Innovation key to staying competitive

Like a tired old rock singer, a has-been actor or a restaurant that has seen better days, the retail sector often has the need to be able to find inspiration from within in order to reinvent itself.

Fortunately for the retail industry the results are usually more positive than the other previous examples, as the inspiration is usually found from years of experience, and knowledge of knowing what to do when times are bad.

The fact of the matter is that retail is a cyclical business where peaks and troughs usually mirror other variable measures such as consumer confidence and inflation. As a result, ongoing success is often due to acutely detailed planning processes. However because a certain element of the retail sector is reliant on the ability of being able to tap into the mindset of the consumer, there is also something to be said for creativity in times of crisis.

No more is this in evidence than when there are troubled times ahead, something that many of the world markets are now increasingly becoming part of. More than many other business sectors, retail needs to continue to attract customers and retailers are becoming more and more adept at appealing to the many different types of shopper that make up their customer demographic.

The simple route is obviously to discount. When our money has to go that little bit further each month, one of the easiest ways to attract shoppers is to slash prices. This strategy is reaping seriously good rewards for the genuine discount retailers, especially in the grocery sector, so much so that companies such as Aldi and Lidl in Europe are actually benefiting from the credit crunch.

Golf course and climbing wall

However I'm a difficult person to please in this regard and when it comes to business ideas I tend to appreciate a little more inventiveness when it comes to such matters. Discounting is all well and good, but when the good times start again those retailers that had previously cut prices will simply go back to where they were before, and hence nothing really changed. Additionally, unless you're actually a discount retailer, reducing your prices is not a long term strategy, but more of an opportunistic short term approach. Therefore it is unlikely to work during a prolonged period of low consumer confidence where there is increasingly less availability of disposable income.

Recently, however, my interest was peaked when I read about a small mall in the states that made the decision to evict a few tenants and instead of re-leasing the space, it built an 18 hole miniature golf course, whilst at the same time it also erected a two-storey high climbing wall right up through the middle of the mall. The mall was prepared to do something completely new, different and inventive in order to appeal to both existing and new customers.

Different forms of entertainment are increasingly becoming part of a new retail strategy for malls and centres, as it boosts interest from adults and children alike. Ideas such as those above also create new touch points of interest for shoppers as it not only adds a new dimension of uniqueness to centres but also a new marketing angle for the mall as well. Now I'm no rock climber, but I am all for seeing such new ideas to the malls in the region if it means that they continue to offer new and different ideas to the shoppers.

- The writer is Head of GRMC Retail Services, Dubai.