Retailers are no strangers to tough trading conditions, but in recent times they have come under pressure on multiple fronts with many brands unable to withstand the forces ranged against them.
Since the start of 2018, we’ve seen the demise of established high street brands, including House of Fraser and Maplin to name but two.
It’s not just customers’ move to online shopping that has wreaked havoc on the status quo. It is also part of a broader shift in how people spend their time (and want to spend their cash). There’s a greater emphasis on buying experiences and less desire to spend it in shopping malls or on the high street. In 2017, Simon Wolfson, Chief Executive of Next, blamed the clothing chain’s first fall in profits for eight years on the move from “buying things to doing things”. Meanwhile Steve Howard, Ikea’s Head of Sustainability, opined that “in the west we have probably hit peak stuff”.
In November 2018, data from The Local Data Company revealed that 24,205 shops, pubs and restaurants closed across the country between January and June 2018. This is double the number ever previously recorded over the first half of a year since LDC began its research five years ago.
Add in a slowdown in consumer spending and rising costs from business rates and wages, and it forms a bleak picture for the nation’s high streets. So, what is the appropriate response from those invested in bricks and mortar?
Own the uncomfortable truths and move on
Online shopping has created a backdrop of shopping destinations which are perceived to be cheaper, and more easily accessible, than the high street. It’s a view encapsulated in one of our New Masters focus groups, in which Millennial Magnus commented: “I’m a complete sucker for the convenience of Amazon, and in fact across the board in recent years, I’ve migrated most of my purchasing to online.”
Our data reveals that two-thirds (66%) think they can find the same products cheaper online than on the high street.
The same proportion also believe it is easier to find what you want online than to go shopping in town.
And it’s not just younger shoppers who hold these views: 6 in 10 (61%) Baby Boomers think they can get things cheaper online. The same proportion agree it is easier to find what you want online than to go shopping in town.
Baby Boomer Chris is not alone in his opinion: “I’d rather order a load of clothes online, try them on at home and send them back if they’re not right. I hate trying on clothes.”
Price and convenience are fundamental considerations when we’re thinking about when and what to buy, but they are not the whole story. In the future, high street retailers need to find other ways of drawing in customers if they’ve lost the battle for cost and ease.
It’s not just the pragmatics of cost and convenience that are driving people away. Our study reveals that people are starting to question whether big department stores, in their current incarnation, are fit for purpose: 6 in 10 (64%) across the generations agree department stores are not as relevant as they used to be.
This poses a fundamental question for the future of the high street: how can retailers regain their relevance to customers when people think they are out of touch and more expensive?
The importance of the high street
The good news is the high street has symbolic importance to many people. Our research shows people have a deep-rooted connection to the concept of local community high streets.
Across the generations, 4 in 5 (81%) believe busy high streets and shopping precincts are essential for the health of local economies..
The same proportion think busy high streets and shopping precincts keep local areas vibrant.
Crucially, 6 in 10 (62%) say they shop locally in order to support local jobs.
So, high street retailers can begin the fight back secure in the knowledge that customers want them to succeed. But time is of the essence. According to the Office of National Statistics, online sales grew by 12.6% year-on-year to October 2018, accounting for a record 18% of all retail sales.
The future of the high street
Three thoughts as to how retailers can seek to redefine their fortunes:
Exploit the desire for human contact and authentic brand experiences.
We’re not saying the digital wave is receding (clearly, it’s swelling), but amid a society going digital we see a counter-trend emerging. There’s a renewed desire for human contact, and it’s growing among young and old alike.
Jacklyn, a Generation X-er asserts: “I like physical shopping because there’s more interaction. I like talking to the women that help me to look for things. I like the shop assistants. It’s not personal when it’s on the internet.”
High street retailers which find ways to deploy their staff at the right moments, in ways which enhance the shopping experience, will be the beneficiaries.
Rediscover the excitement of experiential shopping.
The department stores of the Georgian, Victorian and Edwardian eras knew they had to put on a show. While the convenience of having everything under one roof was important, it was the experience that was paramount. Glorious décor, eye-catching displays, divine cafés, and facilities like libraries, fitting rooms, attentive assistants and even childcare options all created a box of delights that proved irresistible to those used to shopping in fusty alternatives.
John Lewis and Partners’ Oxford Street seasonal winter 2018 Skyline Skating experience gave customers the opportunity to skate beneath the stars, feast on pie, and sample a hot gin cocktail or two from collaborators Mypie and Sipsmith. A staircase down, customers can immerse themselves in a smart home and experience first-hand how new technology works in practice.
Interviewed for 1843 Magazine, head of retail strategy at Gensler, an international architecture firm, Lara Marrero says, “An increasing number of companies are opening shops, not so much to sell things – there’s the internet for that – but to advertise their ethos and to entertain.”
Finding ways to similarly reinvigorate physical shopping experiences should be the number one priority for high street retailers.
Deliver personalised shopping.
This is where retailers can learn from online shopping and use data and technology to deliver seamless and personalised shopping experiences, as a means of making the in-store experience exciting and refreshing.
Over half (53%) of customers claim to be more likely to use brands that use technology to create better products and services.
In China’s Hema cashless supermarkets, shoppers can scan each product for nutritional information, recipes and origin, pay through facial recognition and by redeeming personalised coupons, and shop online for delivery within 30 minutes, while Amazon Go is pursuing its cashless offline stores in the US.
Technology also pays a dividend with the young, allowing high street retailers to future-proof their offers.
There are many challenges facing the future of the high street, which include lack of footfall to town centres and inaccessible parking, but none is greater than meeting the post-digital expectations of switched-on customers, who expect every brand to deliver to the standard of the best.