Credit Crunch Consumerism
No longer can Portas make a series on revamping small shops in order to improve profits; with far fewer customers looking to spend any money, she has taken to looking at the companies that have simply admitted defeat. However, it is not only the small retailers that have taken a hit in these grim economic times: we have all been aware of the closures of Zavvi, Woolworths and many others, drastically changing the face of British high streets everywhere. Despite their boasts of superior customer service, legendary department store John Lewis has also seen this year's profits fall by 26%. However, not everyone is suffering during these times. As customers ‘trade down' their items, Primark have in fact seen an increase in profits by 10% whilst like-for-like earnings have increased by 5%. Clearly, consumers are seeking on-trend fashion for discount prices.
Basic management tenets dictate that sellers should either differentiate on the basis of price or quality in order to attract customers. Whilst these principles are promising in practice, consumer's price awareness is making it difficult for smaller retailers to compete without the benefits of economies of scale (the term given to the costs saved by increasing the size of a company's operations). Thus, without the option of selling t-shirts for £3, small retailers are left only with the option of differentiating themselves on the basis of quality, which can be expensive. In this respect, perhaps it is best to take a leaf out of Sharon O'Connor's book.
Sharon, the Managing Director of high street chain Oasis has refused to allow item prices to plummet, opting instead to offer fun customer experiences like girlie launch nights for their new clothes ranges. With a somber mood across the nation, such activities may prove a useful and attainable way of increasing customer footfall. In addition to this, it may prove profitable for smaller retailers to encourage the ‘investment buys' promoted by the likes of Gok Wan. Rather than buying small, throwaway items from Primark or in the Dorothy Perkins sale, it may still be possible for retailers to encourage larger purchases of high quality that will last for years to come. A stunning black dress, a brown leather tote bag or a statement necklace can all be items that make a great addition to any wardrobe and can transform an outfit, thus allowing customers to get more wear from the existing items in their wardrobe.
Essentially, even in a recession, girls are still girls. When people are struggling in other areas of life, a flattering outfit may perk them up for the day. Mary Portas and others like her seem convinced that if retailers can target customers in the right way, then at least some of them should be able to survive the economic downturn. The key, however, will be to tempt customers away from the big shops and small prices in favour of the more unique pieces offered by small shops.