Retail

Retail

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Retailers and the budget - making a meal out of Sunday trading

My recent short blog focussed on the impact of the Budget on retail, specifically the Living Wage announcement. From both a retail and commentator perspective this was very much the ‘main course’ of the Budget, with consequences still in public discourse. However, a change to Sunday trading laws was also on offer. The reaction to it has been decidedly underwhelming; more skinny salad than your steak and chips.

Initially, the change to Sunday trading laws had been reported by the press as means of potentially providing a ‘boost for the economy’ (the Guardian); meaning more choice and flexibility for consumers, and a little shot in the arm for economic growth and jobs. The reaction from retailers has been mixed though.

 

No appetite from the retailers

According to the Independent, Tesco, Sainsbury’s and Waitrose have been cool on the idea. They believe this could hurt their convenience businesses – a market worth around £38bn a year and growing at 5% year-on-year (according to the IGD). For convenience stores, Sundays are often the busiest day of the week so allowing larger stores to open will certainly impact their sales. On the other side, ASDA (with a notably smaller convenience business) is reported to be receptive to a sensible change; looking for a boost to its bigger stores, having gone on record earlier in the year looking for reform. So, food retail seems split, seemingly dependent on the profile of a retailers’ store portfolio.

In the months since, momentum seems to be with those who want to maintain the status quo. Talk also of a cross-bench rebellion looking to defeat the bill in Parliament doesn’t bode well. This is further enhanced when backed by the Church of England, who feels it would eat in to precious family and religious time.

While there are those who are leading a fightback (such as the Adam Smith Institute), the omens don’t look good. However, putting that aside, what would be the impact of a change to the trading laws on retailers?

Outside of convenience and food, many big-box and destination retailers also cite Sunday as their busiest day. Here the logic suggests longer opening hours would be well received to keep tills ringing. However, after the doors shut, many retailers use the time to capitalise on having a full team at work – i.e. to catch up on training, cascade key messages from management, and catch up on operational tasks that are easier done when customers have gone home. These routines and processes will need to be done at different times, or in different ways, if the doors remain open.

 

A hunger for shopping north of the border

On first view, this poses a challenge to retailers as to how they balance customer vs. operation. Those who already trade north of the border will have an operating model ready to go, as Scotland has no restrictions on Sunday trading. A weekend trip up the A1 will help retailers, who choose to extend opening hours, understand how to approach the customer vs. operation trade off. Equally, from the perspective of the local councils, they will need to work closely with retailers to understand how local services may need to operate differently, such as transport. Use of the Google tool showing how busy retailers are at particular times of the day could also help everyone understand what behaviours may change:

A quick (and far from exhaustive) scan through a few examples suggests there may be an appetite for extended hours on a Sunday. Interestingly, however, many other retailers still operate reduced hours on a Sunday. Does this hint at what the future may end up actually looking like, if we put political argy-bargee aside?

 

The middle ground: steak and salad

I wonder whether if, in reality, Sunday trading will mirror the 24-hour drinking laws of the 2000s. A round of early adopters will open far later/earlier, the rest will follow;  then start to pull back as they find customers prefer the Antiques Roadshow to actual antiques shopping on a Sunday evening. I see more of a ‘9-6’ trading day, much like Scotland now.

Pubs that open late do so for particular events – we could see retailers follow this trend. Depending on the season or local festivals, this could provide great tactical trading opportunities, as well as better links and tie-ins with the local community.  Less than 0.5% of British watering holes have a 24-hour licence, with most of those actually opening 24 hours regularly even less; it’s likely retailers would no doubt settle into a pattern of opening some stores an hour or two earlier/later as local demand suits. I don’t see a full-on shift, but I do see change for two reasons:

  • Why restrict the hours consumers can physically shop on a Sunday when we don’t with online?
  • Which retailers would deny their customers spending money with them – a driver of incremental growth, not a shift in current spending levels

 

 

About the author

Nick Hoenig
Nick Hoenig
Nick is a Senior Consultant with experience in retail, change management and strategy and business planning. He has deep industry experience managing change programmes, building and executing strategies for large business divisions and leading big operational teams.

Leave a comment

Your email address will not be published. Required fields are marked *.