As another report emerges about the decline in high street sales, all I hear is that the high street is dying, and large well-established retailers are on the ropes. With the likes of Woolworths, BHS and Austin Reed all falling away it’s understandable that people would assume it’s the high street that’s in trouble. The reality is however that the high street is not dying; it’s changing, and has been for some time. Those retailers who are innovating and embracing the change in consumer behaviour are benefiting, and those that are not are risking bankruptcy.
When Polaroid went bankrupt in 2001 was it because the camera industry was dying? No, it was simply the changing times from film to digital. A world famous brand founded in 1937, Polaroid simply hadn’t kept up with the times or reacted quickly enough to innovate.
When Blockbuster Video filed for bankruptcy in 2010, was it because the film industry was dying? Of course not, they were unable to make the transition to digital and paid the ultimate price. Netflix and other digital services simply swooped in and took advantage of the changing times.
Remember Tower Records? They invented the very first music mega store. The music industry certainly didn’t die. It changed, and digital download companies like iTunes and Spotify have taken advantage.
Moving with the digital times
It’s naive to suggest that all high street retailers are in trouble because year-on-year high street sales are down 2%. While stores still play a pivotal role in the success of British retailers, Ecommerce has grown over 16% this year.
It’s no surprise those retailers who have embraced online shopping and have understood how a connected offline/online strategy works to offer customers the best of both worlds, are the ones winning in today’s battleground. Take a look at the top 50 retailers in UK by revenue today. Almost all of them have a high street presence. Only Amazon and Ocado from the list boast pure play status, and Ocado’s automated warehouse model makes them more a technology business than retailer.
The benefit of scale
The fact is, the likes of ASOS, Boohoo and many other pure play retailers who are lauded for their success online, can’t get close to the scale of a John Lewis or House of Fraser because they simply don’t have the store footprint to do so. That’s why it was no surprise when last year Boohoo announced their first pop up store in New York and the likes of JD Sports have attributed their 45% rise in profits this year to the 38 new store openings across Europe.
The range of opportunities having a high street store offers retailers is vast, including click and collect services, local personalisation, instore mobile scanning, even virtual and augmented reality. The issue has simply been that too many established retailers have been slow to take advantage and use their stores to embrace the digital world.
Tesco, the largest UK retailer, led the way with their committed approach to digital, seamlessly integrating Tesco Direct online with all of the 1,500 stores country wide through a click and collect service used by over 65% of their general merchandise customers.
On the flip side of that, retailers like WHSmiths, are seemingly oblivious to the savvy digital customers passing by their tired and old fashioned looking stores. If the ingenious @WHS_Carpet twitter feed hasn’t pushed them to action, I don’t know what else will. How much longer can history and nostalgia keep a retailer alive with consistent unhappy customers and falling sales?
The high street most definitely isn’t dead. The way we used to shop however, is. Unfortunately, it seems there will almost certainly be further ‘big name’ casualties to come as a result. I’m looking at you WHS…