High street names may look to Portas and Grimsey, but are they missing the point?
As high street stores continue to stare into the future without much insight into what it holds for them unless they somehow adapt to consumer behaviour, Aaron Martin, head of strategic services at Collective Londonargues that there is a role for bricks and mortar to play, however it must be hand-in-hand with a complimentary online strategy.
There’s no shortage of opinion about the future of the high street: two years ago Mary Portas established her vision and this month The Grimsey Report revisited the challenge, leading to more column inches and an unnecessary showdown between two retail giants who mostly violently agree. They definitely agree that the high street is evolving. As has always been the case with any business, those who fail to evolve will die. So half a year on from the high profile collapse and subsequent resurrection of the HMV, Game and Jessops, are they evolving… or still risking slow painful death? What will it take for a high street brand to succeed – and perhaps even, thrive – in this brave not-so-new world?
Whichever high street report you prefer, there’s little doubt both place the blame for the destruction of many high street brands firmly at the feet of online retailing. One would be daft to suggest otherwise, with Grimsey pointing out that average weekly internet sales are now hitting £582m per week (or 9.7 per cent of all retail spend). Likewise Portas says that although internet sales account for less than 10 per cent of all retail sales, some estimates suggest ecommerce accounted for nearly half of all retail sales growth in the UK between 2003 and 2010.
But perhaps this ongoing insistence on splitting online versus bricks-and-mortar is where brands go wrong: it’s simply not how their consumers view it. For consumers, online and offline are direct competitors offering the same products, but each with their own advantages and disadvantages. As a consumer, I happily buy at bricks-and-mortar stores when I need something only they can offer – immediacy, service, tangibility – and switch to online if I want cheaper prices, consumer guarantee or broader range. And thanks to mobile, I’ll even switch between channels while in-store. To ignore these behaviours and treat them independently is like King Canute standing against the tide.
There’s a role for both bricks-and-mortar and online to supplement each other in providing the best experience for customers; an insight embraced by online retailers like Amazon and even OakFurnitureLand. Whether it’s Amazon’s delivery lockers or OakFurnitureLand’s physical showrooms, both have moved into the physical space at the behest of customers’ needs.
So how have HMV and Jessops, both victims of online retailing, learnt from their brushes with oblivion? They appear to have taken different strategies. HMV is focusing on stores with no ecommerce platform (although one continues to be promised). Jessops is focusing on the online model supplemented with few stores. Neither seem to be hitting the mark.
HMV struggled with digital before their demise, as demonstrated by their mishandling of their young Twitterer and, more tellingly, by their online store being shut down immediately upon insolvency whilst their bricks-and-mortar stores continued to trade. So while it’s not a surprise to see them now taking a bricks-and-mortar first approach, it’s disappointing that a visit to an HMV store still does not give a clear reason to buy then and there. Whilst staff are mostly knowledgeable, their offer is convenient and their prices are competitive (when delivery is taken into account), it’s not readily apparent to consumers… leaving people little reason not to wait until they’re back in the office to order online.
Jessops have the opposite problem. In a complicated, intimidating and expensive category, expertise is a key competitive benefit. But with only 28 stores across the country – and only one in London – it’s clear Jessops are eschewing the high street for online. The challenge with that is that in the digital realm, expertise and brand history mean little alongside price comparison and the wealth of independent information available. So success hinges on competitive pricing and supplementary services (like free returns and added value). But Jessops prices simply aren’t the most competitive, even when grey imports are excluded.
Game, however, are embracing omnichannel retailing and were consequently expected to make £20m profit by year ending 31 July 2013. Games exploits the advantages of a retail state to create exclusive experiences like midnight launches while maximizing digital with unique downloadable content, thriving communities and a mobile ecommerce app. By maximizing all channels, Game are creating an offering that distinguishes them from their digital-only competitors: successfully providing customers what they want, where they want it; with a consistent brand experience and seamless service regardless of channel.
Consumer behaviour has changed irrevocably. They don’t see channels or high street and online as different categories. Retailers need to respect this and understand that whether they’re online-only, omnichannel or bricks-and-mortar, they’re competing with every other seller in their category. The sooner retailers embrace this change, the sooner they’ll play to their strengths… and the more successful they’ll be.