Too many retailers still believe discounting is the only way to keep customers walking through the door.

In this episode of Retail Reckoning, I, Clare Bailey, will explain why that mindset is a fast track to collapse. From the real meaning of value in 2025, to the dangers of a “race to the bottom” on margins, Clare explores how economic uncertainty, squeezed supply chains, and outdated 9–5 trading hours are reshaping the retail landscape.

Discover how independents and big brands alike can compete on more than just price — with smarter stock strategies, customer reassurance, and creating moments of joy that build loyalty.

In this episode, we're focusing on the real meaning of value,

how to maximize margins, the importance of

localization, and if you're trading

9 to 5, this one might make you rethink that.

Welcome back to Retail Reckoning. We're going to cut through the fluff,

confront the facts and say what many others might not. I'm

Clare Bailey and today we're diving into the murky waters of value

margins and what it really means to serve customers. Customers in

2025. This episode picks up right where our last one

left off. And if you haven't caught up on episode one, go and do that.

It sets the stage. Let's first dive into value.

As I said in episode one, it isn't just about price.

Yeah, retail reckoning.

Retail reckoning. No space for

dusty shelves. Cause retail

reckoning owns the floor.

The message hasn't landed enough people yet. Consumers aren't

just bargain hunting, they're prioritizing where they spend.

The share of wallet isn't just about the lowest

possible price. And quite frankly, often when I speak at conferences,

I say to the independent retailers in the audience, be more

stellar, reassuringly expensive. Because actually

value is a race to the bottom that only those with the biggest

pockets can achieve. That's where we call value. But we

don't mean it as value, we mean discounting. The real

meaning of value is a bit of a moving target as

consumer behaviors have changed and more and more people

are looking for ethical and sustainable options, especially

in the younger generation. That's one of the areas where you might be

able to compete on value. Made in the uk. Shorter supply

chains, fewer carbon miles. Others just want

speed, same day delivery. Only recently we

saw that John Lewis was partnering with, I believe it was

Uber Eats, not just to deliver food, but to deliver

all kinds of products, from lamps to bedding to who knows

what. That's real speed. It's not going to be in all stores,

it'll only be in those who've got a significant catchment. And it's a trial,

but it just goes to show how much instant

gratification is important to our consumers today. Think about

your own behavior. There are some who want the cheapest option

and that still feels like a reliable, dependable way forward.

I mean, I often talk about the fact that people cut

as much of their spending out of the boring basics

in order to be able to splash out a little bit on the

interesting additions. And actually that's been seen for

quite a few years now. The majority of us want

the combination of a fair price, not Necessarily the lowest,

but a fair price, quality products, it lives up to our

expectations and meets our needs. The service

we were treated well. And convenience. What are

the opening hours? Is there parking? Can I buy online, can I click and collect?

And all of those things, depending on what they're buying and when,

could have a different weight in the decision. So

really you can't apply this blanket approach that many people do.

And if you still think value is discounting

or a generic promise, then you're already behind the curve,

because it certainly isn't. And the retailers who are

successful have fully understood this.

Talking of discounting, we all know, as we mentioned last

time, that margins are being squeezed. All of the information

that we've heard from national Insurance, increased minimum wages,

very sticky inflation, business rates still looming, online

fraud, all of those things are still relevant. And

that's why consumers are still cautious. All the more so

with a lot of the global economic uncertainty, with what's

happening in the stock market, so Trump's

tariffs, wars, Gaza,

Ukraine, the world is full of bad news

constantly. And when the world is full of bad news, consumers

worry. They worry about their jobs, they worry about

what's going to happen to them. And they worry because

it's nerve wracking to hear all this bad news all the time.

So what they often do is even if they've got

spending power, they just hold back. They keep

the money with them, just in case.

And what retailers need to do, and what many do,

is attract more customers through the door, or to at least engage with

those customers who are cautious and reassure them. The problem is, far too

many think the only way to keep afloat in a time

of extreme consumer lack of confidence is to drop

prices, to maintain volume sell and to release the

cash tied up in stock. But what that doesn't do is generate enough

profit to pay the rent, the rates, the utilities, the staff, the

insurance. And of course, a lot of people complain when

the PLC retailers make profit. And I sort of think, what are you

complaining about? Most of the pension schemes and

investment trusts use PLC retail as part of

their portfolio. If they don't generate profit and shareholders value,

that actually degrades the actual income into a

lot of the major pensions and investment funds. So people that

declare the major retailers who've done well are just

greedy and profiteering from customers, are they? Or are

they being really efficient and delivering what PLCs are meant to do, which is

shareholder value? Because one day when we all come

to draw pensions and hopefully private pensions and so on,

funded by a lot of these stocks and shares will appreciate the fact that

they made a profit because it'll mean that our pension pot has kept up with

inflation and we're not actually going backwards. The other thing to consider

when it comes to discounting is the volume doesn't

equal viability. The smaller businesses can

reduce prices for only so long. But as

the buy in price for new stock is unfortunately rising

due to pressures upwards of the supply chain, what you're getting for the

product you once bought for, say £10, that product may

now be worth £12, 50 or more.

So if you haven't sold enough to generate

the profit now to rebuy stock, you find yourself

in a cash constrained position. And that's a serious

problem. And that's where quite a few small businesses unfortunately have ended up

in an insolvency position. So I really do urge people to

reconsider discounting, but to focus on what can

they do to bring customers back. If you're not making enough

money per transaction to be viable, what's the point?

What are you really gaining?

So looking at that in terms of the high street reality we've

seen over the last, oh, probably it's nearly 15 or

15 plus years now, retailer after retailer

falling into collapse. A lot of that has been to do with not

banking enough money in the golden quarter. So from now until Christmas is the

most important time for a huge amount of retailers if they

don't bank the profits now, and some of those might be looking to make

30% of their annual profit in this next quarter, others in

gifting and so on could be looking as much as 60% in the golden

quarter. And the reality is some of those retail administrations over the Last

more than 15 years have been as a result of a poor Christmas trading.

They then don't have enough in the bank because they've discounted and

they've not done well. They don't have enough in the bank to pay the quarterly

rent, to pay the staff, to buy new stock, and they hit the wall

as well as all that. We've got quite a lot of empty units. More and

more retailers have moved out of high streets and it's an interesting situation

because people are busily blaming the Internet. I actually look at this

from a point of view of what happened back in the 80s and 90s

to deal with housing. Lots of housing estates were built on the edge

of town or out of town and then to serve that community

who became car or public transport reliant to get high streets,

large out of town stores and developments started to pop up. That

meant that the community who'd moved out of the town centre to

the nice detached house with a garden where the kids

could play in a safe area versus living in a flat in the town

centre. But all those families were now not needing to go

into the town centre because of out of town developments. So we can definitely consider

that out of town became part of the reason why the high

street suffered. And we saw closures. Then we saw lots and

lots of car dependency because they were no longer able to walk to

things and public transport wasn't as accessible from housing

developments. And finally we're seeing some planning

reforms which hopefully address the problem of that drift

out of town, which I personally believe has got a lot more to do with

high street decline than the Internet. Because the Internet, even at the peak of

COVID was only ever 35% of total retail sales.

And it trickles along somewhere between 25 ish percent depending on the

ONS figures or whoever you look at. So it's not the Internet. If

there's 25% going through the Internet,

75% are still going through physical shops. Unfortunately, they're not

necessarily the ones in town centres. But luckily there has been

some planning reform that's, I think is a good idea because it's

made it easier to turn perhaps offices above shops or even empty

shops into housing, where it could be usefully used as housing.

That puts populations back on the doorstep of the

businesses. So yes, there'll be fewer businesses in the town centre, but it

brings the equilibrium back and puts a population in front of

the businesses that trade there, so that then they can at least

be viable. And over time, as the population is back in the

town centre, maybe more businesses will pop up. So

that's a good side of planning reform. The recently announced planning

reform doesn't make a lot of sense. As I covered in a previous

episode, we have to really look at the differences between

what's causing issues on the high street, what's causing

drops in footfall, and so on and so forth. And high streets

are less and less accessible. The first thing that local authorities

get when they walk into a dependent business is it's all about

the parking. It's all about this, it's all about that. Availability of

parking is a problem, Cost is not a problem if the offering

is right. But I also think that businesses are often

their own worst enemy. If we think about who have got the highest spending

power, it's often people who are working full time. They're working full

time, right? So they might be commuting back home and

reaching the town, getting off the bus or getting off the train and

walking home perhaps at exactly the time you're shutting.

So if the shop is shut and they need something, they're either going

to jump online when they get home or go to the large out of

town development who are open longer hours. I've always said

that retailers, if they want to open 9 to 5,

really ought to consider getting a different job because it isn't a 9 to 5

job if they don't want to work weekends and back, holidays and evenings and so

on. It's not the career for you, but the behavior and the

footfall that we've seen over the years has depleted during

the nine to five hours. But actually the best period

is the evening and nighttime economy. So that segue

from arriving home from work through into the evenings and you only have

to look at some European countries. Let's take Denmark. Very similar weather to uk,

arguably colder. I used to do some work in a town called Aarhus,

which is about on the level with Edinburgh. It's minus 10 in the winter,

but you see people al fresco dining and they provide blankets

and heaters and so on, and they're having fun and they're enjoying the

atmosphere and they're hanging out together until quite late into the evening and

all the shops are still open. Whereas in the uk, if you go

out for a meal, the only thing that's open is probably the pub

and the restaurant. Chances are all the shops are shut and

I believe that that's where we're missing out. So one thing I'd

say, if you take nothing else from this, reconsider your opening hours

and try to look at the flow of people around your town. Your council

might have footfall data that you could ask to see. And if it seems that

there's a peak of footfall in the evenings, perhaps when commuters come

home, then why not change your opening hours to suit them?

Other things that you can do We've talked about the range

and segmentation in the previous episode, but

it's also things like reviewing your suppliers.

If you consolidate the range and curate it down to

the things that people really buy in volume and which make you profit,

that might mean that you can then push more volume

through some products and negotiate better rates with suppliers. Because

if you think about it, if certain products on the range were actually proliferating

the range and cannibalizing the potential sales of another

product because it offered a similar alternative by

channeling all that demand through the best performer, you can

negotiate harder with the supplier to say, look, I'm going to be increasing volumes. Is

there anything you can do? You can also, whether you're large or small,

make sure you monitor actual supplier performance, because

failure to deliver impacts availability, impacts customer

experience. And actually you could be looking to your supplier

base and asking them for better performance and managing a couple of

KPIs that the supplier then thinks whether you're small or not.

These people are serious about being professional. And even the

biggest suppliers will be impressed by a small business

demanding the same level of performance as a large business. They may not

listen to you, but it's worth having a go.

I worked with an independent fashion retailer in Litchfield a few years ago

and it was her aim to sell business, which she now has. But she was

really working everywhere God sent. And her repos data showed

that she was overstocked on high fashion items and

selling out regularly on core basics. All we needed

to do was make a when it's gone, it's gone policy on high

fashion. Basically, if it's not sold by New Year's Eve, things like a

party dress, for instance, it's not going to. But making

it so I must buy it now because she'll sell out made

a sense of urgency around the product and of course it increased the

sales. So she got a higher sell through rate by saying, when it's gone,

it's gone. But similarly, because these things were core basics

that she kept selling out of, I just said, why don't you

buy slightly more than you think you need? Because

the demand had been constrained by lots of stockouts. So if

demand's constrained, it gives you inaccurate data to forecast from. So why

don't you just buy heavy on that? And if you've got this capacity for storage

and you've got the cash in the bank, why not buy a month and a

half worth of stock and make sure that you saturate

the sales. Never go out of stock, and then you'll know what your real

baseline is. Well, that transformed the business. Those two

key levers never be out of stock of the core basics

and make it an urgent purchase of the sort of

fashion items. She increased her profit by

£40,000 in the first year. And this is a small, independent

single store retailer that of course put her in a strong position to be able

to sell. And I don't think this matters whether you're large or small. You

cannot afford to be out of stock of the things that customers expect to find.

It's like Sainsbury's not having bread on the shelf. That would really

annoy people. They think, well, I'll go to Tesco's then. What if they

never come back? It's a really bad choice. Equally,

we don't expect certain high seasonable products to be available. You

don't want to buy a Christmas tree in February after all.

Finally, I want to pick up on the local intelligence

that I talked about in the previous episode. And I think

that the key to this is the empowerment. And I mentioned

that before, but going into this in a bit more detail, it's about

understanding the local market and demographic. It's about doing, as I

just said, going to the local council and getting footfall data to understand the

flow of people around the town and then requesting

changes to opening hours and trading hours. There might be licensing

limitations on that, but at least you can ask. And it's about

the personalization and the flexibility and the

adaptability that makes it feel like this

isn't just the same old, same old cookie cutter

template. This is a business that understands me. Even

though they've got a big brand name above the door, the staff

know me by name and they know what I like and they

recommend things to me. And it feels great because that's

exactly how the independents behave. It's really important to allow the

managers, and even the area managers as well, to

respond and agree to what's actually happening in store. And you give them

room to act, to surprise. For example, one thing I

always talk about at conferences as well is moments of joy in

customer experience. And I talk about loyalty and I talk

about disloyalty because in my wallet I must have six

coffee shop cardboard stamper cards. And I call them

disloyalty cards because quite frankly, depending on which coffee shop

I'm walking past now, if I want a coffee, I open the wallet and flick

through all the cards until I find the one that's that brand and I get

my stamp. And at some point down the line, I've got enough to get a

free one. Then I discovered what pret a manger do. They don't do that.

They actually had the opportunity at store level and

a budget to achieve this. That said, oh, it's on the house today. Now,

that happened to me once and I didn't know at the time that that was

common practice. And I turned to what then was called

Twitter and said, oh my goodness, my coffee's just been on the

house. What a wonderful surprise. And it was a moment of joy.

Now, if I can see a prep, I'll walk past the other coffee

shops to go there, even though I know that it's a policy

and they're allowed to do this. But I just hope that it might be me

again that gets the free coffee. I would definitely

recommend having room to create moments of joy.

So to wrap up, margin isn't a

dirty word, it's survival. It's about being able

to pay your staff, keep your rent commitments and provide

shareholder value. If that's the kind of organization structure you've got,

it means that you can actually invest in keeping

the service levels up. At the moment, we've seen staffing levels

drop because the cost of staffing is higher than ever before.

And of course that affects affects the service level. You need to know your

numbers, make tough range decisions,

invest in what's working and ditch what's not. Well, thanks

for tuning in. If this has resonated, please share it. If you've got topics

you'd like us to cover, drop me a message. And until next time,

keep reckoning with retail.

Reckoning. Retail reckon

no space for dusty shelves cause

retail reckoning owns the floor.