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What next for retail? Three keys to a successful turnaround
If you believe the media, retail is doomed. Exorbitant business rates payable by retailers, high rents, difficult landlords, the cost of goods, Brexit, consumer debt, consumer behaviour, online retailers, the list of apparent threats to retailers is endless. However, consumers will always need to buy goods and services; the alternative being to return to the good old days of hunting and gathering.
Retail does face challenges – it always has – and retailers must work through them to identify and solve their customers’ problems, setting out a stall to sell their solution.
Unfortunately, after initial success, many businesses lose their way. I and my fellow turnaround professionals know what a retail business must do to get back on the right path. The answer, in my view, starts with three key features:
Online retailers appear to be a threat to traditional bricks and mortar retailers. There is nothing more convenient than using a smart phone to order goods is there? Yet, what if the consumer needs the item urgently? This is the issue online retailers have – they cannot satisfy an immediate need. Online retailers are working hard to solve the problem. For example, in New York, it is now possible to visit a menswear store that carries one item of each size for customers to try on before buying. Purchased goods are delivered within 12 hours anywhere in New York. Amazon has purchased Whole Foods, enabling it to have conveniently located stores for a click and collect service. You will see more of this. Traditional bricks and mortar retailers are adapting to the new convenience demanded by consumers and are working together with online partners and social media to solve those problems.
Online retailers cannot provide an experience. The closest they get is allowing you to choose the colour of an item you wish to purchase and see photographs or videos of it online. Luxury car manufacturers allow you to ‘build’ your desired vehicle and then place an order; but that’s not the same as visiting a car show room and having a test drive, is it? This is where bricks and mortar can really compete with online. Stores can offer cafes and restaurants, classes and wine tastings, personal shoppers and beauty treatments, talks and events.
In the UK, shopping has become a pastime; part of our culture. Online cannot compete with this. I expect we’ll see more collaborations between different businesses attracting people from online communities to visit bricks and mortar stores. Pubs in Nottingham are turning themselves into co-working spaces to allowing lone workers an alternative, both in price and experience, to an office or sitting at home. Opportunities for collaboration and growth are a by-product of this, as are increased sales.
Online will almost always be cheaper and it is not uncommon for consumers to visit a bricks and mortar retail store to try before they buy online. Bricks and mortar retailers can play exactly the same game by offering convenience and experience as part of their value proposition. Remember the menswear shop in New York?
John Ruskin said: “There is hardly anything in the world that some man cannot make a little worse and sell a little cheaper, and the people who consider price only are this man's lawful prey.” A successful retail turnaround strategy will invariably avoid those customers and focus on the value buyers. There are plenty of these around, which is why luxury brands tend to buck recessions.
Retailers of all kinds should use every lesson from their competitors and harness the technology available to them in order to succeed in a fast moving and competitive market. The rewards are there for those who keep these key factors in mind.
For more information, please contact Robin Johnston on 0115 947 4500 or visit www.buckles-law.co.uk