A couple of weeks ago, Toys ‘R’ Us announced it’s closing all stores, whilst House of Fraser, Debenhams and New Look are all struggling and face an uncertain future. One thing is certain; the ‘Retail Apocalypse’ is claiming more and more victims.
Over the past few years, a theme has been developing and it has become quite clear that retailers are in danger of facing similar fates, unless they change their business strategy.
Changes in culture and technology have a knock-on effect on consumer behaviour, and this is a huge factor in the decline of many retailers. As a result of being able to shop from the comfort of their own home quickly and easily, people are spending less time shopping in brick-and-mortar stores and more time shopping online.
Customers are becoming increasingly savvy and are well aware that by browsing online, they can usually find the cheapest possible option. This has led to Amazon becoming an eCommerce powerhouse, boasting huge figures such as 183 million unique visitors per month, and net revenue of $178 billion in 2017.
So, what do retailers need to do?
Offer a unique in-store experience
Those retailers who still have physical stores occupying retail space nationwide need to justify their necessity, by offering customers a brand experience that could only be achieved in-store. By failing to do this, Toys R Us was destined to eventually fail.
At the end of the day, what did their in-store experience really amount to?
Inventory was stacked from floor to ceiling, most of it in boxes and packaging which didn’t allow children to interact with it until after purchase. It was basically a warehouse with some tills and a real lack of creativity and imagination. When you compare this to LEGO stores which offer space for children to play with LEGO first and which showcase some of the fantastic creations you can make, the difference in experience is huge.
Another retailer that offers memorable in-store experiences is Lush. With over 1,000 stores globally, they’re clearly doing something right. Their unique and interactive layout allows consumers to view demonstrations, touch and smell products in a way that they simply couldn’t online. They also pride themselves on having friendly, knowledgeable staff who are willing to go the extra mile.
Omni-channel, integrated commerce solutions
Whilst the failings and deaths of various major retailers is a common topic on the news, retail sales in general are actually growing worldwide. The retail market generated over $23 billion last year and is projected to reach nearly $28 trillion by 2020. This is because of the year-on-year growth of eCommerce.
Retailers who have a strong high street presence should use this to their advantage and integrate it with their online stores. ‘Click-and-collect’, a process where you can check if a product you’re viewing online is available at a store near you is a good example of this, as well as being able to return products in-store that were bought online etc.
An early adopter of these strategies was Next, and over half of their online orders are now collected in store. In addition, studies show that 23% of UK customers end up buying additional items in store when collecting an online order. Whilst Next’s high street sales decreased by 7% for the entire year, their online sales rose by 10%.
Be competitive with the eComm giants
Customer expectations have never been higher, and retailers need to recognise this and meet them, no matter how much of a headache it may be. Whether this means investing in logistics to make sure next-day delivery is possible, or lowering prices and having a lower profit margin, if it means converting more customers than you would without implementing these changes, it’s the smart option in the long-term.
After all, sometimes relying on brand loyalty and recognition is not always enough, as the collapse of so many big name retailers over the past few years has demonstrated.
Invest in digital
There’s no ignoring the evidence - high-street sales are on the decline and online sales are on the increase. Retailers need to recognise this shift in customer behaviour and invest in marketing and digital accordingly.
The majority of marketing budget should be going towards areas like PPC, display, targeted remarketing and building a social media brand by producing content that creates a strong loyal following. It’s also truly vital to have a fully optimised, quick loading, user-friendly site. Fashion retailers must look to adopt strategies similar to the growing online retailers such as ASOS & Boohoo, rather than relying on brand recognition to keep customers returning.
There’s no denying it’s a worrying time for retailers at the moment, however their fate is not sealed. By recognising the shift in consumer behaviour and focus on online sales rather than operating with an outdated business model, they would be giving themselves the best chance to become profitable again.