How the retail landscape is changing
The retail sector has changed dramatically in recent years and shops need to find innovative ways to stay relevant
Since the start of the recession there have been a number of high street store closures, with the latest casualties being HMV, Comet, Blockbuster and Jessops. The question on everyone’s lips is whether or not the high street as its own entity is doomed, or if it can evolve to stay relevant.
Undeniably, it is the Internet that has had the biggest impact on physical shops. The ability to find almost anything online cheaper than in-store has proved a tough challenge for shops, as they must pay overheads on the properties. As if that wasn’t bad enough, shoppers can now walk into an outlet, scan an item’s barcode with their smartphones and immediately be informed where to buy it for a cheaper price. Unless it’s something that is needed urgently, most shoppers are happy to wait a day or two for delivery and spend less money.
As much of a threat as the Internet is, though, it is not the only problem the high street is facing. These are times in which people are trying to save as much as possible, and for many that means refraining from buying certain things entirely. It is likely that spending levels by consumers will continue to remain lower for a while to come, too.
In addition to that, the costs of running a business are more expensive – for instance, VAT increased from 17.5 per cent to 20 per cent and commodity prices have increased. The competition is much fiercer and is coming from all sides: globalisation means there are threats from international companies on home soil, supermarkets are selling products that compete, and undercut many other stores, from kitchen goods to clothing and electrical items.
There is also the fact that consumers are much more aware of ‘green’ living and sustainability than they ever were ten years ago. A full 60 per cent of consumers consider environmental impact more important than brand name and 22 per cent will spend money to buy green products; what this means for businesses is the need to be displaying a green awareness message, otherwise sales will plummet regardless of the brand.
So it is not just the Internet that is making physical shops suffer, although it certainly plays a big part. In order for shops to continue, they must evolve. This means being aware of what consumers are doing and how the playing field has changed over time. As consumers can walk around one shop while simultaneously comparing the prices of goods in other stores on their gadgets, the shops must adjust their role. They need to be part of a relationship between retailer and consumer, and there are ways this can occur because there are things shops can do that the Internet cannot – shoppers can see, feel, touch, use and smell goods in person, and this is not possible online. One-to-one advice is available in store also.
With this in mind, shops can think of ways to innovate. For instance, introduce technology in store, such as the ability to scan barcodes in store and find out product information – shops could even go further by having interactive technology whereby consumers can type in the product they want and the screen responds with the aisle number, making the process of finding products much easier. Shops must engage more with customers, such as inviting loyal customers to exclusive opportunities within the store, which will help build loyalty and brand engagement too. By making shops more interactive, more immersive, more fun and with excellent customer service, consumers are much more likely to want to visit the shop and continue visiting the high street in the traditional format.
There is no doubt that the high street can exist in the modern world, but it must adapt and evolve in order to do so.