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Retail: CFOs find their priority is all about the data

David Rae | Oct. 3, 2011
The British high street isn't a happy place. Rising input costs and taxes combined with falling wages and consumer spending makes for a particularly unpleasant cocktail. And while it's a cocktail that retail CFOs have been supping for some time, there's no doubt that the sector is in chronic need of a pick me up.

Although fashionable, Hall is quick to point out that his products are by no means small-ticket items, with the average cost of a bike reaching around �600. And it's these types of considered, discretionary purchases that consumers are thinking long and hard about.

"The reality is that a lot of people are choosing to go bike riding with a second-hand bike," he says. "So things like our servicing is up significantly, indeed some of our more specialist parts like wheels are selling well because people are deciding to keep hold of their frames.

"Ultimately that has two issues for us: one, we get most of our upside from selling a bike and, two, the add-ons � so, if consumers are not coming in to buy a bike they might not come in to buy add-ons either."

Of course, a stuttering economy is not the only issue having an impact on the British high street � a change in consumer behaviour was well under way prior to the 2008 crash and, arguably, has only been hastened by it.

Recent research by PricewaterhouseCoopers shows how the impact of the digital world is an opportunity and a threat to retail businesses. In 2008 just 4 percent of online consumer shopped online more than once a week � in 2010, this had more than trebled to 14 percent.

This has more than one impact. The obvious one is that traditional retailers with a large portfolio of bricks and mortar retail outlets must assess their balance sheets in order to determine the retail outlets they should keep. It's a trend already in play, with Carpetright, Thorntons, JJB Sports, Comet and Blacks Leisure having closed hundreds of stores between them.

But while the natural reaction is to view the growth of online as a threat to traditional retailers, the opposite can be true. The strength of a brand is still immensely powerful, and consumers are more likely to shop online with a brand they trust than with one they have little knowledge of.

A combined offering

It's a trend that PwC highlighted in its research. Survey respondents were asked whether spending with their favourite online retailer had increased since they had started to shop across multiple channels. Just less than half of online shoppers said it had remained broadly the same, but the remainder said it had increased; 9 percent by more than a quarter and 27 percent by more than 10 percent.

It's a revenue opportunity that few CFOs can afford to miss out on � even those in booming sectors such as cycling. "We recognise that our online business is growing very, very quickly and that's a challenge that we're trying to meet," Halls says.

 

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