Retailers are dead. Long live retail.
26th March 2019
Our bi-monthly thought piece collection for 2019 is back with a vengeance with Strategy and Development Director Michael Artis reflecting on the retail landscape and how it has changed…
Full disclosure; I wrote this piece in July 2018 and immediately felt guilty. Somehow, as soon as it was committed to paper, I felt like I had cheated on an industry I love and was schooled in.
However, after 9 months and some of the latest shenanigans from the retailers we love(d), it’s time we got real.
Retail is alive . . .
it’s the Retailers that have become obsolete
Since civilisation has been, well, civilised, us humans have exchanged goods and services so that the community we are part of can thrive and sustain itself.
Where these exchanges have taken place, communities, countries and empires have been built. As we continue to progress, the points of exchange have become more global, more virtual and arguably less connected to the people actually producing and buying the goods.
The Genie won’t go back in the bottle
We have all got used to guaranteed low prices, infinite choice, and doorstep delivery within 24 hours.
In the UK, we are seeing more and more of the “nation’s favourite” retailers shrink or disappear. Like HMV, Comet, BHS, Maplin and Woolworths, we all are nostalgic for their memory, but in truth, we all stopped shopping with them because they were out-dated, inconvenient, uncompetitive or simply irrelevant to what we want today.
Standing on the cliff edge
When everything is available to buy anytime, anywhere, we simply don’t need as many chain shops in the UK. ‘Shopping’ as an engaged, front-of-mind activity will only occur for the things we care most about.
Our shopping baskets will become subscription-based, leaving us to simply ‘confirm’ the items our home says we need, and boom, it will be picked, price-matched and delivered at your convenience.
Basically, the reasons for most retailers to exist simply don’t translate into the way we buy, consume and replenish. The thinking from the noughties was a national retailer in the UK needs 300 stores and a website for country-wide coverage. Those same retailers now need about 70.
Sadly, no amount of ‘investing in the experience’ is going to help 75% of the nationwide retailer brands we know and love. The problem is too great.
Legacy leases have held back disposal until now. I’d imagine the next 3-5 years will see those leases end, and a focus on the 25% of stores which are viable can then resume.
Reaching the horizon
So, that is a lot of “Retailers are dead!”
Where’s the “Long live Retail” bit?! Although our buying behaviour may have changed, the need for social interaction has still got legs! Smart stuff has its role, but it’s the bits that aren’t controlled by algorithms that trigger the authentic experiences we all crave.
From shops and cafes, to railway stations and ‘shopping’ malls; marketplaces are fundamental to society and the way we connect with our communities. However, ‘physical’ marketplaces will inevitably be fewer.
Forget highstreets as you know them.
They will no longer be a parade of shops and banks. The majority will be hyper-local businesses serving distress needs and time-enriching treats (hair, nails, coffee etc). In contrast, the minority will be the ‘big’ destinations – a fusion of leisure, entertainment, food and drink, plus an opportunity to ‘buy stuff’ . . . the stuff that you haven’t already automated, subscribed to or asked your smart speaker to buy while you were in the bath.
In the UK, retailers are going to be going through hell over the next few years because they know what they need to become, but there is a long way between today’s cliff and tomorrow’s horizon. In truth, only the brave and nimble will be able to survive the journey.
Circle of life – Back to the future
Back when I studied Retail as my degree (yes, that does exist as a subject), we examined the power shifts in the marketplace through the last 50 years or so.
We were/are in the era of the ‘consumer.’ Before then, it was era of the retailers – the ascendancy of Wal Mart, Tesco etc. They ‘owned’ the consumer relationship, could flex their buying power across brands, and also undercut them with own-label goods.
Prior to the retailer age, was that of the brand – think Mad Men – where efficiencies of scale, mass production and ‘selling the dream’ changed the things people wanted to buy.
Apologies for the history lesson, but I believe we are now going ‘back to the future,’ and that brands can take back the power that retailers have enjoyed for so long by dealing directly with the end consumer.
The killer for retailers is that brands are not incumbered by 100s of stores in a marketplace that only needs 10s. If the brands can occupy the ‘right’ marketplaces – say the 70 or so that are the surviving destinations – learn from how retailers have nailed a ‘live’ physical in-store relationship and manage the ‘real’ customer journey (integrated with the omni-one we know so much about), Retail is looking quite exciting.
Get these new marketplaces designed with the right mix of leisure and community-enhancing experiences people actually want to engage with, we may also see the end of the ‘generic’ looking high street we have all complained so much about for the last 10 years!
I don’t know what’s going to happen to the 100s of highstreets that are no longer viable. Hyper-local will work for many, but not all, and the required social engineering that would be required as an alternative, is well beyond my paygrade.
This is why I believe Retailers are in trouble, but retail is far from it. Those businesses creating physical places to show and sell their wares need to think more like venue creators, rather than estate operators.
So here is a call for the brave.
The next era is coming. If you wait, you will have missed it.
Real experiences will always be valued, but not if they are a poor version of what I can do online easier, quicker and cheaper.
Any brand (read: anyone trying to sell anything) must regard its physical channel as a network of ‘venues,’ where the coffee served and the people who serve it are just as important as the actual ‘goods’ for sale – visit any serious independent bike shop to get a glimpse of this future.
So, let’s not mourn the victims of progress, but instead shape and re-shape physical experiences, so that the communities we all want to be part of can actually exist in the modern world.
Lets do this.
#2020 #Brand #Venue #Change #FuturePositive #HumanisingExperiences