But the shops are not only fewer in numbers, they are changing as well. There are now large market halls in Rotterdam and Amsterdam, and leading grocery chains Albert Heijn and Jumbo are also opening their own Food Markets. These are concepts we didn’t even dream of a few years ago. Not only in food are we’re seeing chains open bigger stores – flagship stores – in A1 locations. All across retail, huge stores are opening that sell a full product range and, more specifically, a full-on brand experience.
Going bigger doesn’t apply to all chains. Many are moving in the opposite direction by opening branches that are smaller in size and carry limited, carefully selected stock. You’ll often find stores like this in smaller cities and towns. With a little help from the in-store kiosks, the full product range is still available. Home improvement chains are moving in both directions: besides the hypermarkets on the urban fringes, Gamma and Praxis have opened small DIY stores with a more limited stock in different cities. This is something furniture retailer IKEA has also done in a number of cities abroad.
Finally there are the major outlet centres, which have also grown in number here in the Netherlands. Besides Batavia Stad in Lelystad and Rosada in Roermond, the Zoetermeer city council has also approved the construction of a massive outlet centre. The upsurge in outlet centres places even more pressure on the existing retail shopping areas.
CHANGING PRICE STRATEGIES
In December 2016, health food chain GNC announced it was closing 4400 of its stores for one day so it could change the pricing policy in the stores. According to the company, the business model was outdated, the prices and discounts were confusing and were not in sync on the online and offline channels. One of the reasons GNC gave for the change is that the prices in the market are virtually completely transparent. Many customers have a smartphone and can compare product prices on the spot.
Similar issues are also at play in our own country. Dutch DIY chain Formido reported that its stores would be working with “reasonable prices every day”, moving away from the well-known DIY discount vouchers. Here too, market transparency was the main instigator for this change in price strategy.
However, (price) transparency is not the only reason retailers are changing their price strategy. The success on the Dutch market of chains like Action, Lidl and Op=Op Voordeelshop is forcing the competition to keep a close eye on their own pricing. In the UK, research was recently conducted on the growth of discount retailers. One very interesting outcome of the study shows that discounters mainly grow during times of economic crisis, but don’t lose any of this market share once the hard times are over.
The above are examples of developments currently taking place and which are changing the market. And it is precisely in this changing market that retailers should be asking the question: “How do I stay relevant?” and “How can I continue to add value and distinguish myself in doing so?”
Distinguishing yourself can of course be achieved in many ways. In our blog we will write about current topics in which you, as a retailer, can make the difference. There are the three key areas in which you can really distinguish yourself: innovation of shopping concepts, well-trained staff and current, relevant content.