The top trends affecting the retail industry: a guide for graduate job hunters
Retail is a 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. In particular you need to know who the main retailers are and have an understanding of their similarities and differences. 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 now. In March 2018, Sainsbury's announced that it was slashing the price of 930 products in its stores and online. Tesco also launched its own discount chain called Jack's in September 2018 to compete with the discount supermarkets.
- Creating new product ranges. This happens regularly within retail. Most supermarkets have expanded their vegan offerings and their 'free from' ranges in response to the increasing demand for gluten- and dairy-free products. Some supermarkets have also collaborated with restaurant chains: Sainsbury's launched a range of ready meals in collaboration with Las Iguanas in September 2018, while Tesco's unveiled its Bella Italia frozen ready meals in the same month.
- 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. Meanwhile, Marks & Spencer's partnership with BP has seen the creation of over 200 M&S Simply Food at BP Connect stores since 2005. 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.
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 2018, everyone aged 25 and above earns a minimum of £7.83 an hour, which is 33p more than the previous rate of £7.50. As of 1 April 2019, it will be £8.21. The government is aiming to get the NLW up to £9.00 by April 2020. Those retailers that do pay non-managerial employees the minimum wage 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. Marks and Spencer is also branching out into online grocery shopping. It started two trial services for Sparks loyalty members in Camden and Reading in autumn 2017.
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. The department stores House of Fraser and Debenhams have both faced difficulties in 2018. Debenhams also recently unveiled its 'Debenhams Redesigned' strategy this year, which aims to transform the department store into a destination for social shopping by offering activities such as hair and beauty treatments and facilities such as restaurants and gyms.
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, retailers 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. H&M also announced its aim to only use 100% recycled or other sustainably sourced materials in its clothing by 2030.
Current example: social responsibility and food waste
Food waste remains a hot issue in the UK, with calls for the government to set a national food waste target. 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.
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. Iceland, for example, committed to eliminating plastic packaging for all its own-brand product by 2023.
Another issue that has been garnering attention is palm oil and its link to rainforest destruction. Iceland has taken the lead on this topic with its 'Choose a Christmas Without Palm Oil' campaign, including its Rang-tan advert that was widely circulated on social media after it was ruled that the advert could not appear on TV. Iceland has also pledged that there will be no palm oil in 100% of its own brand food by the end of 2018.
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.