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The High Street has long been regarded as one of the best indicators of the economic health in the United Kingdom, but the huge impact of e-commerce has finally begun to take its toll on the brick-and-mortar side of retail. Over 10% of shops in town centres across the UK are empty, and the decline in chain stores has been accelerating dramatically since 2011. There are many competing theories about the root causes behind this decline, but one thing can’t be denied – these retailers are failing to adapt to a changing consumer market.
In an era when the cost of doing business rises faster than the accompanying sales values, cost-cutting has to be a major consideration for retailers of all sizes. One of the most effective means of accomplishing this, of course, is to reduce the footprint of physical sales operations and move towards a lower-cost online model. The initial development of a solid e-commerce platform may be expensive, but the cost of maintaining a single storefront (in other words, a single chain-wide website) is obviously fantastically cheaper than having physical storefronts dotted all over the country.
Many retailers are leery of making the jump to an entirely online business model, and perhaps with good reason. John Lewis has solved this problem using a method known as a ‘multi-channel’ approach, allowing retailers to split their efforts and adapt to the changing conditions and demands of the consumer towards digital offerings while still catering to those shoppers who prefer to do their shopping in a brick-and-mortar store. Richard Lowe of Barclay’s offers another solution, with a much heavier focus on leveraging social media as an analogue to more traditional word-of-mouth advertising strategies. Burberry, Louis Vuitton and Prada have all made extensive use of social commerce to drive sales, and have weathered the e-commerce storm better than most other retailers as a result.
It is important to note, however, that even though there is a rapidly burgeoning trend towards e-commerce and m-commerce in almost all areas of retail, there will be certain niches that will retain their brick-and-mortar facades as a matter of necessity. The question becomes not whether the product can be purchased online but whether it is the best choice to do so. Retailers will need to evolve the value propositions they offer to customers and expand their in-store consumer experiences to stay current and relevant in the marketplace.
In other words, what we’re seeing is by no means the death of the high street model, but rather a complex metamorphosis into a leaner and more efficient model that better suits customer demand.