This week we read an interesting article by Alex Sbardella, which proclaimed that Retail ISN’T dying – but retailers are. As ‘Retail Apocalypse’ gains its own Wikipedia entry, and high profile UK chains continue to drop like flies – is this assertion really correct?
Over the last few weeks, Toys R Us and Maplin became the latest big-name brands to join the sorry throng of well-known retailers who have bitten the dust in recent years, along with BHS, Woolworths, Blockbuster….and lots of other former family favourites. Newspapers continue to report doom upon gloom and for some retailers the future is looking very bleak indeed.
Of course in this situation we have to ask ourselves why. Sbardella suggests that many people are still blaming online giants such as Amazon –and ecommerce in general – for the dearth of high street sales, even though online purchases still only account for 9% of sales in the UK. And when tech isn’t getting the blame, then its those frivolous, unpredictable millennials that are getting accused of wrecking the industry instead. But Sbardella suggests that neither are culpable for what is happening on the high street:
“But the truth? None of the above. Retail’s not dead. In fact, it is undergoing something of a renaissance – just not for everyone. eCommerce is booming, yet 91% of UK retail still takes place in physical stores; there’s a reason Amazon bought Whole Foods.”
He says that retailers are to blame for the problems happening in retail – mid-market retailers to be precise. Those that don’t offer premium goods or heavily discounted items are struggling to find a new angle. Whilst for luxury goods and discount stores, the future is looking very rosy.
Premium retailers are opening three stores for every middle-market one that closes and their revenues are growing around 40 times quicker than those of their middle-market rivals. On the opposite end of the scale, discounters are also thriving. Lidl and Aldi have been the best-loved brands in the UK for four years in a row. And as for the millennials, according to studies their spending habits are no different to other age groups with the same income.
So, Sbardella asks: “What happened to the safe homogenous uninspiring proposition that has served retailers so well for 40 years?”
I think he’s answered his own question a bit there hasn’t he? ‘Safe?’ ‘Uninspiring?” Many times on this blog we have described how retailers need to be agile and forward-thinking to adapt and survive in the modern retail landscape. On top of this, the middle classes who used to shop at middle-market stores are in decline. According to research from Oxford University, there are now 30% fewer middle-income shoppers in the UK. And in these uncertain economic times, customers have also gotten smarter. They shop around for the best deals and use apps and websites to track bargains.
So what do retailers need to do to stay afloat? Firstly they need to understand that customers have a far wider set of needs than they used to – and they need the freedom, resources and agility to be able to meet those needs. By offering exemplary customer experiences, journeys, stories, sharing values and building relationships – or at the other end of the scale, by giving them convenience and affordability.
Sbardella asserts that retailers have secretly known all this for years but only now that shops and chains are going into administration all around them do they realise that they must put it into practice in order to survive:
“If you’re in the middle, it’s innovate or die.”
Time to get tough! Do you agree with his comments? Or do you still think Amazon and EBay (and the millennials!) have a lot to answer for? Let us know in the comments section below. And if you’re a retailer looking for an agile retail strategy and some innovative in-store experiences to help you move forward – give us a call, we can help!