Retail outlets such as House of Fraser, Poundworld, Bench, Maplin, Berwin & Berwin, Countrywide Farmers have recently gone into administration in the UK.
Betterware and Kleeneze with over 3,000 door to door salespeople have also both disappeared from our neighbourhoods during 2018.
Sears (inc KMART) founded over 125 years ago and once the world’s largest retailer has just last week filed for chapter 11 bankruptcy protection in the US.
In contrast Amazon are creating an additional 1,000 highly skilled jobs in the UK to work in their development centres “software & machine learning” and within their Amazon Web Services (AWS) division. In fact Amazon now employ 27,500people, 20,000 in fulfilment centres and over 6,000 within its corporate division in the UK. Globally they employ 575,000 people. Amazons global sales for the 3 months to June were $53bn generating a record quarterly profit of $2.5bn.
If you are a retail store business owner, what does this mean for you?
Are there any lessons that we can learn from the failings of these retail giants?
Let’s start with the facts!
The latest Retail Sales Reports from the ONS highlights 1.2% retail sales growth in the 3 months to September for all retail sales (both online and in-store) but compared to August down 0.8% due to food sales dropping 1.5% which the experts believe was due to the weather and us putting our barbeques away!
The ratio of all online retail purchases is 17.8% of total retail sales. The proportion of online spending on clothing and food in particular is growing at a faster rate at 18.2% and 5.8% respectively.
Even retail stalwarts such as M&S are reviewing their longer term strategy on the high street; food seems to be the only area where sales are relatively stable on the high street and I suspect food is where M&S will concentrate going forward.
What are your business’s chances of survival?
“By changing nothing, nothing changes” – Tony Robbins
You don’t need me to tell you that e-commerce is a big part of the current and future retail environment. If you’re not already embracing digital technologies, it is inevitable that you will have to make some changes, but there are other opportunities of which you can also take advantage.
Develop a multi-pronged approach
The buzz phrase in retail is omni-channel marketing. Integrate your online and offline marketing activities; use social media to attract and increase footfall to your store, combined with offering your products through an e-commerce website that will allow your products to be sold into new markets and may even attract new customers from different areas of the county or country. It is important to understand how your customers (existing and potential) behave; people aged between 18 and 24 make 54% of purchases through their smartphones and over 60% of this age group would try a product suggested by a YouTuber. If your business isn’t online, you will miss out on this whole generation. This short video gives you an idea of the numbers of people now using social media to engage with brands.
Deliver a great customer experience
With footfall on the high street reducing by 4% year-on-year, you have to attract potential customers into your shop. You will need to add value to the customer experience in order to stay ahead of the competition. By adding value to customers in your store, you will also discourage ‘shopping around’ online behaviour that could be damaging to your business.
How do you add value? Well, consider the décor: does it need a facelift? Does it have curb appeal? Think about your branding, store layout and the ‘customer journey’. Pay attention to where shoppers travel in your shop. What catches their eye and attention? Are there any areas that fewer people visit? Why might that be? Can you place any low price/high profit items at queueing points for the customer to make impulse purchases while they wait? Think of the high-street retailer Primark; they have spent a lot of time figuring out how best to capture a customer’s attention in store. The strategically-placed displays at the check-out desk means that even if we nip in for one item, we come out with an arm full. It’s all pretty basic stuff, but it’s about spending time trying and testing different layouts and displays and monitoring the success of each change or update.
Personalise your customer interactions
Shopping in store has one unique feature you don’t have online: human interaction. Digital engineers are doing their best to replicate this online by utilising live chat bots and humanised search engines- with these so-called ‘personalisation’ strategies expecting to gain momentum over the coming years. Therefore ensure your staff in-store deliver high quality service levels to help the customers buy; surviving in a retail business is not about heavy discounting. Poundworld couldn’t survive. It’s about offering a great shopping experience. Do you currently “meet and greet”, making your customers feel welcome and help them to buy?
I was in one of the big department stores mentioned above yesterday, and the shop assistant never approached or asked me what I was looking for. In fact everything was marked down by 25-50%. Selling purely based on price “the race to the bottom”– is not sustainable. I walked out empty handed and I suspect it’s only a matter of time before the store itself is standing empty!
New technology vs traditional values
Embrace the digital: as retailers, we need to use technology to make it easier for our customers to buy our products. You could consider self-service checkouts, online click-and-collect in-store service, in-store click-and-buy or click-and-order touch screens, product video displays or interactive kiosks. Even at McDonalds you now order on an interactive screen in-store!
VR, AI, AR… eh?
So, you’ve embraced some simple digital technologies into your business and they’re proving to work. You’re a digital convert and you want to step your technology up a gear. What’s on the horizon?
• Virtual Reality (VR): those weird headsets. Did you know that you can now specify your new car and even test drive it without sitting in the car via VR? Audi hopes this will increase footfall to their showrooms just for this novel experience. The benefit to the dealers? They will carry less stock, so will need smaller retail outlets. The younger audience now expects to use digital tech at every touchpoint. Keep an eye for VR car dealerships springing up on your local high street!
• Augmented Reality (AR): real world environments are augmented (overlaid) by computer generated sound, video and graphics. Applying AR tech to retailing allows the customer to experience the product before they buy it. Wayfair, the American furniture retailer, is piloting this technology using Google Tango software to show customers how their furniture might look in your home or office before buying.
• Artificial Intelligence (AI): intelligent machines. AI is being used in-store to enhance the shopping experience by introducing concepts such as the artificial store assistants – used by Macy’s in the US.
AI will be the real game changer and eventually, this technology will become so advanced that many stores in the future will not have checkouts and you’ll just walk in, pick up your chosen products and leave; no queuing and no cash transactions! Amazon are leading the digital march with their latest AI product, Alexa, and have already registered Amazon Go in many markets: “A new kind of store featuring the world’s most advanced shopping technology. No lines, no checkout – just grab and go!” The concept is already piloting in Seattle. Amazon has also moved into the food retailing business with the recent purchase of Wholefoods, moving from the digital retailing market into the bricks and mortar, with plans to open 2,000 Amazon Go stores across the US in the next few years. It won’t be long before they are here in the UK and M&S have just announced they will be trailing this technology here in the UK.
In conclusion, as a retailer, you should regularly review your operation from the customers’ perspective and ask yourself “What could we do to enhance the customers buying experience?” Don’t view digital technology as a stand-alone hurdle, but instead utilise it to your customers’ advantage to provide them with what they want. Remember that many of your current customers and future customers will have been born between the 1980s and 2000s (known as Millennials) and have been brought up surrounded with computers and technology. So you’ll need embrace the mind-set of the ‘digital natives’ or risk being left behind! A report released recently highlights this point: gaming sales are up 15% year-on-year a whopping £5bn in total sales in the last year.
Want to learn more?
We will be running some Freedom seminars and workshops during October and November across Cumbria. Please keep an eye on our events website page for workshops near you.
At Business Doctors we also offer free access to the Value Builder online tool, along with a free no obligation meeting to go through the key factors which will help you to understand what to work on to increase the value of your business.
If you are looking to grow your business, Business Doctors Cumbria offer a free business health check where we can help you to set a clear vision to understand the steps you need to take to fulfil your aspirations. Contact Peter Fleming 0845 163 1490 or 07966 686112 or email firstname.lastname@example.org.
Or click here to view our website for other services we can offer you.