The retail sector is beset by paradox. Food is classified as an area of non-discretionary expenditure but it is one where consumers are exercising more and more discretion.


This might focus on ethical sourcing, organic status, mileage, or scrutinise the fat, or sugar and salt content. But even the hard discounters have become more discreet.

Rising raw material costs are driving commoditisation upstream while ever lower prices for high-tech products are endorsing the process from the other direction; the latest gadgets and gizmos are not just for the with-it cognoscenti, but must-haves for all. IPod? We allPod.

The biggest paradox, by far, derives from the coexistence of economic downturn and technological advance; the former impoverishes consumers while the latter empowers them.

And empower as never before. IT has mutated from Information to Intelligence Technology. If recession comes to pass, it will be the first in this internet age and the worldwide web will prove to be the most potent of consumer toolkits.

Price awareness, which inevitably goes up as belts tighten, has gained a whole new dimension through web sites and search engines. Real-time comparisons of competing offers and promotions are now instant and transparent.

Product preference is being affected as never before by online user reviews. Word of mouth, always the highest scorer in the credibility stakes, is coming over louder and clearer in the growing multitude of blogs, wikis and social networks. One can safely assume that when consumers watch their purses, they’ll want to purchase the best bet.

Multichannel choice not only plays to convenience, but to lowest cost fulfilment for the customer. Not necessarily lowest cost for the retailer, of course, but those retailers that wish to prosper must accept that a monochannel strategy is no longer an option.

The paradox, par excellence, is that at the very moment that retail spending is forecast to fall, the shopper is turning shopkeeper: eBay launches 1,000 shops a day, but so too do the less well-known sites.

Anyone can log on to www.zlio.com, for instance, set up their own virtual shopfront, free of charge, and offer a selection from the 6 million-plus products nominated by the host. There are no inventory, personnel, real estate or logistics costs. The linked-in brand-owner pays commission (from 1 to 15 per cent) on the basis of cash per transaction – or even pay per click. Zlio takes a cut, but so too did Tupperware, its pre-internet forerunner. Social shopping has arrived whether the high street likes it or not.

Michael Poynor, chief retail adviser, PricewaterhouseCoopers

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