Will retailers wake up before it’s too late?
Published 19 September 2018 | Julian Fisher
Will they wake up before it’s too late and what can they do to ensure they make it through to the new year?
In today’s competitive retail market, domino-style store closures continue to make headlines with high street giants like House of Fraser and Homebase recently announcing store closures and the number of stores which have closed in the UK this year stands at more than 1,100. The summer months are traditionally a particularly difficult time for retailers, with the Christmas period acting as a crucial time for trading - bringing in a large proportion of their revenue, as much as 40 per cent in some cases. However, given the spate of recent closures, this Christmas could be make or break for a large number of high street retailers. So, as retailers turn their attention to this crucial trading period, will they wake up before it’s too late and what can they do to ensure they make through to the new year?
Historically, jitterish retailers have been slow to adapt to change compared to their online counterparts; investing in costly retail system upgrades can take months or even years to implement, with the technology already out-of-date by the time installation is complete. Bricks-and-mortar stores must be more inventive and exploit what makes them different, adopt personalisation and embrace the shopping experience. With online brands such as Amazon moving from strength to strength, UK high street retailers must begin to take these risks to keep in tune with changing consumer behaviours.
One of the main causes for the fall of high street stores is carrying the burden of large debts and loans and being unable to meet repayments. Increasingly, we are seeing retailers selling stores or retail space for a quick boost to cash-flow and then renting the premises back off the new owner. Another common response to falling numbers is to cut staff numbers. While these responses may solve cash-flow issues in the short-term, they aren’t long-term solutions and don’t get to the root of the retailer’s problems. Retailers must find more effective ways to cut costs, or more importantly boost their revenue and should lend more focus to pricing and which products they should stock. The current approach of many retailers is failing them as reflected in the string of recent store closures, as such, retailers must look at alternative methods to entice consumers back into their stores.
Answering the customer's needs
While it has generally been the consensus that online retailers have the upper-hand thanks to removing pain points such as queuing or offering substantial discounts, there are several benefits of having a bricks-and-mortar store that retailers are overlooking. Firstly, high street retailers have the opportunity to achieve more than online retailers as once customers are in the store there is the possibility of tempting them with other items on display and upselling. Additionally, in physical stores, retailers can create an atmosphere and play to the customer’s senses as, unlike with online shopping, consumers can touch and smell items and look at them from every angle. This ability to touch and try on items should not be overlooked as it can be a real driving force to make a purchase, whereas online shoppers have to use an element of imagination which can often deter them from making that risky purchase.
In-store shopping experiences also allow consumers to share instant reviews with other shoppers, giving them the opportunity to gain different opinions and find alternative options. Instead of assuming that they are at a disadvantage compared to online retailers, high street retailers should celebrate their differences and the experiences they can offer that are unique to bricks-and-mortar stores. Retailers must sell the ‘experience’ of high street shopping in a bid to entice consumers back into their stores.
In addition to this, high street stores must address what customers want when they walk into a store and answer this need, rather than running their business to beat competitors who may be attempting to sell products at unprofitable prices. If stores can provide customers with the perfect mix of the right environment, the right products in the right sizes, friendly and knowledgeable staff and decent amenities, such as changing rooms, it could be argued that price will become more of a secondary issue. That is to say, as long as the price is fair the consumer will be happy due to the convenience provided by the other elements of the experience. This convenience combined with paying a fair price for a product is likely to deter the customer from going elsewhere in order to undercut the price slightly.
Making stores more inviting
Fair pricing is one of the most important issues for customers. Retailers should keep this in mind and provide consumers with fair pricing, discounts and loyalty schemes. In doing so, retailers have the potential to win customers round and gain repeat custom as these ‘rewards’ for shopping at a store can leave the customer with a lasting feel-good factor. For example, if a customer comes away from a store feeling as if they have achieved something, i.e. getting a good deal on a product, this is likely to foster customer loyalty and inspire repeated trips to the store.
Adopting new technology and using existing technology more thoughtfully is one of the main ways in which retailers can arm themselves against closures. For example, busy stores with long queues is one of the biggest turn offs of visiting the high street, and retailers should find ways to avoid this. Retailers could consider implementing technology which steers customers away from the traditional point of sale and allows them to take payment for items at any point within the store, for instance. This not only adds to the convenience of in-store shopping but could also allow more interaction with customer and free up more space within the store.
This leads into the need for retailers to make stores more inviting. By implementing technology which allows customers to pay at various points, there is the potential to free up more space which can be used for consultations and demonstrations. Alternatively, it could be used to create larger changing rooms or act as a dedicated space for new product ranges. The possibilities for this space are endless but are all able to make the high street shopping trip a more pleasant experience.
The high street of the future will be a place where fortune favours the brave. In order to stand a chance of succeeding, retailers need to take more risks and adopt change. The current performance of many retailers suggests that existing strategies aren’t working and that bold decisions need to be made to catch up with online competitors. Rather than looking to cutting staff as the immediate solution to cash-flow problems, retailers must address the real heart of the problem and implement changes as a direct result. While those retailers carrying large debts are unlikely to last much longer, other retailers who do make these changes should come out the other side in a much better position.