The high street as we know it is dead. Boring stores are dead. Or if they are not dead yet, they will be if retailers do nothing.
The high street started to decline because retailers saw firstly that out-of-town, and then online were what customers wanted. It’s always driven by us, the customer. Business rates and planning complexity by local authorities have exacerbated the situation, ramping up the closures. The last 12 months alone saw the collapse of Toys R us, Maplin and Conviviality, while a growing number of others are undergoing CVA (Company Voluntary Agreement).
“The high street started to decline because retailers saw firstly that out-of-town, and then online were what customers wanted.”
Enter the online retailers and platform businesses – e.g. Amazon, ASOS, Shop Direct, Ocado, Ebay, Farfetch, and Deliveroo, who have trained customers to expect immediacy, intuitive experiences and transparency, and they are constantly raising the bar. Whether it be personalised websites or apps, one-click shopping, faster delivery, or free returns, these businesses are making online shopping more and more convenient.
They are also working to solve the typical pain points of shopping online – augmented reality to help with trial and fit, and 90-minute delivery to get items to customers really quickly. They are already deploying artificial intelligence to help tackle the enormous amounts of data that they are collecting in order to make better decisions and do things faster, in a more efficient and accurate way.
Yes, approximately 80% of purchases are still happening in physical stores. But, we only need to look at the trend, and project out how much more will move online if boring physical stores don’t change their tune, and if the platform businesses continue to widen the gap (which they will).
People go to stores for 6 key reasons:
- to pick up something quick
- get inspiration and try/test products
- be entertained
- pick up an online order
- get humanised advice
- or to buy something they can’t buy elsewhere (e.g. best price or a unique product)
Other than that, they can buy the rest online. In fact, for some products, the internet of things makes replenishment pretty much automatic, thereby making the physical store completely redundant.
Can shoppers be attracted back? Yes, but the high street of the future will look very different to how it does today – we will have more inspirational and experiential stores with lots of good service, such as Lush, Hotel Chocolat and Sephora, more convenience or service shops. For example, Co-op is planning to open 48 convenience stores and EE is aiming for 100 new stores, and pick-up points, such as Rymans, which offer DHL services.
A whole smattering of other types of outlets will add flavour to the high street – rental shops like Rent the Runway (who now have 5 stores), and guideshops, showrooming stores like Bonobos (which now has over 50 guideshops) across the US. Bonobos was an online pureplay that moved to the physical world, offering customers the ability to test and try on products before ordering. We will likely see more of this happening as online brands start to emerge on the high street, as they smartly apply their vast amounts of customer data for the local area. This is not necessarily to sell product, but rather to engage customers, enable them to experience products, build the brand, and build deeper relationships with customers.
So… what next?
Basically the traditional retail model, where stores buy or produce merchandise, and then sell (push) them to customers is being completely redefined.
So what’s being lost? Bad or non-existent service and boring, uninspiring stores are being lost forever. In my view, this is certainly not something to mourn after.
One thing is for sure, the high street will continue to evolve, as change is the only constant.
How long will it take to change? Who knows, but retailers can’t afford to wait for this, because we, as customers won’t. The retail brands that will still be on the high street of the future will be the ones who try and shape (or re-shape) it now…