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The fate of the unaligned

With increasing frequency, industries and the companies in them get caught like rabbits in the headlights of change. It’s happening to UK high street retailing right now and their survival depends on how they decide to react.

In the 1970’s the collapse of the independent grocery retail market began. Over the next 40 years store numbers would crash and their market share would tumble from 30% to reach a mere 2.4% in 2014.

Alongside this the home delivery of milk collapsed. An industry that in the seventies employed 45,000 milkmen to deliver daily to 90% of British homes now has around 4,000 milkmen delivering to 10% of homes.

There was a common cause of both: the UK Supermarket chains.

They built ‘out of town’ stores, sold at lower prices and offered ‘convenience’ foods and food that lasted longer due to improved supply chains. This enabled consumers to change their behaviour to buying food once a week instead of every.

The momentum behind the Supermarkets  was their alignment with ‘social changes’, like the increase in women in the workplace, that meant people had less time to shop, and cook food.

This created an unstoppable shift and an inevitable collapse of the ‘unaligned’.

Today the dynamics are similar and the changes no less dramatic.

Today’s disruptor is internet shopping and e-commerce, with Amazon at the forefront. On the receiving end are the bricks and mortar retailers. The fuel is the same. Ecommerce is aligned with changing consumer lifestyles, offering improvements in convenience that include larger selection of goods, lower prices, delivered to the home and a reduction in time spent shopping: all from the comfort of your own living room 24/7.

So, history is repeating itself as the graph below illustrates. (source: Centre For Retail Research)

To the Victor the spoils

An average for UK high street retailing shows a total of of 38 store groups fail per annum.

There have already been 12 retail failures in 2018: that’s 12 store chains going bust in the first two months of the year, including Toys R Us and Maplin.

This raises two questions:

  1. Who else will go this year?
  2. What are retailers going to do about it?

Given these are obvious questions what is surprising is the lack of effective response from most of the bricks and mortar retailers.

Only a week or so after the collapse of Toys R Us a toy retailer in my local high street  re-opened a store that had been closed for a couple of months for an upgrade.

I was under whelmed. A cleaner, tidier, brighter store. But that was it. I hope it works but it is hard to see how neater rows of a necessarily limited product range will stem the tide even a little.

I was expecting something more like a Hamleys experience: An alive and vibrant toy store where the employees entertain the customers delivering the one thing that e-commerce cannot- an emotionally engaging experience.

Then there is what happened only a few days ago. My wife and daughter visited a large clothing store. Found half a dozen dresses each and went to try them on. After waiting for the girl on the desk to finish rearranging her shifts on the phone they were told there were no changing rooms as this was only an outlet store! This lead to them leaving they left without making a purchase.

This is beginning to look like a mixture between abject surrender and for retailers like the one above, the longest suicide note in history.

It is as if they don’t realise that E commerce globally is only 10% of the turnover of bricks retailing. So it isn’t ‘all over’. Not yet. But retailers are already acting like rabbits trapped in the headlights of the oncoming Amazon steamroller, frozen into inaction and hoping it will miss them if they make themselves a bit better or small enough by closing stores.

What is needed is a vision, strategy and investment. The high street and the stores along it need to be reinvented and totally reimagined. A bit better won’t do. It isn’t enough. Different and better than e-commerce is what is required.

A fundamental decision needs to be made by boards and shareholders: Fight, Flight or Fright?

The future, and there will be a future, of high street retailing will belong to the bold and the brave. That requires a vision worth fighting for, one that can be believed in and invested in, not a refit, but a reimagining of Bricks and Mortar that aligns with what consumers will want next.

But to the winners it will be a good investment because, in the words of

William L. Marcy, “to the victor belong the spoils.”

Amazon has already booked their place in the High Street. The only questions really worth asking are if your stores current sites will be coffee shops, hairdressers, boarded up or reaping the rewards of the new age of high street retailing?

What’s your choice: Fight, flight or fright?

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