The Death Of The High Street
The “death of the high street” has become a common refrain amidst the store closures going on in the UK and elsewhere. Its signs include store closures, bankruptcy filings for long-established retail brands, and disruptive changes in the retail industry.
Below, we will look at the common problems that retailers are encountering, according to Toni, as well as some solutions for retailers today.
Case Study: Paperchase
Paperchase, a UK stationery retailer, is one of the latest casualties of the doom and gloom on High Street. Founded in the 1960s, the company gained a reputation as an upmarket seller of stationery products. From having annual revenues of over £100 million and a substantial international footprint, Paperchase is now restructuring, with the possibility of declaring insolvency. It has planned store closures across the UK as part of cost-cutting measures.
Case Study: LK Bennett
LK Bennett was a highly successful UK high end fashion retailer. The company was founded in 1990 and had a strong run, expanding overseas in the early 2000s. Beginning in 2012, however, the retailer’s fortunes slipped, with operating profits falling from £9 million to about £3 million. Over the next several years, LK Bennett faced operating losses and had to restructure the business. The process involved cost-cutting and re-focusing product lines. Meanwhile, the company struggled to compete with lower-priced fashion retailers such as Hobbs and Phase Eight. In March 2019, the BBC announced
LK Bennett would go into administration.
Deja Vu: Challenges In UK Retail And Beyond
While the UK retail sector has been particularly affected, the reach of the current challenges extends well beyond these examples alone. The struggle of the high street is not limited to the UK alone, nor to retail traders necessarily.
The Effect Is Not Limited To The UK
US retailers, as well as those in Canada, are among those affected. In the US, for example, CNBC reports
that retailers like JC Penney and Sears are in the process of closing stores. Meanwhile, across Canada, as CBC reports
, retailers like Green Earth are among those affected.
The Death Of The High Street Is Not Limited To Retail
The current trend of store closures is not affecting retailers only, however. Restaurants and food service businesses are also closing stores in areas similar to those where retail closures have been seen. In the US, for example, Subway and Joe’s Crab Shack have been closing some of their stores lately.
The Reasons Why Companies Are Going Into Administration
There are a variety of reasons why retailers and other high street businesses are closing down. Chief among them are rising rent costs, shifts in consumer shopping preferences and, the elephant in the room, online shopping.
High Rent And Operating Costs
Businesses located in prime real estate areas such as that found on high streets often carry high operating costs. Not only does rent cost a lot, but so does insurance, debt service, and other expenses. This has been exacerbated at a time when there are a lot of competing stores and consumer attitudes to shopping are changing.
Besides operating costs, high street businesses face more challenges in the form of Brexit uncertainty. This has led investors to take a wait and see approach, which makes it harder for ailing businesses to get financial infusions.
The Big Elephant In The Room: Online Shopping
Online shopping is slowly eating into the traditional market for high street businesses. The customers that are choosing to shop online represent potential store traffic that will likely not be turning up at a physical store. Some retailers have even found that online sales can cannibalize in-store sales, but in such cases that might be a tradeoff worth making.
There’s a reason why shoppers are opting for shopping online versus in-store. Time is precious, and shoppers prefer the convenience of shopping online. Using ecommerce stores means they don’t have to deal with finding parking or other offline shopping hassles.
Solutions For Retailers
While the situation might look bleak for high street businesses, there are solutions that can help your business not only survive but grow during this time. Here are some solutions for retailers and high street businesses.
1. Create an experience above and beyond what an online store can provide - Toys R Us in the UK failed at this. It was compared to a warehouse. The business didn’t create an inviting area, so it was seen as very bland. This meant that it could not compete with the experience of shopping online. Remember, shoppers are under no obligation to visit your store. You have to create an inviting and superlative experience that draws in-store visits.
2. Draw on your employees for an advantage - Best Buy in the US faced intense competition from Walmart and Amazon, which both extended their reach online. However, Best Buy was able to make a few key changes by bringing new management. Part of their new strategy was increased employee engagement. They had top management levels go into the stores and work with these teams. In addition, they listened to feedback from employees. The employees, for example, urged the reintroduction of an employee discount that had existed before. This increased the employees’ engagement in the stores, improving the experience of customers in-store. This had a ripple effect on the business, leading to more in-store visits.
3. Leverage what offline can do that online can’t - Another thing that Best Buy did is collaborate with the brands they sell, especially in the tech sector. They work with brands like Samsung, and created showcases inside their Best Buy retail locations. In these showcases, Best Buy shows the phones and customers can easily learn about the brands. The advantage with doing this in-store rather than online is that offline allows the customer to touch the phones, interact with them and get a first-hand experience of how well the phone works. This creates a value proposition that makes in-store customers want to return because it’s a side of shopping that they can’t get online.
4. Extend the offline experience, be creative with this - There’s a chance as well for retailers to view the current challenges as an opportunity to connect with customers creatively. For example, Best Buy implemented a “house call” system. What they will do is send out a specialist to your home and talk with you about what your needs are. For example, if you are in the market for a TV, Best Buy can send a specialist to visit your home and go over your unique TV usage patterns. Based on your unique wants, the specialist will not only make the optimal recommendations, but will revisit to see how well the solution is working. This extends the offline experience and creates new ways for Best Buy to keep customers happy.
Happy Customers And Happy Employees Make The Best Business Model
If there’s a theme running through the advice for brands looking to survive, it’s to focus once again on what business success is all about. For most brands, that’s making customers happy. As we saw, however, from the example of Best Buy, great brands don’t stop there. The best way to survive in these times is to leverage creativity to deliver outstanding value for customers and employees. Especially for retailers, happy employees can make all the difference. Always look for ways to innovate and bring out the best from your team. Adapt to changes in technology and update your store to move with the times and to keep shoppers excited