Forecasting Consumer Demand….The Retailer’s Dilemma ….

I am not a Retailer. I could not be a Retailer. I have neither skill set nor temperament . I spend most of my working life talking with retailers and wholesalers, so I know a little of one aspect of retailing , that is the supply end and being a consumer , I know, sometimes what it is I want, the demand end. However, on many occasions , I don’t know what I want, which is the source of the problem.

The biggest retailers have access to data to tell them that their sales of Coca Cola (can’t use the word coke anymore) will peak in two weeks, using history and weather forecasts. They know the sales of baking products are going to explode when the Great British Bake off comes on telly. Sales of beer and pizza will suddenly jump when there is major sporting event on TV. Supermarkets , will know , I suspect , exactly how many loaves of sliced bread they will sell each and every week. But most retailers don’t have that data or sell the sort of product that is that demand reliable.

Twenty years ago, buyers would turn up at trade shows and apart from new product, and then they would be very wary of anything new, as they knew what sold last year would sell next year and taking on new products meant taking a chance; they would order their needs for the year. Actually it wasn’t quite that straight forward but it illustrates the general shape of buying behaviours it was not that long ago.

I sold 2000 widgets last year so I think I will sell 2100 this year (or 1900 depending upon the buyer).

Demand was not pulled it was driven from behind . The retailers (and wholesalers), in most markets, decided what they were going to sell and the consumer had little say in it. An over simplification, perhaps. Nevertheless it was pretty close to the truth. But then it started to change . With the incursion of online retailers and the gradual development of social media ,the consumer was starting to throw its weight. From the online operators offering a far bigger range of product, and sometimes very different product, to the consumer passing on this information via social media.

I believe this is why part of today’s UK Retail High Street is where it is today. There are a lot of tired brands that have received little attention over recent years , notably Arcadia, Debenhams, Edinburgh Woollen Mill……..They sat on their laurels, did not reinvest and lost sight of their customers. The latest Bonmarché supposedly the shop for the over 50’s . Well today’s fifty five year old is a very different beast to that of twenty years ago. Looking at their shop windows you would think you were back in the eighties .

Typical Bonmarché Store Front

It is easy to to mock, to just stand back and say well they are were a lot of old rubbish. What is not easy is predicting what the Buying Public actually wants. A not so perfect example is this current year of 2020. When the first lockdown of the year in the UK began, all thought that’s it for three months . Nothing is going to sell, except toilet rolls and food, as there is nowhere to sell it . Even the mighty Amazon stopped selling non essentials for a few weeks. But no, small web sites found themselves inundated with demand for craft items, games, toys, puzzles, drawing books, home party items. At its peak demand far exceeded supply. Now when the second lockdown occurred, it was a very different scenario . Why ? Because the consumer behaviour was different. As to why, leave that to the social psychologists reports next year.

There is nothing easy about second guessing the consumer and their wants. It is different if you are a major brand . They have the ability and resources to push their demand . The millions that wait outside The Apple stores when a new product is launched, before knowing how the product will perform. The brand, in this case Apple, telling their audience that they want it . But that wont last forever . But they understand this and develop other income streams, which one day will replace those of their physical products. In this case it is making programmes, films, digital music , and cloud computing (Amazon get 50% of their profits from 10% of their revenue ie Cloud computing). Few organisations have had the resources to adopt alternative strategies, or rather they have no plan to do so.

I am often asked What is selling ? What Should I buy ? I can only answer what sold yesterday and really do not have any idea of what will sell tomorrow. This sounds a bit like copping out. It is . There is no easy answer. Of course, within every range of product there is a core of items that the retailer will know they have to have in their store. But going forward that is not enough.

There are retailers that get it right, or rather they get a lot closer. Zara is one of them . they apparently can turn new ranges around in three weeks . The major successful discounters (certainly in the UK ) have open door policies in respect of seeing suppliers. This does not necessarily mean they know more about what the consumer wants, but it does mean from one end of the chain they are lot closer to what trends are coming through, and can act accordingly.

The bottom line is that there has to be radical rethinking by the retail entrepreneurs on how they operate . it maybe something along the lines of literally of more of a shop window. I have seen this happen with two new retailers in my neighbourhood. One is a deli/grocer , the other is a butcher. The attitude is more

This is what we have in the shop, but don’t hesitate to ask if we don’ have what you want or don’t know what you want .

Think Star Trek. Think Dematerialization. Think Spock being transmitted from Mother Ship to Planet Surface.

Rabbit in box is 3d Printer or I can never buy a red rabbit ornament when I want one!

Well maybe not quite but I suggest, that to counter the issue of not knowing what to stock and what your customer might want, the technology is not far away. For many the Store will become more of an idea fulfilment location. A place where you will be able to discuss your needs with knowledgeable staff within that field and walk out with what you want rather than what they want to sell you.

Maybe or maybe not. What I can say without any hesitation, retail cannot and will not stay in its present form. This has nothing to do with Covid, Pandemics, Brexit, Deal or No Deal , it has to do with a rapidly changing consumer. Retail must change and it must change radically.

The Future Consumer ….

The current UK government will have redesigned the future consumer as a very svelte like creature arriving at our gleaming, but empty, shopping centres in vast swarms of cycling health freaks. Some would have arrived in electric cars but they had not managed to build any charging points. This scenario having evolved from their policies on reducing obesity. Naturally, the whole concept will be inspired by ministerial cars being replaced by high performance racing bikes, or maybe E Bikes.

Reality is a little more complex. Most businesses (involved in selling products to consumers) spend a great deal of time looking at what the retail landscape will look like, what the future trends are, the economic future , spending habits and ways to market. Yet do they actually look at what the consumer will look like (metaphorically speaking) ?

It came as a bit of a surprise when looking for research there is not much going in . Or rather there is , and always has been, a lot on consumer behaviour but not on the holistic consumer. By this I mean, the whole package . That’s is to say behaviour, social interaction, physicality of the individual, thinking process, social awareness , family sizes, cultural approaches , education, spending power, in effect everything goes to make the everyday consumer. Yes there is plenty of research in each and everyone one of these components and I know most major retailers have some form of futurologist within the organisation. However, there seems to be little which really looks at the complete person, In so far as there ever can be such a creature.

Hence I was somewhat, initially pleased, but ultimately disappointed when I recently, read a report by an Organisation called Raconteur.net publishing a report called The Future Consumer. It spoke at length about the future consumer but much of this was based upon the effects of Covid. I would not hesitate to accept that Covid will have had an impact on the Consumer, I am not convinced it is the comprehensive Shape Shifter it is being described as. Yes, it will have moved a additional sector of society into shopping online. Yes, it will have made an impact on the way we work (though once again I am not thinking this will be as long lasting as suggested. See what happens to those working from home during a miserable winter. It focuses on and suggests fairly nebulous plans about connecting to the consumer.

Craig Inglis ,Chair of the Marketing Society Raconteur..the Future Consume. September 2020

There are other influences that go beyond Covid that are just as powerful in shaping the future consumer, Environment, climate, technology, education and wealth to list just a few. Covid has, to a degree, brought forward the timeline. There is no doubt that a section of society that were new to online purchasing during lockdown will remain online. But not all and furthermore they will not buy everything online. Those starved of the retail experience, apart from queuing outside supermarkets, suddenly missed the ability to go to shop.

I am not convinced that the issue of working from from home or rather the desire to work from home is quite as strong as all the pundits claim. Yes, there will be a change but not as big as big as people think(see previous paragraph). Climate and environment is in a very confused state as the consumer edged back to using cars as public transport was deemed unsafe.

Wealth, health and education all being linked. In that those who have a good education, tend to be wealthier and healthier. The sum effect does throw up some light for good independents, in the more affluent areas of society. The consumer has become aware of its good local independents . They have got (or at least some of them) have got used to walking to them and seeing their offer and being surprised (positively mainly , I think) . The combination, perhaps of working more from home, and in walking distance provides opportunities for the good local independent to connect to this ‘new consumer’ and build relationships that will help their business to flourish long in to the future. The less fortunate, invariably have a poorer choice of independent, if there is any choice at all. So no change there then, the less fortunate become even less fortunate.

So many retailers, amongst those some of our biggest have managed to get their predictions of the Future Consumer so wrong. M&S has got to be at the forefront , their decline started way back , probably at least fifteen years. You just need to look at their approach to online, having only just got their food offering up and running , then only a small part of it and then only through a third party (Ocado). Even the big supermarkets grossly misunderstood their customers potential behaviour when the European discounters first came to our shores (Aldi, Lidl). Consequently they are all only playing catch up.

Hands up, this is not an easy game, predicting the future consumer . You could say that there have been few that get it right. Like it or not Amazon is perhaps the one that stands out. Twenty three years ago, Jeff Bezos (technology achievements aside) seemed to know what the consumer would buy into, in the future. But then I am not sure it is rocket science (or even technological science) convenience, consumer confidence, value pricing and above all the consumer experience, are surely precursors to those who wants to retail. There are those who argue, quite rightly, that he (Bezos)does not care about much else, but we are talking about consumer perspective and here he wins hands down.

IKEA is perhaps another. When they first expanded there was plenty of flat pack furniture around but not in the way that IKEA envisaged it. Nor in the environment they created . ‘The plenty’ no longer exist . IKEA enabled the consumer to visualise a new environment and consequently helped in developing a new consumer . The same perhaps could be said about Terence Conran(in the UK) in the sixties and seventies. Not that he sold flat pack furniture but he saw how the furniture consumer was changing . Unfortunately, when he sold the company, the new company did not continue with that vision. But Conran cannot be considered a global shape shifter moreover his influence was on a relatively small sector of the market. I suspect there are few consumers, in the developed world who do not know of Amazon or IKEA. There are, of course, other future proofing brands available. Those non future proofing may not be around for as long as they think.

Whilst gently lambasting Raconteurs research , I did feel the diagram below was helpful in illustrating some of the effects of Covid on the existing consumer and data such as this, needs to be considered when looking for the future consumer

Raconteur..the Future Consume. September 2020

There are no options. Or rather there are two. You do nothing or you at least take the opportunity, especially in the current climate, to look around at the changes you can see happen in front of you and take a view on what may happen. Back to no options. If you do nothing , nothing will happen or rather , as sure as eggs is eggs, things won’t improve there is a very good chance they will only deteriorate. If you look around , make some guided assumptions and act accordingly, you have an opportunity, if not to get ahead of the game at least keep up with it.

Consumers, by definition, include us all

John F Kennedy

That being a truism, we all change, develop and evolve . As we are all consumers the same principle applies . If we wish to sell stuff to ourselves we need to have some idea how we change and develop. If as a retailer you don’t someone else will .

Now, more than ever, retailers have got to look long and hard and what tomorrow’s consumer is like. For those that don’t it will not be difficult to predict their future, however short lived that maybe.

To Mask….or Not to Mask? A very serious question.

Unashamed bit of product placement ! This should sort out a bit of protection. This will get the High Street moving (but perhaps not in the way we want). But it would look great on a Zoom (there are other makes of online Video Meetings !) Meeting.

This is not about the rights or wrongs of wearing a mask . If science says that it is of benefit then I accept it. It is not about our personal freedoms or civil liberties, if wearing one protects others then we should. However, why haven’t we been told to wear them 4 months ago. Why was it not made mandatory immediately as opposed to waiting 3 weeks from shop opening? Businesses were already prepared, it is only the consumer who had to get prepared (like go and buy one. That said there is huge confusion as to what sort of mask actually works and what not to do if you do wear one) ). The science evolves so say the Government. Well how come it evolved a darn sight quicker in the rest of the world.

My argument is to look at the reason why they have come up with this late stage retail requirement and its possible impact.

I can think of only 3 possible reasons for the mandatory wearing of masks within stores:

  1. Public safety
  2. Political
  3. Economic

One hopes number one is paramount. Well, as we all know you don’t have to wear them in bars or restaurants; somewhat impractical. However, if there is a risk of infection you are likely to spend a lot longer in a bar or restaurant and even with social distancing more likely to have interaction with strangers, than you are in a shop. The new regs state that store staff don’t have to wear them . If we are to accept the science that the mask is to protect 3rd parties are we to assume that store staff are less likely to have the virus than the store customer ? I don’t think science has made that claim. So I am not convinced that Public safety is number one or if it is then I think this a bit arse about face. Which of course would surprise no one.

If it is number 2 , Then I am perplexed as it can’t see much political gain here. Perhaps there is enough pressure about the Government’s mixed and cockeyed messaging that they thought they should align with popular opinion. Assuming popular opinion believes that it is a good thing.

Number 3 sort of makes sense, if they think that it will give the consumer more confidence to go into shops and spend. I don’t. Yes there are naturally those who are very concerned about their unmasked fellow shoppers. Yet my gut feeling , and subjective research suggests otherwise. Non essential shopping is partly a leisure activity and I am pretty certain it will stop the consumer going for leisure or casual shopping if it involves masks.

It’s the don’t have to , and it is not much fun so I will get it online attitude , that will only push more consumers back onto online and not go into the retail store. There will be, of course, those who will be more confident in a masked up situation, but I still feel they will be far outweighed by thinking I really don’t need to do this. So I wont.

There is a lot of confusion out there with the consumer, and this is not helping and one thing about which I am pretty sure it will not help the retailer.