Local high streets are losing shops that can’t compete with the likes of Amazon, eBay and Not On The High Street, to say nothing of online ordering and home delivery by the grocery multiples.
These are being replaced by outlets with a high service component, such as hairdressers, beauty salons, nail bars and estate agents. These are businesses in which employees acting as brand ambassadors can make a huge impact. And data from Service Management Group shows that positive interactions with staff can have a dramatic impact on loyalty.
Source: Service Management GroupBut I believe the announcement of a new branch of estate agents, Knight Frank opening soon in Turnham Green Terrace, Chiswick, is a tipping point, a sign of an accident waiting to happen to one category of these service-led high street retailers.
There are already 10 estate agents in this 200 metre road and a further nine within five minutes' walk, let alone drive. Estate agents we're not short of. So why is another one opening when the sector is over-shopped and ripe for the disruptive impact of online-only estate agencies?I assume Knight Frank’s logic is that with London property prices growing at 15 per cent this year, there’s a corresponding increase in potential buyers and sellers, and thus they have an opportunity to gain market share. Certainly the analyses of London flat prices by Dr David Lloyd show wide variations per post code in the performance of an investment in residential property and these are indicated in the anonymised chart below (data available via @MEDEDNPH).
Source: Dr. David Lloyd @MEDEDNPHHowever such information is not forthcoming from any estate agent I’ve come across. The best of them do have the all-important friendly manner and likeability, and a few have deep local knowledge and contacts to sustain their business, but strategic advice is thin on the ground. For example, the market is relying increasingly on the £ per square foot calculation, but estate agent property details don’t calculate it for you. It’s a bit like a media agency not providing cost per thousand data but letting the client work it out for themselves. A professional estate agency should be in a position to advise clients where best to be putting their money, based upon these sorts of analyses. It would be so much better if their personal relationship skills could be developed beyond that of ‘greeter’ to ‘advisor’. In bubble times, the estate agency business makes money and the Phoenix-like Foxtons has just reported turnover of £34.1m from a branch network of 47, so each shop is averaging £725,532, plus mortgage broking revenue on top. But the over-supply of estate agents and price-cutting have created the sector’s notoriously low levels of service, and now the increasing reliance on Rightmove and Zoopla has made employees even less proactive. This has all the makings of a downward spiral which may render estate agent shops unviable, despite their current profitability. If you take the trouble to go into one of their offices and register your interest, providing specific details of your property requirements you still get sent irrelevant ones. If you brief them to alert you to new instructions, especially before they’re marketed, you hear little or nothing because they rely on you receiving direct alerts from Zoopla and Rightmove.Meanwhile, Rightmove data suggests that there's more online activity Monday to Thursday and less going into the weekend: people are researching before shopping. So, with the notable exception of Foxtons which pioneered longer opening hours, why do most of these shops close early on Saturday afternoon and why are hardly any open on Sundays? This prime real estate isn’t being maximised and the customer service isn’t good enough to ward off the coming threat from low-cost online-only brands. Increasingly, service businesses need to make themselves available to their clients. For example a lot of the pressure would come off General Practitioners if they were able to make much better use of communications technologies in serving their patients. And faced with intense price competition from online services estate agency brands need to understand where their added value for customers truly lies and then ensure they deliver in these key areas.
Look at the threat to the hotel business posed by Airbnb. 10 million guests stayed at an Airbnb rental during 2013, a stunning achievement for a company only founded in 2008. Most recently, Airbnb secured a $450m investment, valuing it at $10bn. That makes it one of the world’s most valuable start-ups, and worth more than large publicly traded hotel brands like Hyatt Hotels. No doubt the UK estate agency sector will, like the US hotel business, go into lobbying over-drive to try and stop these insurgents, but it may be too little too late because their customers don’t have enough reason to support the status quo, and have every reason to embrace change.So what are the general lessons for marketers which face some of the challenges which beset estate agencies – including advertising agencies, for example? Firstly, avoid being ‘middled’ and go either for a sustainable specialism in a premium niche, or consolidate to deliver the economies and power of scale. Secondly, don’t just gather customer details, but augment it with information from social media to enable employees to empathise with their customers and be true brand ambassadors. Thirdly understand thoroughly the complete customer journey and how physical premises and digital communications can combine to deliver ‘high tech and high touch’, and a great service experience.
