Monday 5 October 2009

Retail Political Power…a Force for Change?

As we are currently undergoing great political change worldwide, including a significant step forward in the development of the EU following the ‘yes’ result in the Irish Lisbon Referendum, a return to Mr Blair's care and attention, and radical repercussions as economies everywhere attempt to pull out of the global financial crisis, it is perhaps useful to explore the growing political influence of major retailers on the provision of consumer choice in their markets.

Given their sensitivity and ability to respond rapidly and cost-effectively to consumer-shopper needs, based upon their intimate knowledge of their target audience in terms of name, address, income, shopping behaviour, hobbies, family circumstances, financial exposure, and state-of-health it is obvious that they are accumulating a powerful marketing tool. Moreover, Tesco’s Clubcard penetration of over 50% of UK households, measuring 45 pieces of data on each product, and with an additional 12m members in Ireland, Poland, Slovakia, Thailand, China, Malaysia and South Korea means that the retailers are moving way beyond the collection of basic numbers to deep insight on consumer behaviour as a basis for focused need-satisfaction. This constant attention to the meeting of consumer need, coupled with a determination to encourage repeat purchase as a test of need-satisfaction can build a degree of consumer loyalty that can only be envied by those hanging onto political power.

Anyone doubting the potential power of retailers should bear in mind their ability to exercise real political power in two ways, direct influence on the consumer-shopper-voter in-store, and via direct impact upon the economy.

In the current economic climate, major retailers can use price, the ultimate persuader, to modify the entire value-set of individuals, whilst they can directly affect the economy via their leverage in terms of influencing/controlling inflation, the balance of payments, direct employment of significant numbers of wage-earners, and especially their ability to control access to in-store traffic-flow. Their impact on shopper behaviour can be seen in the way shoppers have traded down in their purchase of top-end toiletries, and embraced quality private label as household budgets have come under increasing pressure.

Specifically, doubters should reflect upon retailers’ track record in unilaterally dismantling restrictive and out-of-date legislation in the EU and UK relating to limited shopping hours, Sunday trading, Resale-Price-Maintenance, and the Net-Book-Agreement, in recent years.

On balance it could therefore be said that major retailers have more political power than the politicians…

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