The news at the moment is full of stories about large high street retailers in trouble. If you own a retail business or are planning to start one, you’re probably wondering what’s next for the retail industry, in this article Retail Business Consultant, Catherine Erdly shares her thoughts on what’s next for the Great British High Street.
Although it does feel like a worrying time, one thing is clear. It’s not retail that’s in trouble, it’s boring retail.
Be honest, how surprised were when you heard about BHS? When was the last time that a trip to Toys R Us (or Debenhams, or House of Fraser even) got your pulse racing and left you feeling great about the experience?
These current problems are part of a new cycle for the industry. If you look back at history before the 1950s, large chains didn’t exist.
With the “baby boomer” generation came larger chains that could buy goods cheaply from China and have them shipped to the UK at rock-bottom prices.
Chain stores multiplied over 50 years, boosted by customers happy to buy standardised products at low prices, forcing independent stores to close.
Online retail is often blamed for the current problems on the high street. The unstoppable rise of online-only Amazon is held up as the ultimate retail success story.
While it’s true that eCommerce has grown hugely over the past decade, it’s not the only reason for the current state of giant retailers.
85% of all money spent on retail purchases is still spent in physical stores. Online shopping, although growing at a much faster rate than offline, is still only 15% of total spend.
For retail businesses, it is no longer the case that bigger is always better. Manufacturing goods halfway across the world and shipping them to the UK keeps getting more expensive. Energy, wages and transport costs keep rising. The pound is weak, making imports more costly now than before the Brexit vote.
Business rates changes and the living wage increases cost large chains millions of pounds. The price of doing business keeps getting more expensive.
According to the British Retail Consortium, across the large chains, net profitability has fallen from 6-8% of sales pre-2007 to 3-5% today. In other words, even those with massive sales only make a tiny percentage of that back as profits. And over time, that percentage is shrinking.
The only question that remains is how many of these big chains will be able to transform themselves into flexible, modern organisations before they go the way of Maplin and Toys R Us.
It used to be that people wanted to fit in, or “keep up with the Jonesesinvolved
Now, people are much more interested in standing out or buying products that perfectly suit their needs and wants.
They want all of their choices, from skincare to food, to clothes and their home all reflect who they are as a person, and what they believe in.
Also, last year the Blue Planet II documentary highlighted the impact of ocean plastics and kickstarted a wave of conscious consumerism. This idea of “buying less but buying better” has become a much bigger consideration for a much larger number of shoppers.
Ethical and sustainable credentials are no longer a “nice-to-have” for retailers; customers are expecting all retailers to be minimising their environmental impact wherever possible.
More than that, customers are expecting businesses to have a purpose – and they want to know what that is.
Today’s modern customer wants to buy from a company that shares their ethics and values and isn’t afraid to talk about it.
2019 is a fantastic time to be an independent retailer. There are so many opportunities for new and existing independent retailers to reach out and gain new customers.
Ten years ago, having a shop would have meant a lengthy lease, and having a website would have involved thousands of pounds of development.
Today, pop-up shops and markets are everywhere, and building your website is easy and cheap.
Social media, when used effectively, can be a fantastic, level playing field for your business, allowing you to reach out and connect with your audience.
Also, as an independent business, you are ideally positioned to create something unique and special for your ideal customer.
Focus on the products that will best serve your customers, get clear about your values and get ready to share that message with your customers – drawing them into your community by championing values that they can all get behind.
The future of retail is uncertain, but one thing is sure. The brands that communicate their purpose and vision most effectively through their products, as well as their messaging, will be the ones that are left standing.
Catherine offers an incredible 1:1 session to help you analyse your sales, identify and grow your profits. Connect with her on Instagram or contact her for a 1:1 session quoting “small and mighty”.
Catherine is the founder of Future Retail Consulting and is on a mission to help people create the life they want by growing successful product-based businesses. She helps them make money by developing a clear strategy focused on their product offering, their pricing, and their sales channels.
Catherine brings nearly twenty years of industry expertise and an inspiring passion for product businesses.