2/3 of UK retailers use secondary revenues against margin squeeze

Two-thirds of UK retailers are using secondary revenue methods to tackle margin squeeze and boost their profitability according to new research from Webloyalty and the British Retail Consortium (BRC).

As more and more retailers across the country are faced with shifting consumer shopping habits, increasing costs following the drop of the pound and growing competition they find themselves in a period of unprecedented pressure. As margins are being squeezed, more retailers are turning to secondary revenue options, a move which is rapidly becoming common practice on the high street.

In a survey of 100 leading UK retailers, 67 percent of businesses reported at least 1 percent of their revenue came in from secondary sources. 18 percent of them, including key fashion players, are generating at least a fifth of their income through non-core revenue streams, such as affiliate marketing, advertising space, cross-selling additional products and services and offering credit as well as loyalty and reward programmes.

Although businesses of all sizes are adopting secondary revenue strategies in the UK, data shows that it is the larger retailers who are capitalizing the most, with 22 percent of retailers earning more than 1 million pounds in turnover, generating 20 percent or more from secondary sources. In addition, retailers turning over 100,000 pounds or less reported using only four different methods of secondary revenue generation, whereas those with a turnover of more than 100 million reported using seven.

"The retail landscape is facing one of its biggest challenges to date; remaining profitable during times of change," commented Guy Chiswick, Managing Director of Webloyalty, Northern Europe. "Threats to profitability are multiplying, from escalating delivery and fulfillment costs, the strain of handling huge returns, the cost of ecommerce investment and delivering functionality across devices. Not to mention the uncertain and unpredictable effects of Brexit."

"Our research shows that secondary revenue strategies have the potential to combat low margins. However, whilst they can be easily incorporated into retailers’ overall marketing agenda, to maximize revenue through these sources it is important they are relevant to the brand and introduced at the right stage of the customer journey."

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