Friday 19 June 2015

Restructuring for the new UK retail trade environment

With all attention focused on the structural changes occurring in UK retail, in particular the growth of the discounters and Waitrose at the expense of the Big 4, in a flat-line market, very little attention is being paid to the most obvious of knock-on implications, the need for some adjustment in how we manage this new mix of retail routes to consumer…

At current rates of large space redundancy, the economics of selling off ‘spare’ space – at a rate that forces buyers of the property to achieve sales intensities of £1,000/sq. ft.+ to justify the investment, the resulting property lock-in prevents major retailers from scaling down to the smaller, closer convenience outlets demanded by consumers shopping more often in smaller quantities.

This has to result in a gradual loss of market share from Kantar’s current levels of 73.5% for the Big 4, to a combination of the discounters, Waitrose, online and emerging formats. Incidentally, even if the Big 4 retain their fair share of online growth, online success does little or nothing to address their bricks & mortar surplus issues…

This has to result in losses in market share for the Big 4 – the only issue is the point of settlement..

All of this means that the requirements of the UK NAM role are changing, along with the relative importance of the Big 4 in supplier portfolios.

Time for a market-led change of emphasis at NAM level? 

Subscribers can access the implications and options for NAMs in the June issue of NamNews.

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