Is something happening out there? Are we changing as consumers? Could we be craving the allure of simpler times? I ask because in recent weeks I’ve been presented with at least three interesting bits of news, analysis and comment. The monolithic Tesco – long the darling of both consumers and retail gurus – posted a drop in profits of more than 90 per cent. By anyone’s standard, even a business as huge as Tesco, this is pretty disastrous. In financial terms it may be a drop in the ocean to such a corporate heavyweight but it’s what it says about our relationship with the brand that is most telling. Apparently our infatuation with the out-of-town shopping experience has hit a rocky patch.
Secondly, Homebase is to close several of its stores due to market overcrowding and the fact (who knew in a recession?) a lot of us have fallen out of love with DIY. Speaking personally, when were some of us ever in love with DIY?
Finally, and perhaps of most interest, Amazon – the very essence of an Internet business – announced that it is to open its first bricks and mortar store (in Manhattan).
Oh, and there was one other thing: sales of hard copy books have hardly been affected by the arrival of e-readers and, wonderfully refreshing to learn, it appears there remains an appetite for the physical book among those of primary school age who feel they “already spend enough time looking at a screen”.
Given that none of this can be regarded as in-depth research into our behaviour it’s hard to gauge exactly what it tells us but, and here’s the nub for the communicators and marketers among us, it does reinforce the consumer must never ever be taken for granted. Regardless of the fact we live in a world that constantly displays a pack mentality (or is brainwashed into displaying such a mentality) at the end of the day we basically have simple wants, needs and desires.
Let’s take Tesco to start – an aggressive business that grew at a phenomenal rate and offered us time-strapped, pressurised individuals convenience on a grand scale, invested in a huge development programme, saturated locations with variations of its brand (Metro, Express. Extra and, if you were in Thailand, Lotus!) and fiercely undercut its competitors. Until along came those pesky upstarts Lidl and Aldi. How dare they!
Of course the other thing Tesco did was play its role in the demise of parts of the high street. Why go to a newsagent when you can pick up the Daily Mail (if you really must!) next to the sandwich aisle? Why support that specialist off licence when Tesco offered an impressive range of real ales and that lager you enjoyed by the pool on your last holiday? Why go to the local butcher when your supermarket gave you choice and value, if questionable quality.
Just to throw everything at the consumer, Tesco became a bank, an insurance provider, a clothing outlet, a mobile phone business.
An expert on the German retail sector (did we have so many “experts” a decade ago?) interviewed on BBC Breakfast said her fellow countrymen and women are deserting retail parks and turning increasingly to Aldi and Lidl, both of which have demonstrated to consumers that value can come with quality. She also commented that the two German companies, which currently have just eight per cent of UK supermarket business, have their sights firmly set on getting themselves a bigger slice of our cash.
Quite where that leaves Tesco is anyone’s guess. Some would say it has pursued an expansionist policy that is perfectly good business sense. Others feel it was corporate greed and arrogance on a grand scale. For the moment anyway, it’s pretty obvious our relationship with Britain’s biggest retailer is currently anything but harmonious. And now it’s been placed under a criminal investigation by the Serious Fraud Office for overstating its profits.
That takes us to Amazon – another business that’s had its reputational issues with the British public and with the odious, grandstanding Margaret Hodge. There can be few companies we associate more closely with the internet and e-commerce and yet the business with 237 million active customer accounts worldwide, global net revenue of US$74.45 billion and a brand value estimated at almost US$46 billion is opening a shop. Yes, a bricks and mortar shop.
Now, is Amazon serious about establishing a conventional retail presence and is the shop just across from the Empire State Building in midtown Manhattan a one-off or the first of many? The interesting question of the online giant is, of course, “why?”
This is a skilled and meticulous company when it comes to tracking, understanding and second-guessing its customers. Does it, therefore, know something we don’t? Maybe the seemingly unshakable appeal of the physical book against e-reader technology has led the company to consider the enduring allure of the bookshop as something it can exploit – or maybe it’s as simple as a PR and branding exercise; a presence in one of the busiest, most influential cities in the world.
It’s beginning to appear that businesses and big brands are slowly out of step with the consumer – and that a lot of us are tiring of the anodyne, cloned nature of how we shop and make our retail purchasing decisions.
In the past couple of years in the village where I live we’ve welcomed the arrival of two new cafes/delicatessen and a traditional barbers shop (each going into previously and long vacant premises).
These new businesses offer quality, lovely and individual surroundings, and great service. They all appear to be doing a roaring trade. An isolated anecdote perhaps but one which, in its own small way, sends another signal to the big retail brands that they continue to take the consumer for granted at their peril.