional investment below and above the line, and training and support for retailers.
Retailer's view
Simon Turner, the former managing director of PC World, predicted a boom in demand for netbooks, in response to the widening choice of electronic communications formats and importance of PCs (which are now in around 70% of homes). It will be further fuelled by a trend towards greater personalisation of products and services.
An insight into the efforts of the competition was given by Hugh Harvey, chief executive of Comet. After 75 years in business, the company made a strategic reassessment of its performance in 2005 and concluded that its key weaknesses were low knowledge and poor service. Transforming itself from the ‘value retailer' into the ‘specialist retailer with good service' Comet introduced a number of changes to its structure and services. It included a major education and motivating programme for the staff, the introduction of the Comet-on-call home repair service, a next day delivery service and a TV wall mounting service. The results are monitored with such measures as mystery shopping visits which every shop receives twice a month.
Hands-on advice
"The future is rosy," argued Tim Moss whose Moss of Bath store have been operating for 47 years and now thrives on its custom install business which represents 50% of his turnover. The key in this line of work is qualified staff which may receive additional incentives for selling accessories, said Mr Moss. Many orders in this high average value business come from world-of-mouth recommendations, therefore his advice for other retailers was to get involved in their local speaking circuit, such as clubs, associations and private events, which create opportunities to educate audiences about the latest technology and such issues as digital switchover.
Practical advice on how not only to survive but also get stronger in recession was given by five retra retailers who found ways of differentiating themselves from the competition.
Malcolm Marshall, former president of retra, saying "people buy from people" went on to demonstrate the importance of customer service and stressed that staff training should be at the core of every independent business. Since only 7% of communication is conducted through words and in 55% through body language, staff should be trained and motivated to display the ‘can do' attitude. Other important issues which need to be reviewed particularly in recession are: the level of stockholding, credit availability (including a ‘buy now and pay later' option) and analysis of sales - per product, hour, sales person etc.
Bradford-based retailer, Kully Johal of SS Audio, presented unconventional rules of ‘guerrilla marketing' which relies on imagination rather than on large budgets for its effectiveness. It focuses on such forms of promotion as canvassing, editorial, brochures, telephone marketing and personal letters to customers thanking them for their support and inviting them to examine the latest offers.
Graham Russell, a young retailer from West Sussex, suggested taking a fresh look at the business from other people's perspective, whether these are customers, staff or simply passers by. This may bring new ideas for future improvements. Equally simple but effective advice came from John Campbell from Northern Ireland who called for "exceeding customer expectations in recession," with, for example, free delivery or installation.
Finally, Robert Hughes, current retra president, called independents to reconsider rentals as a business opportunity. The demand for rental is growing, fuelled by the sophistication of CE and demand for fast servicing of DA appliances, and presently it constitutes 30% of business in his 34 stores.
The next annual retra conference will take place in April 2010 in the Hyatt Hotel and Conference Centre in Birmingham.
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