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Retail Technology, Retail technology News

Retail and distribution marketers optimistic on economy

Monday January 11 2010

Marketing viewed as high priority as retailers react to changing economic and customer environment  

Marketing viewed as high priority as retailers react to changing economic and customer environment

 

The latest Marketing Trends Survey (Autumn 2009) from The Chartered Institute of Marketing reveals that there has been a steady consolidation of positive sentiment about future economic conditions in the UK amongst marketers working in the retail, distribution and leisure sectors.

 

Nearly half (46%) of marketers working in these sectors now believe that the UK economy will improve in the next 12 months, an increase of 15 percentage points from the last survey (31%). There has been supported by a similar drop in the numbers who think that the economy will get worse in the next year, which has fallen dramatically, from 29%, six months ago, to 12%.

 

The views emerging from this ninth wave of The Chartered Institute of Marketing’s Marketing Trends Survey, conducted by Ipsos MORI, show that optimism about their own business prospects of marketers in the retail, distribution and leisure sectors is more pronounced than for the UK economy, and that optimism has continued to grow.

 

The proportion of marketers in these sectors who are confident that business for their own organisation will improve over the next 12 months has risen from around a third (36%) in spring 2009 to over half (53%) in October 2009. This compares to just one in nine (11%) who believe that their business will get worse (down dramatically wave-on-wave, from over a quarter 26%).

 

Positive outlook extends to sales and budgets

 

Anticipated sales figures for this financial year are the highest of any of the sectors surveyed (+2.8%), and have bounced back from spring 2009 when marketers in these sectors expected to see a decline (-0.2%). Half (50%) now consider their sales plan to be “challenging”, which is 12 percentage points lower than spring 2009 (62%). Overall, marketers expect sales to grow by +1.0% this financial year.

 

Commenting on the findings, David Thorp, director of research and professional development at The Chartered Institute of Marketing said: “2010 will certainly be a challenging year for retail, distribution and leisure sector marketers, with the slow progress of the economic recovery, the UK general election and an ever-growing presence of digital and social media.

 

“However it’s good to see that marketers in the retail, distribution and leisure sectors have an improved positive outlook and that they are responding to customer needs by modifying their products and services. For now, marketers are wisely concentrating their hard-won budgets in the most effective activities, and still see the need to invest in training. As we move into the New Year, I’m convinced this more professional approach will stand them in good stead when the economy fully recovers.”

 

Marketing making a sales difference

 

The report found that marketing is clearly seen as a high priority and the proportion spent on marketing in these sectors confirms this. Three-quarters (75%) feel that marketing is viewed as a ‘high priority’ within their company’s business strategy. This is the highest level for any of the sectors surveyed (the overall average is 60%) and is also up from six months ago when around two-thirds (65%) held this view.

 

There has been some easing in securing marketing budgets among marketers in these sectors. Half (50%) find that securing budget for marketing activities is “very” or “fairly” difficult, which is a substantial decline from spring 2009, when for three in five (60%) this was the case. Among those who say securing funding is difficult, three-quarters (75%) of them say that these difficulties are either “wholly” or “partially” due to the current economic environment.

 

Rising up the corporate agenda

 

The importance of marketing in organisations in the retail, distribution and leisure sectors can also be seen in the amount spend on marketing. Not including salaries, an average of 10.2% of companies’ turnover in the retail, distribution and leisure sectors is accounted for by their marketing spend, the highest level for any of the sectors surveyed. This amount also represents an increase from the spend seen in Spring 2009 (8.2%).

 

Marketers are reacting to changing economic and customer environment: There is a clear recognition among marketers in the retail, distribution and leisure sectors that their customers have changed in recent times. Around three-quarters (73%) concur that there has been a fundamental shift in their customers’ behaviours and spending patterns since the start of the recession. A significant minority of organisations in those sectors appear to be responding to these change times as well. Over half (56%) agree that the current economic environment has forced them to change their products and/or service offering. This is the joint highest proportion for any of the sectors surveyed.

 

In addition and on a more positive note, a third (33%) of marketers working in the retail, distribution and leisure sectors say that the current economic environment is opening up lots of opportunities for their organisation.

 

Fears for job losses stemmed

 

Fewer concerns about marketing functions shrinking: While they have eased across other sectors, among marketers working in these sectors there is a stubborn minority of around a quarter (27%) who are personally worried about losing their job over the next 12 months (however, this is in line with the figures for UK sectors as a whole). Nevertheless, there is better news with regard to expected changes in the sizes of marketing functions in the retail, distribution and leisure sectors.

 

In Spring 2009, over a fifth (22%) expected the marketing function to shrink in the current sales year compared to the previous year. In October 2009, this figure has more than halved to just 8% who have those concerns. In fact, three times as many (24%) expect their marketing function to grow in that period. Among those who are expecting a reduction in size, nearly all (85%) say that those reductions are either “wholly” or “partially” due to the current economic environment.