Retailers are increasingly turning to alternative forms of revenue as rising rates costs and margin pressures mean core-product sales are no longer enough.
According to new data from Webloyalty, 70 per cent of retailers are now generating secondary revenues from sources other than core product.
A further 46 per cent of these generate more than 10 per cent of their total revenues from secondary sources, up from 36 per cent last year when Webloyalty’s first Beyond the Core report was published.
The number of retailers who consider secondary revenues “very” or “extremely” important more than doubled, rising from 13 per cent to 29 per cent this year.
This is reportedly largely due to the sharp rise in retail profit warnings, which hit a seven-year high in the first months of 2018.
Secondary revenue strategies appear to be working, with 75 per cent of businesses reporting increased profit margins.
Advertising was the most commonly used strategy, with 30 per cent of respondents saying they explored it, while 29 per cent stated they used internal loyalty and reward schemes.
“In today’s competitive marketplace, retailers of all sizes are experiencing significant industry landscape changes, it’s important for all retailers to be smart about maintaining and importantly, increasing their profitability,” Webloyalty’s Northern Europe director Richard Piper said.
“With secondary revenue streams proven to have a positive effect on profit margins, retailers should introduce a dedicated secondary revenue strategy that can fit within and support the overall marketing strategy to ensure business success and resilience.”