Paul Wheeler is the Sales Director for MHK UK, a cooperative of specialist kitchen retail businesses in the United Kingdom.
How to meet consumer demand in times of economic uncertainty
Posted 2nd Nov 2019
It’s a strange environment out there in consumer-land right now. Many consumers are holding their breath and waiting to see how the general economic turmoil plays out.
At a national level, there have been tranches of job losses reported in the media and attributed to Brexit, although there is simultaneously the lowest reported level of unemployment since the 1970’s. Faced with such uncertainty and conflicting information it’s no wonder consumers are unsure whether they should spend the pound in their pocket or continue to hold their breath and see.
So how does a kitchen retailer not only survive, but also thrive in this situation? The good news is that consumers will spend their pounds and it’s not a race to the bottom chasing the lowest price. At every level in the market, however, consumers are cautious. They are therefore demanding greater value for their spend, and insisting that budgets are adhered to.
More related blogs:
- How businesses can gain a competitive advantage
- UK water shorage: how we can future-proof homes and the industry
- The resurgence of coloured bathrooms
This is a clear sign to a KBB retailer that they need to re-evaluate their offer and re-align it to the changing demands of their target customer. If those target customers are shifting their expectations of what constitutes value, retailers need to ensure they are offering the best value for money across a wide range of budget levels, whilst keeping in mind that service also plays a big part in the value for money proposition. If your target customer is demanding better value, then your target has moved so you then have the choice of either finding new customers, or finding a product that offers what your target audience now wants to buy.
To come out on top, retailers need a clear product strategy, with a product staircase of good, better and best. There also needs to be quantifiable differences between products that justify the price-points, so that a customer can stay under your roof and not go elsewhere if your tried and tested offering no longer fits the bill.
It's also important that the retailer has selected a product portfolio based on a clear understanding of what each brand or product does well, and what each brand doesn’t offer too.
Lastly, it is important that the retailer is sourcing these products efficiently and paying the right price for them – if there are too many links in the chain, this will erode the value a consumer receives. It will make the sale less likely, or the margin lower.
At kitchen buying group MHK, we give our members many tools to help them win in this situation.
We always recommend a “product staircase”, and my primary concern is always to understand a retailer’s business. The aim is to give insight, to help them select products and the right brands that are appropriate for their market.
We also want to offer great “bang for their buck,” to enable the business to operate as profitably as possible. We want to give the retailer somewhere to go when faced with a fixed budget and specific wish list from a customer.
Members have the advantage of knowing they are buying their products very efficiently, at the right price, with 30 days to pay and with early settlement discounts and rebates from many suppliers - to offer better value it is a combination of several smaller factors that add up to make a big difference and give a retailer the edge. We also understand that this is a marginal business and every additional kitchen MHK can help a member sell feeds directly into that retailer’s bottom line profit.
So, to win in the race for better value, make sure you have several well-chosen rungs of the value ladder in your showroom - this is where MHK can help!