Last month The Postings shopping centre in Kirkcaldy was put up for sale with a reserve price of £1. Once loved shops like Evans Cycles, HMV, House of Fraser, New Look, Oddbins, Toys ‘R Us and even rent-to-own specialist Bright House have either disappeared or suffered severe financial trauma.
The structural changes sweeping through the retail sector are leading to great changes of the shape of our High Streets; according to The Local Data Company there’s a huge growth in barbers, beauty salons, nail bars, restaurants and independent coffee shops. Conversely there’s a sharp fall in the number of banks and estate agents, reflecting the profound changes in how we bank and to a lesser degree buy property.
What is driving these changes? The relentless growth of online retailing has led to a downward spiral of pricing. Black Friday is just one example of unprecedented levels of discounting. As consumers we have never had it so good. We can compare prices in seconds. Our mobile phone is the smartest shopping companion we have ever had.
So this must be a dire time to be a retailer, then? Absolutely not! I am on a judge on this year’s Retail Week Awards – the industry’s Oscars – and have been blown away by the creativity and flexibility of the entries I have seen. So how are Britain’s leading retailers adapting to this harsh new climate?
Most are embracing online retail. The very best offer a service that rivals the pure online leaders like Amazon, ASOS and Ocado. Over Christmas, more than half of Next’s sales were online. Britain’s second biggest clothing retailer has skilfully used its traditional catalogue business to develop the skills and systems to be a great online business, as has Shop Direct. Meanwhile Screwfix is a business that knows for their customer – the tradesman and jobbing builder – time is money. He can order from his mobile, and that crucial part or tool will be ready for him as he drives up to the shop.
Others are relentlessly focussed on offering low prices and/or great value. Primark stands out for not selling online. That’s allowed them to reinvest in unbeatable prices coupled with great fashion awareness. Aldi and Lidl defy the stereotype of a discount grocer by offering highly acclaimed premium products at low prices – from lobsters to Iberian ham. Indeed, I am sipping my glass of Lidl Hortus gin while writing…
Another response we have seen in the Retail Week Awards entries is ramping up in-store service and expertise, which is hard for online retailers to rival. The new John Lewis & Partners flagship in Westfield shows the future of the department store. You can get style advice for yourself, for your home and experiment with the latest smart home technology. And I have just bought a new television at my local Richer Sounds, with deep, objective and friendly advice that kept me away from the online search engines.
There’s been a massive investment in offering unforgettable experience through visiting the store, whether it’s Nike in New York, Sports Direct’s huge store in Thurrock, or L’Occitane’s flagship which brings the spirit of the south of France to rain swept Regent Street. Other retailers are using deep knowledge of their customers to develop fantastic own brands – Go Outdoors’ bike range, Aldi’s Mamia baby products, and Lloyds’ Solero Sun Protection products all deliver innovation, quality and value for money.
Retailers also recognise that today’s customer cares about the future, and the impact their consumption has on others. H&M offer collection points in their stores for recycled clothing, with nothing going to landfill. Timpson’s and the Co-op offer valuable routes into employment for ex-offenders and the victims of modern slavery respectively. Indeed individual retail leaders have used their own personal beliefs to raise the profile of important issues, from Iceland’s Richard Walker on palm oil, Ann Summers’ Jacqueline Gold on women in management to Tesco’s Dave Lewis on food waste.
Unsurprisingly there’s lots of great technological innovation in the entries for the Retail Week Awards. Eyekandy is an augmented reality app which allows you to “point and place” a virtual piece of furniture in your home, look at it and walk around it, all before you buy. Some are simply designed to make life easier for us as customers – such as parcels specialist CollectPlus, who allow Amazon Echo or Dot owners to return a parcel by asking Alexa. That sends you a barcode, which allows any of their 7,000 points to print off the returns label. Unfortunately Alexa doesn’t take the parcel to the store for you…
So what does the future hold? Yes we are saying goodbye to some familiar retail names, and will continue to do so. But there are a lot of spirited newcomers too, such as fast-growing carpet retailer Tapi. And of course there are many new options online, such as SilkFred, which offers women’s fashion from 600 independent brands, and Trouva which sells homewares as well as fashion.
My advice for Britain’s shopkeepers is to make sure you are not stuck in the middle – be either a leader on quality, style or choice, or be a price leader. The very most potent businesses manage to do both – ASOS, Primark, Aldi and Lidl are all world-class retailers.
Technology will continue to revolutionise shopping. The most extreme example of automation in retailing is the Amazon Go store, which hasn’t yet arrived in the UK. After gaining entry with your mobile phone, you simply take what you want off the shelves and walk out. A shoplifter’s paradise? No – your purchases are automatically charged to your Amazon account. For years the City has been sceptical about online grocer Ocado, but it’s now clear that this trailblazing company has developed such revolutionary technology that it can successfully sell it to other grocers worldwide, with America’s Kroger, France’s Groupe Casino and Canada’s Sobeys already signed up.
But technology isn’t everything. Among entries for the Retail Week Awards which captured the judges’ imagination are The Entertainer and jewellers- Beaverbrooks. Both are both modestly sized retailers with a strong sense of family values underpinning everything they do. They look after their staff as much as they look after their customers, and as a result are performing brilliantly in notoriously difficult product categories.
I am really looking forward to next month’s glitzy Retail Week Awards Dinner. As a judge I am keeping quiet about the winners. But there’s one surprise awaiting me on the evening – the “Consumer’s Choice” as voted for online by consumers themselves. I’m not a betting man, but I think Amazon, Next, Primark and Tesco will all be close to the top of the rankings.
Alan Giles, Associate Fellow, Saïd Business School, University Of Oxford