Is this the death of the high street, or just an awkward phase of transition? Jonathan Easton sums up recent events in the retail space and asks whether this shot in the arm is just what the industry needs.
There is no brief and witty way the succinctly intro this piece. Compounding several high-profile announcements, it is difficult to pick one as the defining story of the past couple of months.
One might argue that the obvious lead should go to Marks & Spencer. As an iconic retailer with 134 years of history, the fact that it announced a ‘radical’ plan (a word not usually associated with the brand, asides from the audacious launch of vegan Percy Pigs a few years back) to close 100-plus stores by 2022, with 14 more in addition to the 22 already shut this year should be an apt sign of the times. “Yet another dagger in the heart of the British high-street,” as Astound Commerce’s Terry Hunter melodramatically puts it.
Or should that title go to the even older House of Fraser (launched in 1849, making it an elder statesman compared with the sprightly M&S), which declared its intentions to close 31 of its 59 shops as part of a rescue deal. The decision, described by chief executive Alex Williamson as ‘brutal’ and ‘very emotional’, will see 6,000 people out of work.
But as established as those two stores are, they aren’t as relevant to PCR as Dixons Carphone. Sniping at ex-boss Seb James, recently instated CEO Alex Baldock announced plans to close 92 of its 650 Currys PC World stores in the wake of a profit warning. In concert with the news came an internal prediction that profits will fall to £300 million in 2018/19 – compared to £382 million in 2017/18 and £501 million in 2016/17. As related to us as that story is, it is perhaps not quite as impactful as the others with the news being spun in a more positive fashion. The company is investing £30 million to ‘correct recent underinvestment’ in its ‘colleague and customer proposition’, which also means that there won’t be any redundancies.
That’s not it though. Elsewhere on the high street, Poundworld appointed administrators, putting 5,100 jobs at risk. What was particularly illuminating about the news wasn’t so much that it happened, but the company’s reaction to it: “Like many high street retailers, Poundworld has suffered from high product cost inflation, decreasing footfall, weaker consumer confidence and an increasingly competitive discount retail market,” read a statement from Poundworld.
“This isn’t the survival of the fittest, this is the survival of the most digitally savvy”
Adrian West, Fujitsu UK
So it comes as absolutely no surprise that a report emerged from the Centre for Retail Research showing that this year is expected to be the worst year for store closure on the UK high street since 2008. Outside of the big names mentioned above, more than 10,000 stores are expected to cease being used for retail.
Basically, it would seem that everyone is buggered. It doesn’t seem as though (save for Baldock blaming Dixons Carphone’s failures on – among other things – the defunct HoneyBee software arm, the company’s joint venture with mobile provider Sprint and mobile phones) much of this is to do with companies one-upping each other on the high street.
Adrian West, director for commercial sector at Fujitsu UK, thinks as much, stating: “This isn’t the survival of the fittest, this is the survival of the most digitally-savvy. Internet sales are expected to accelerate and consumers increasingly expect both their in-store and online experience to be boosted by technology. The consequence is bricks-and-mortar retailers have now involuntarily joined the race to reinvent their business or accept defeat.”
And the cherry on top of all this? New stores aren’t opening either. The Local Data Company, which studied the top 500 British town centres, found there were 4,083 new store openings in 2017, the lowest since 2010. Responding to that reveal, West argues that stores should consider their unique proposition and what they can do to stand out. “Retailers need to re-think what the in-store experience means to them and their customers. It’s becoming more intrinsically linked with the customer experience; in fact, retailers need to think of them as one and the same, as that is how customers see it.
“The quality of in-store technology can indeed impact the loyalty of consumers and we’ve found 58 per cent have even chosen to buy a product from a store because of a better in-store experience. Retailers can enhance the store by ensuring that they are thinking digitally with one holistic view over their entire operations, from the shop floor to the back-end systems through to the online store. The high street isn’t dead, it’s just growing up and retailers need to grow alongside it.”
It seems a cruel irony to say that the high street is growing up while it is literally doing anything but growing. However, what is a definite theme is that the retailers that are big enough to afford to are repositioning themselves. M&S, notes Hunter, ‘plans to move a third of its sales online, and intends to instead have fewer, larger clothing and homeware stores in better locations’.
“Retailers must become more tech-savvy to improve customer experience”
Andy Tow, Retail Marketing Group
Despite what the doom and gloom of the news might suggest, consumers still want physical stores and view it as an essential part of retail. “81 per cent of UK consumers identify the physical store as vital to the shopping experience,” points out Retail Marketing Group managing director Andy Tow. “70 per cent still enjoy the full encounter. Traditional retail shopping remains a steadfast British pastime. But there’s a catch, retailers must become more tech-savvy to improve customer experience.”
There we go again, that recurring theme: become more tech savvy or suffer. Taking a more digital approach to real world retail ‘offers the best of both worlds,’ states Tow. “The irreplaceable emotional connection and the convenience of a seamless, interactive and digitally intelligent shopping experience that modern-day customers demand. This unique human/tech interface is the future of high street retail.”
So are we currently witnessing the death of the high street, or is this just an awkward phase of transition? The truth likely lies somewhere in between. The high street in its current guise (or what it was a few years ago before all the hoarding went up to mask the empty retail units) is on its way out, and as a part of that some household names will go the way of the dodo.
But bricks and mortar isn’t disappearing. It is clear that people still want to go into a shop and see products – whether they go on to make their purchases in store or online. The retailers who make their way through this transition will be the ones who are acutely aware of their USP, and those who fully embrace the expectations and technologies of the digital age.