The real challenges facing the High Street!
Many column inches are written on stats from the High Street such as the recent ONS sales figures (-0.7%) and the BRC drop in footfall. The same happens when we publish vacancy rates or the number of openings and closures. It is a great sector to work in as there is always a story to be had and you can take your pick from the good, to the bad, to the ugly! With all data, however, it is important to evaluate the source and how comprehensive it is. Not all are the same and so if someone says that seaside towns are dead and bases it on analysis of six seaside towns when there are many more, or indeed a consumer survey of 100 people, then for me it is ‘breeze data’ and not a true indication of a wider change – ‘climate/seasonal change’. It is a cumulative trend that you need to look for.
That said, the issues that face retailers are many but in short we can see that inflation far outstrips wage growth, which gives us less spend. On top of this, we have seen utility costs rise significantly and at the same time the Asda income tracker is also telling us that we have less money to spend. As such, it should be no surprise that retail sales fell 0.7% last month and let’s be honest and not say it is the weather or pre-Christmas spend cashpiling. The reality is that we have less money and we are very choosy about our needs and wants. Lidl and Aldi have done an outstanding job on addressing consumer NEEDS and the likes of Primark, Amazon, ASOS, Apple (and on a personal note my local rugby team Leicester Tigers) have been very good at addressing consumer WANTS. The fact that Tesco has sold over 100,000 Hudls just shows that when we want to spend we do, but we do so wisely. At the end of the day we all want to be sold to and this is an art and, one which many retailers have forgotten how to do and are now desperately spending money to change. Changing consumer perceptions is not easy and so those retailers who strive to keep and grow their existing customers and are not so mass market focused, do well. John Lewis is probably the best quoted example in this respect.
In my view, the challenge for retailers is not just all of the above but it is to deliver the shopping channels when and where the consumer wants them. If this is order by 10pm for next day delivery (Next), timed delivery slots, click and collect (free), or just come and visit us in-store, then that is what needs to be optimized. How many retailers incentivize their customers to visit their stores so they get the opportunity to wow them and get them to become active customers? Very few, if any, is the answer. The technology and ability is there and we will shortly show this in principle with our partnership with Addictive Points on our consumer shop search site www.localdatasearch.com. Research today from Nottingham showed that women visit eight shops and then buy from two – make sure you are one of the two! Consumers, and I am no exception, want to visit a shop for an experience, the ability to see and try, and finally to be advised, engaged and made to feel that the time spent in that shop was worthwhile, fun and answered their needs and wants. We might not buy in-store today, but many go home and then order online as a result, so show-rooming is something to be encouraged, supported, and loved as people are coming to your shop. Make sure you convert them to customers and preferably evangelist of their experience with you.
Not rocket science but often forgotten! One thing we need to avoid in 2014 or indeed 2015 is a rise in interest rates.