Retail is a rapidly-changing sector. To succeed in the recruitment process for a graduate role it is vital that you are aware of the trends affecting the industry and consumer spending. You will need to know how these trends affect:
- the retail industry as a whole
- the retailer that you have applied for
- the retailer’s competitors.
Why do graduates need to know about retail trends?
On an application form or in an interview for a graduate retail role you are likely to be asked commercial awareness questions. These might include outlining the challenges and issues that the retailer or industry is facing, or making suggestions about how the retailer might improve its store. Further down the line, assessment centres commonly use case study exercises and presentations to assess candidates. Again, this will require you to demonstrate your commercial awareness. You will need to have researched trends thoroughly in order to give informed answers at every stage during the selection process. Recruiters want candidates who can show their understanding of and interest in the sector.
Retail commercial awareness: things to look out for
If you’re trying to develop your retail commercial awareness, below are some of the things that you should be brushing up on. Use these as starting points for your own research into the sector.
Retailers and their competition
Retail is a highly competitive area and you must be aware of which retailers are in competition with one another. You need to know who the main retailers are and understand their similarities and differences. In particular, you should carry out research to discover the main competitors of the company you’re applying to. Bear in mind that retail is very fast moving so just because one retailer is in the lead today, it doesn’t mean that they always will be.
Current example: the rise of the discount supermarkets
Discount supermarkets, in particular Aldi and Lidl, have grown rapidly in popularity across the UK over the past few years and they are continuing to pose a threat to long-established retailers. In response to this, retailers are having to adapt and develop new strategies to challenge the success of the discounters. This has so far included things such as:
- Implementing a ‘price war’. This has been going on for several years nowand the record levels of discounting before Christmas last year continued into January this year. Reductions in prices by large supermarkets – including Tesco, Asda and Sainsbury’s – have led Aldi to cut prices in 2019 in order to maintain a considerable price gap.
- Expanding vegetarian, vegan and ‘free-from’ offerings. Alongside a growing number of people cutting out meat or animal products entirely, increasing awareness of the environmental impact of meat production has increased the popularity of the ‘flexitarian’ (mainly meat-free) diet and reduced consumption of animal products – such as the decision to have meat-free Mondays. Tesco started stocking the ‘bleeding’ vegan burger, manufactured by US brand Beyond Meat, in 2018; they will begin selling Beyond Meat’s ‘sizzling’ vegan sausages at the end of September this year.
- Focusing more on smaller, food-based outlets to meet the needs of commuters, such as in train and petrol stations. Tesco, for example, completed its takeover of the wholesaler Booker, which owns the Londis and Budgens convenience stores, in March 2018. In November 2018, a BBC investigation called Inside Out looked into the prices of items in convenience stores compared to supermarkets. It found that the same items were more expensive in convenience stores. As part of plans to open 55 new stores in London by 2025, Aldi has decided to open some smaller, ‘local’ branches.
Challenges to/developments in the retail sector
If you are applying for a graduate job at a retailer, recruiters will expect you to be aware of what is affecting the sector in general as well as what is affecting the particular company that you are applying to. You should also have some idea of how retailers are adapting to overcome any changes or difficulties and the impact that this is having on their success.
Current example: the new National Living Wage (NLW)
As of 1 April 2019, everyone aged 25 and over earns a minimum of £8.21 an hour, which is 38p more than the previous rate of £7.83. The government is aiming to get the NLW up to £9.00 by April 2020. Those retailers that pay non-managerial employees the minimum wage (rather than a higher rate of pay) will need to absorb the extra costs of the higher wage bill. They could do this in a variety of ways: by raising the prices of products in-store, by accepting the loss that they are likely to make, or by reducing their expenditure elsewhere within the business. Savvy graduates should be aware of developments such as the NLW and consider how different retailers might respond.
Current example: the continued growth of online shopping
Online shopping, on computers, tablets and smartphones, has long been on the rise and the impact that this is having on retailers is increasingly visible: if fewer customers are buying goods in-store, this can result in retailers focusing more on their online presence and scaling back plans to open new stores, as well as finding new ways to draw customers into existing stores.
Amazon's move into the UK grocery market in 2016 poses a threat to the sales of those retailers that had so far dominated it, such as Tesco, Sainsbury's, Asda and Ocado. Morrisons has taken the tactic, ‘if you can’t beat them, join them’, by making a deal for same-day grocery deliveries with Amazon this year.
Meanwhile, in the world of fashion, high-street retailers are having to find ways to keep up with the increasingly popular online-only retailers such as Asos and Boohoo. Over the past eighteen months, Arcadia Group – which owns retailers such as Topshop, Topman, Dorothy Perkins and Wallis – has faced losses, and Debenhams and House of Fraser have entered administration.
As well as moving towards online selling, some retailers have responded to this trend by improving and expanding the experiences provided to customers on their shop floors. In April, the world’s biggest Primark was opened in Birmingham, inside which there’s a barber’s shop, a beauty studio and a café. At the end of November, the Selfridges on Oxford Street (London) will become the first department store to install a permanent cinema. As customers can buy online, these initiatives are designed to give them the incentive to visit physical stores.
Changing concerns of retailers
Retailers are almost always in the news and their prominence in public life means that their actions are often heavily scrutinised. As such, they have to be aware of the concerns of their customers and work in line with them. They also have to work hard to promote a positive image within society. If they don’t, it could damage their reputations and cause them to suffer financially as a result.
Current example: the ethical sourcing and manufacturing of products
Where and how products are made has been a prominent issue within the retail industry. As a result, retailers need to be increasingly transparent about their relationships with suppliers and many have sections of their corporate website dedicated to providing information on the sourcing and manufacturing of their products. Waitrose, for example, has for a long time made its support for ethical sourcing and British produce a unique selling point. Clothing retailer Pretty Little Thing has launched its Recycled range, using recycled materials, and H&M aims to only use 100% recycled or other sustainably sourced materials in its clothing by 2030.
Food waste remains a hot issue in the UK. Topics up for discussion include the potential for supermarkets to be legally required to publish their food waste data, the future of best before labels, possible improvements to food packaging and the sale of 'wonky' fruit and vegetables to reduce food waste. Asda is currently trialling a new coating technology that slows down the rate at which fresh fruits and vegetables spoil, as a way to reduce food waste.
There is currently a spotlight on reducing plastic waste, for example through introducing plastic-free aisles. In January 2018 200 MPs wrote to Tesco, Sainsbury’s, Morrisons, Asda, Waitrose, Aldi, Lidl, Budgens and Marks & Spencer urging them to scrap plastic packaging and the prime minister pledged to ban all avoidable plastic waste in the UK by 2042. Since then, many of the major retailers have announced their plans to tackle plastic waste. Sainsbury’s, for example, plans to halve the amount of plastic they use by 2025; the supermarket has recently suggested it might start selling milk and fizzy drinks in returnable glass bottles.
Recent challenges to throwaway fashion and its environmental impact have led many people to support second-hand clothing. Oxfam launched the Second Hand September campaign this year, to encourage people to stop buying new clothes for 30 days. For this month, Selfridges in London has demonstrated its support through the pop-up, called Depop Space Selfridges, and Asda has started selling second hand clothes in its Milton Keynes store.
Doing further research
You need to thoroughly research these trends as well as any others you come across before applying for a graduate role in retail, and especially before any interviews you might have. Retail trends and stories about particular retailers are often covered in the mainstream media, as well as in specialist news outlets. You can also research retail trends by looking at retailers’ websites – keep an eye out for information and press releases detailing any significant changes such as store closures or the introduction of new initiatives.