Can we fix bricks and mortar retail in an increasingly digital world? Course we can...
Lets all face it, The High Street as we know it is dead, the latest round of eye wateringly bad statistics prove it pretty categorically ... 11,000 major high street stores have gone bust since 2008 and 1500 restaurants have too since 2017 with another 15,000 predicted to (say Moore Stephens the accountancy firm). I predict House of Fraser will not be the last major store to fall over in the next 12 months, there are lots of others clinging on grimly to their past successes and simply ignoring the trends.
So why is this and why does no-one seem to be doing anything about it? The threat was raised back in 2011 by Mary Portas in her much maligned retail report. Critics said that she used it as a PR stunt and said that the towns under her watch had lost 1,000 stores in 5 years. That's pretty tough as her report is good in parts but sadly we as a country are very slow at change and the problems we face are very deep rooted.
There have been several high profile schemes set up to try and save the high street including the 2020 Digital High street report which was written in 2015, had many high profile sponsors who had no vested interest to make the high street work & it seemed to focus on making the high streets of tomorrow more connected by providing better wifi and connectivity! What rubbish, interestingly its forward was written by the Chairman of Home retail group who sold up 12 months after the report was written, including selling Homebase to Bunnings who promptly lost £547M very quickly! I think the report was way off the mark and should be largely ignored.
So sadly there is'nt much out there which paves the way for success....! However one thing is now 100% certain ... consumers shop in very different ways, increasingly online and via mobile & with rent & rates making the store model difficult to operate, change is fundamental. BUT the high street will always be there and so high streets & retailers need to adapt their service to keep up & remain relevant. As I've said in a few other blogs, Alibaba in China is reinventing retail and I'm sure we as a country should listen and learn quickly.
So having thought about this a bit, and being passionate about stores and high streets, here are my top things to think about for retailers wanting to operate profitably in todays digitally connected world:
1) Cut the right deal with your landlord: Seems obvious right? Study the contract you are about to enter into and challenge it. Look out for the upwards only rent clause and fight it tooth and nail, this is a sloppy clause which should be deleted to become upwards / downwards to mirror market conditions, sadly lots of contracts I see are upwards only rents which is a travesty. Like a house buyer be prepared to walk away if the landlord is lazy or arrogant as many are. This is a tenants market and time to play hardball. If you are able to meet the Landlord do so, get into dialogue with him / her and explain what you are doing. I also think the days of hefty premiums will be more and more rare but in higher footfall high streets which are working, you will still need to pay these for a good plot.
2) Get the size of the store chain right: Because you should be digitally savvy & already operate a successful e commerce site, you don't need masses of stores piled full of stock no-one will ever buy. By understanding your shoppers better and what they buy & where they live (through the use of the right tech) you should be able to create a small footprint of lovely smaller sized stores packed full of experience located in the places you know your shoppers live. Optimise Margin per square foot by offering other experiences... If you are a beauty brand offer treatment rooms, if you are a fashion store offer a bar where people can sit and dwell, if you are a gym have a juice bar ... think laterally and if needs be team up with another brand. The high street should play the role of your flagship store where you bring alive your brand and champion it. Think long and hard about it and make it beautiful. Done well it will grow your brand & drive a deeper relationship with your customer
3) Experience is everything: The stores which are doing well nowadays are an experience to go into & offer different things to do for their customers ... Mega brand Nike does it well, yes its huge and has a massive budget and the store is more of a tourist attraction nowadays but they are also savvy retailers. NikeTown in London currently has a running track to celebrate the drop of the new Phantom Vision by the front door and an in-house DJ playing tunes. My kids love the place, the service is good, the tech digitally relevant and of course the range and the design beautiful. How many SME's really embrace experience? Many of the high street stores I see are anything but an experience and they wonder why people walk past! Experience should be embedded into your high street store, it should be digitally connected allowing people to order, pick up, browse and swap items super easily, store staff should be well trained, polite and great sales people & above all it should be memorable. But also the store design should pop & be non formulaic, it should include areas which can be easily swapped to be seasonal, window displays should be frequently changed ... think differently and above all be brave & try and break the mould.
4) Be really local - high streets can only be revived if the retailers on them fight for their high street and try to make a difference. Most nowadays have local market days where local producers set up small stalls, this drives a bit of footfall, but actually in my experience, annoys the retailers who are paying extortionate rates to be there as its the wrong sort of footfall! This is the "go to" of a BID and is lazy and a bit dated. For retailers to work on the high street, they have to be part of the community, employing locals, sponsoring local events at Easter, Summer and Christmas ... these are all fairly done and I think you need to work even harder. Walk the pavements sampling, market & get to know the locals by name, offer them special offers & reward cards for living locally, team up with other retailers on your stretch to offer more, get out there and meet the people! If you are offer is good enough, your store offers a lovely experience which is differentiated and memorable (not safe and predictable), you will win.
So in summary ... the high street has changed & so too the shopping experience, we all know that, but the high street store should still be part of every retailers armoury. Retailing is about offering a fabulous and memorable experience which lives just as well online as it does on the high street, the two things compliment each other. So adapt, rip up the rule book and be different. Old brands who don't will be dead, those that adapt and do something current will be successful.