The British high street is struggling. The recent demise of retail stalwarts Toys R Us and Maplin represents the latest stage in an industry shakeout that has already claimed household names, such as Woolworths, Comet and British Homes Stores (BHS). Worse still, pressure on the high street shows no signs of abating.
During December 2017, high street footfall decreased by 3.5% year-on-year, according to the British Retail Consortium (BRC). Helen Dickinson, chief executive of the BRC, says retailers face rapid structural change due to digital evolution and rising operational costs.
It is a sentiment that chimes with retail analyst Richard Hyman, who says the high street has long been in decline and has now reached a crossroads.
Hyman says significant structural change will be the dominant theme across retail for the next five years. The bottom line, he says, is that the retail industry needs to get smaller and refocus its efforts.
Experts such as the BRC suggest structural change will involve the repurposing of physical store space and a recognition of the importance of digital channels. While Hyman acknowledges the importance of these two elements, he adds that there is no silver bullet for firms looking to extricate their business from tough financial climes.
“A focus on showrooming and experience is alright, but it’s not going to save the industry,” he says. “What you need is a relevant retail proposition that is economically viable. That offering needs to be customer-driven.
“In a growth market, you can get away with not being great at retailing – but the growth market has gone and it isn’t coming back. The answer, as strange as it might seem, is that retailers should get better at retailing.”
Creating a seamless customer experience
So how can retail firms overcome this challenge and create a fresh business model? Helena Theakstone, head of digital at Oasis Fashion, is one of the pioneers of a data-led approach to retailing. Theakstone joined Oasis in February 2017, having previously worked in senior marketing positions at Marks and Spencer and Cancer Research UK.
Theakstone says executives should be wary of judging low footfall rates in isolation. She says strong online sales in a location are likely influenced by the presence of a nearby store, where consumers can come in and test the merchandise. Executives should assess multiple factors prior to making any hasty decisions, such as store closures.
Rather than relying on a single route to market, Theakstone says retailers must create a strategy that draws on a mix of offline and online channels.
Oasis is keen to create a strong link between the data used on the high street and the information it holds from online sales. Initiatives, such as e-receipts, are helping the firm create a better picture of customer buying habits and helping to ensure any messaging – in relation to marketing and promotions – is as relevant as possible.
“Brands that are creating a seamless offline to online experience for the customer have the advantage,” says Theakstone. “The customer has never been more in charge of when and where they wish to make a purchase. By giving them a consistent experience across all platforms, we can ensure what we deliver is a true reflection of the brand.”
Like other retail experts, Theakstone recognises the importance of creating showroom-like experiences. She says Oasis’s Tottenham Court Road store in London represents an example of how her firm is moving away from the traditional form of retailing as a purely transactional activity.
“The store features experiential facilities, such as a café and nail bar, which create a stronger affinity to the brand and allow the customer to spend more time in the store,” says Theakstone.
“In addition, being able to complete in-store ordering across all of our stores has enabled our customers to shop for items that may not be available in their size in that location.”
Developing an omni-channel view
The showroom-liked approach used by Oasis is one that resonates with Miya Knights, head of industry insight at Eagle Eye Solutions.
She says retailers should use free store space to introduce experiential elements that help to showcase new ranges, or offer an immersive, try-before-you-buy experience. This focus on experience helps make the store a shopping destination again, rather than just a sales and fulfilment hub.
Knights gives other examples of experiences with shopping, such as Waitrose experimenting with cookery classes, and Marks and Spencer inviting its Sparks loyalty scheme members to invitation-only evening events to preview the latest collections.
In New York this January, luxury jeweller Tiffany opened a Breakfast at Tiffany’s-style café next to a newly expanded and revamped homewares section in its flagship Fifth Avenue store. Knights says these pioneering retailers are using experiences to create seamless retail offerings across multiple channels.
“Many are now seeing their e-commerce and digital presence as a way of not only engaging customers to buy online, but as a way of browsing before then enticing them into the store,” she says.
“These retailers are highlighting the sensory attributes of a product only accessible in-store, such as fit or weight, touch, look and feel, or the expert advice available from informed store associates.”
Knights says retailers should give online customers a good reason to visit their stores and a great experience on the high street, with compelling motivation to buy when they’re there. They should also make sure these experiences incentivise any customer leaving the store without a sale to complete their purchases online.
“And when they do, the ideal scenario would be to have engaged with them digitally in-store – with additional recipe, styling or origin information, offers, reviews and rewards – to tie the online transaction back to previous store visits and get a truly omni-channel view of return on investment,” says Knights.
Integrating disparate sources of data
Julian Burnett, CIO at House of Fraser, is working hard to create an integrated view of customers. He is pushing a business-wide transformation agenda to help the organisation refine the supply chain process, increase customer satisfaction and boost the bottom line.
Part of this strategy has included the implementation of store networking technology during the past two years. Burnett is a big advocate for the power of big data in retailing. The store networking technology allows employees to visualise store movement in terms of customer flow.
Most interestingly, perhaps, Burnett and his team have integrated that customer flow information with space planning tools, so House of Fraser can demonstrate the effectiveness of store layouts, relative to customer footfall. Burnett says the integrated approach gives his firm potential to explore combinations of different product adjacencies, densities and layouts.
We’re heading to a world where our knowledge of customers who visit our website will be paralleled by our knowledge of customers as they visit our stores
Julian Burnett, House of Fraser
“We’re heading to a world – and there are still some missing pieces in this jigsaw – where our knowledge of our customers who visit our website will be paralleled by our knowledge of customers as they visit our stores, in terms of where they were, what they looked at, what they picked up and what they put in their baskets,” he says.
“In our warehouse, I’m now able to operate agnostic of channel in our pick operations, and I’m able to understand the likely demand profile coming from each store, because I’ve got live footfall analysis. I can then start to connect those two pictures together and be much more dynamic in how we replenish stores.”
Building a high street presence
Modern retailers, therefore, face a complex environment, where executives must manage operations across a diverse range of locations and platforms.
Phil Lewis, director of digital experience at Boden, recognises this multi-channel mode of operation presents a range of challenges. Yet rather than a threat, he sees the intertwining of online and offline operations as an opportunity.
“It's the way of the world,” he says, referring to the ongoing focus on high-quality customer experiences. “Everything we’re doing – if you look at enterprise architecture, product information management or digital transformation, all of these elements are foundations to enable multi-channel. They’re not being designed in isolation.”
Boden’s business model has been built through catalogue and online channels. Lewis and his colleagues continue to develop a multi-channel strategy. The firm recently announced its first US retail partnership, and the firm’s womenswear is now available on the website and in select shops of department store chain Nordstrom.
While 95% of trade still takes place through web channels, Boden – in a twist on the usual flight from traditional retail spaces – is beginning to create a high-street presence in the UK. The firm recently opened its flagship store on London’s King’s Road.
Lewis recognises the novelty value of the approach, suggesting retail executives who want to make the most of structural change must treat change as an organisation-wide phenomenon.
“Our move into physical stores, after already operating online, is a big difference and a luxury that maybe we’ve got that other people haven’t had,” he says.
“We can go into this change process and make investments with the knowledge that we know why we’re doing it. We understand what we’re building and we’re creating a strategy for multiple consumers across a range of channels, rather than one specific type of customer.”
As the retail landscape shifts in the wake of new technologies, experts in retail and tech explain how firms need to adapt to cater for modern consumers.
