We have to talk about the High Street
The high street is in distress. House of Fraser has announced the closure of 39 of its 50 shops, affecting 6,000 jobs. Carphone Warehouse plans to shut 92 stores, Mothercare is set to close 50, New Look has already closed 60, and Marks and Spencer plans to close 100 stores by 2022. This is all on the back of a drastic decline in footfall (down 8.6% in 2017/18) and high street spend (down 3.1%).
Conversely, e-commerce retail sales are soaring – expected to grow globally from $2.84bn in 2018 to $4.87bn in 2021. 73% of consumers plan to spend more online in future and 23% identify as being digitally obsessed. The retail model is clearly undergoing seismic change. What’s driving this shift?
Customers want to shop in a frictionless way. They demand retail experiences that are quick, simple, easy and efficient – in fact, 80 percent of consumers are willing to pay more for a better customer experience. But bricks and mortar retailers have been slow on the uptake. A recent study found that 40% of UK retailers received complaints about items being unavailable, 37% about queue wait times, and 32% about store congestion. Amazon is setting the pace – having captured 33.5% of all UK sales. They’re “obsessive” about customer experience, and consumers now expect everyone to offer the ‘Amazon’ shopping experience.
But – the high street isn’t to be underestimated. It is still, by far, the dominant channel. 92% of purchases happen offline. Many pureplay brands are moving into physical retail, from Amazon (with its $13.7bn purchase of Whole Foods, its Amazon Go store and Amazon Books stores) to Missguided. And against the tide of CVA’s and bankruptcies, there are many high street success stories. Superdry has 500 stores and is planning to open a further 80 in 2019. With 174 stores and plans to open 10 new stores this year, Primark has grown its share of the UK clothing market to 16.5%. Lush’s philanthropy and personalised in-store experience has led to a 30% – 50% increase in store sales.
In this new retail world, the brands that succeed will be those who identify the role for their bricks and mortar offer, and shape a unique, immersive physical experience.