By Mark Cox, Chief Operating Officer, Channel Islands Co-operative Society
Looking ahead to 2017, what can we expect? After a period of flux with major political and economic events affecting both consumer and business confidence, it looks like we're facing a period of price inflation; goods are going to be more expensive and operating costs will rise.
While the islands may have been protected from some issues surrounding Brexit, the drop in the value of sterling will be felt locally due to the impact of higher import costs in food and non-food sectors. Many of the major retailers will have hedged currency for this year, so the weakness in sterling will only begin to have an impact early this year.
Proposed above-RPI increases in Jersey and Guernsey on alcohol, tobacco and fuel duty will have a further impact on disposable income levels. Increased fuel costs affect businesses as well, and the size of the increases will negatively impact operating costs.
Balancing the books
Yes, the lower interest rates might help as they may offset some of the inflationary pressures consumers face, but the continued focus on balancing the books on the islands, at the cost of the taxpayer, could well mean that any benefit is eroded.
With both islands looking at how best to fund the growing cost of health services, we should expect to see continued consumer interest in health and wellness. The increased awareness of the cost, financial or otherwise, of our lifestyle choices is driving behaviour change and food retailers are well placed to help inform and educate shoppers.
Customers will search out convenience more than ever – shopping more frequently instead of large weekly shops, and willing to shop around and top up as required. Retailers need to work hard to retain loyalty and capture a greater share of customers’ spend.
Online and digital technologies also continue to grow and influence consumer choice locally. This isn’t going to change and retailers will need to continue to invest in their offer to ensure it remains relevant.
Focus on engagement
The traditional bricks and mortar store will remain important, but retailers will focus harder on creating more meaningful engagement. Customers are more empowered than ever and tend to be more impatient too, so creating theatre and offering experiences in store that can’t be replicated online will be important.
Without doubt, shopping is becoming more 'social' – customers are talking about products, services and experiences all over the web. As retailers, we can’t just sit back and hope for positive feedback; we need to engage and provide up-to-date, relevant social content from which to inform decisions and choice.
Comparing our high-street vacancy rates with similar towns in the UK, we still have a vibrant, compelling offer in our town centres, and we continue to punch above our weight in terms of the mix of local and chain store retailers available.
High-street investment
Investment in Jersey’s high street is evident – De Gruchy and the Co-op will complete significant improvement projects in 2017. This demonstration of confidence can only be good for the islands.
In Guernsey, there isn’t quite the same scale of opportunity, but recent moves by M&S kids, iQ and Feelunique demonstrate that retailers are willing to invest to improve their offer.
While we will still see growth from retail in 2017, it will remain challenging and retailers will need to consider carefully how ambitious their targets are.
But it’s not all doom and gloom. Both islands have fantastic retail offers that exceed what would be available in similar-sized market towns in the UK – though there's no room for complacency. Retailers that drive value, engage and interact well with customers and focus on delivering experiences that can’t be replicated elsewhere will enjoy a strong 2017.