Consumer 2017: How retailers can serve changing demographics

Polish is now the second-most spoken language in the UK, and Muslims account for 5% of the population.

UK shopper demographics remains fast changing. According to the Office of National Statistics, migration to the UK remained at record levels last year with the inflow of EU citizens at historically high levels. In fact, 10% of all migrants came from Romania in the year ending June 2016.

So how can retailers tailor their offer to ensure they are meeting the needs of as many of their customers as possible?

World food aisles have become a common sight in UK supermarkets, with many retailers taking a local approach to their food offer.

Tesco, for example, has introduced world foods into more than 1,600 stores across all formats, with central European items in more than 1,000 shops.

A spokesman for the grocer said: “Across the UK, our customers tell us how much they love our world food range. We’ve recently added a number of new foods influenced from different countries including Australian, American and Mediterranean to the world food options available in many of our stores.”

Religious events

For the big four grocers, cultural and religious festivals and celebrations can be a significant driver of sales.

During Ramadan last year, which comprises of a month of fasting during daylight hours for Muslims culminating in a celebratory feast called Eid al-Fitr, Tesco forecasted a £30m sales surge and ran in-store and online promotions.

“Delivering a wider range is, in my opinion, one of the few tactics to win against discounters”

Heiner Evanschitzky, Aston Business School

Sainsbury’s also operated a Ramadan section on its website during the period, as well as rolling out world food aisles across 270 of its stores nationwide, while Asda created a 30-day calendar of special offers.

Aston Business School professor and chair of marketing Heiner Evanschitzky says: “It’s a huge opportunity for the big retailers in particular to plan marketing activities around minority shopper events.

“Delivering a wider range is, in my opinion, one of the few tactics to win against discounters.

“It’s the strength of the big supermarkets to have huge ranges of products – perhaps not every product at the best price, but at least something is always available for every taste.

“I think it’s a much better positioning to be known for having a huge assortment, adapted to local needs, than the pointless focus on price.”

Department store and fashion retailers have also tried to monopolise religious events such as Ramadan to boost sales, with Westfield London operating prayer rooms and Arabic-speaking concierges to accommodate Muslim shoppers.

Luxury and high street fashion retailers such as DKNY and Mango have also launched Ramadan clothing collections, while Marks & Spencer introduced a burkini swimwear collection last March that sold out during the summer.

Drilling down data and cost

While catering to an increasingly racially and religiously diverse customer base may appear an obvious way for retailers to boost sales, it is essential that they do not spread themselves too thin, says KPMG head of retail Paul Martin.

“If you’re catering to 18 different nationalities, then that’s obviously going to drive complexity, so the challenge lies in managing the tail in terms of cost,” says Martin.

“In a time when cost is king, you could very easily be going down a rabbit hole, or worse, a dead end, by running specific events for a small proportion of the population, sitting on stock and adding complexity to your supply chain.”

Those with loyalty schemes should drill down into the data to see what their world food products are being bought in conjunction with

So how can retailers ensure the products they stock give them the best return on their investment across multiple demographics?

Analysing customer data and stocking stores in different regions based on varying racial and cultural demographics is a good way of ensuring that retailers have an offer that is relevant to as wide a customer base as possible.

However, Martin says the those with loyalty schemes should drill down into the data to see what their world food products are being bought in conjunction with.

“If you’re trying to streamline your product range, you generally look at the slow-moving stock and then you need to understand basket adjacencies,” he says.

The diversity halo effect

The reality of the changing UK population means that the appetites of shoppers are continually developing, and the grocers are perhaps best placed to cater to this ongoing shift.

While independent shops selling diverse products will continue to serve the needs of shoppers across different cultures and backgrounds, supermarkets have a unique place in the market to bring more diverse products to a wider retail audience.

Supermarkets have a unique place in the market to bring more diverse products to a wider retail audience

Martin says: “If you look at the demographics, Britain is an ethnically diverse country.

“So catering to different groups is really important, whilst acknowledging that white and British shoppers are much more diverse in their consumption patterns than they used to be.

“Grocers want to ideally work out what products are hitting both groups, as the rewards will then be double.”

Giving shoppers what they want is key to every retailer’s success, but as the cultural make-up of the UK continues to shift, retailers must cater to the needs of their new shoppers and offer new and exciting products to their existing range.