Fewer stores and less staff hours equals more profit? Is this the new retail formula that all retailers are aspiring to?
We have lost track of the number of retailers that are culling under-performing stores and cutting staff hours in the pursuit of profit in a difficult period of High Street retailing. Luxury purchases have been reined in as inflation starts to rise and political uncertainty makes mortgage and credit card rates look less certain than they once did.
In 10 years’ time fewer shops will have fewer staff working in them and yet we will probably all be spending more on our shopping. The trend is pointing that way. There are certainly more shops being closed than are being occupied by etailers debuting on the High Street. The rise of technology, the ability to shop without getting your wallet out or scanning an item at the till that Amazon is bringing us, would indicate the retail workforce should be worried.
Are town councils worried? Are landlords?
It is going to get harder to squeeze the same rent from the same players so in our opinion, if they aren’t ready to evolve, they should be worried. The need for flexibility and thinking about retail in a fresh way will be paramount. Norms will be challenged. This required evolution is tricky however, if your community shops online how do you protect your Town Centre? Our view has remained solid, if you are not building footfall driving activities (schools, colleges, cinemas, libraries, restaurants etc.) then you are vulnerable. Yet maybe the salvation is in etailing ?
How is it we have the rising trend of etailers opening stores, are they mad? No, they consider themselves opportunists opening showrooms to drive more sales online. Made.com, Loaf.com and other furniture etailers get that the consumer wants to sit on a sofa before they buy it. How that rationale works for books, or fashion is debateable, but Joe Browns is buying it. The online fashion retailer wants to connect with its customer in a physical environment in Meadowhall to be precise.
The customer connects with brands not channels
Total retail sales are all but flat with fluctuations only happening between channels. We must remember that the customer connects with brands, not channels, and they want a seamless experience whether they are in Sheffield or Portsmouth. To achieve that, staff knowledge and retail experiences need to marry up. When a customer has more information about a product on their phone than the person selling it in a shop, there is a problem.
The physical shop is an opportunity for the retailer to inspire the customer and give them a memorable delightful experience. When the retail experience has barely changed in the last 20 years it’s easy to see where the problem lies.
Etailers taking up positions on the High Street have that in mind; they were conceived in a time of change and are drowning in data that tells them more about their customer than a lifetime of standing at a till will ever do.
So the etailers have the advantage?
No, they just have a mindset that embraces a constantly changing environment. We expect they will face their own difficulties. It’s easy to drag and drop a product onto the home page, less easy to physically move it around a shop to fill gaps in range availability.
Anyone citing the “death” of retail and the UK’s High Streets must be coupled with the inflexible landlord and the retailer navel gazing. What we are seeing is the evolution of retail, natural selection, survival of the fittest. A new retail model is rising that will find more innovative ways to generate profits. The number of what we call retail stores today will decrease, but we will see an increasing number of sites that involve a form of purchase behaviour. Those sites will be served by by people, what we call shop assistants today.
A new retail formula is emerging, be in no doubt, and it will be more productive, with different touch points for the customer but ultimately serving that customer. Online, in store, till-free or with a full customer service, the customer will decide.