We are all familiar with the cycle of fashion; flares come and go, beards are seeing a growth in popularity and vinyl fights back. In the same way retailing can go in cycles; local farmers markets are booming, hypermarkets are downsizing and personal shopping experiences are valued.
Is it now time for High Streets to come back into fashion?
The Local Data Company published this week that there has been a drop in store vacancy rates in the UK as a whole, but there is a huge disparity between the north and the south with the north east having more than twice the number empty stores as London.
There are countless reasons why retailers close down, rates and rents play some part, poor management and lack of agility to respond to competition play a part too, but the squeeze in margins that online retailers have placed upon bricks and mortar stores have mean that rates and lack of agility are compromised because of lack of cash, caused by weak margins. And so the vicious cycle started.
And yet, we read this week that Amazon is putting together a deal to buy Radioshack in the US because it wants to showroom its products to the consumer, in stores, on High Streets.
John Lewis, which is held as a success model of omni-channel retailing in the UK, credit some of the success of their online offer to the stores themselves, claiming that customers wouldn’t buy online without having first checked out their purchase in store first. There is more to it than that, not least of which the ‘never knowingly undersold’ promise, but for John Lewis the model works.
Made.com opened another UK store in London, believing that online can be significantly supported by a store and presumably forecasting that the costs associated with running a store are more than offset by the benefit.
And so the cycle of retailing looks to take another turn. Amazon and Made.com are leading and may not succeed but where one leads, others follow, learning as they go and subtlety modifying the model each time. Opening a showroom is not the same as opening a chain, but fashion goes in cycles and who would have predicted 10 years ago that hypermarkets would be overshadowed by convenience store expansions.
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