Destination, Destination, Destination

Ken

Make More Margin’s Ken Simpson

BLM asks retail sector experts what the future holds for the traditional high street and what impact the growth of online has had.

A report entitled Retail Futures 2018 was recently published, with the aim of assessing what the retail landscape will look like in 2018.

Broad and all-encompassing, it made pretty grim reading for UK retailers.

The report forecasts that by 2018 total store numbers will fall by 22 per cent from 281,930 today to 220,000 in 2018, resulting in job losses that could reach 316,000 across the UK.

Other headline forecasts said that there will be a further 164 major or medium sized companies going into administration, involving the loss of 22,600 stores and 140,000 employees.

Retail casualties

From reading the report it is clear there are some recessionary retail casualties still to come, joining the likes of Blockbuster, Jessops and Comet.

It is also clear that success not only depends on being as innovative as you can as a retailer, and embracing the changing dynamic, but for all concerned to make clear strategic decisions that permit online retail to coexist with bricks and mortar retail.

Online retail sales to rise

Interestingly the forecast says that online retail sales will rise from 12.7 per cent (2012) to 21.5% by 2018 or the end of the decade.

So how do retailers, both big and small work in tandem with online?

Ken Simpson, who is a Bristol based retail expert and judge at the UK retail awards says that the John Lewis model is one worth following:

He comments: “For starters, all retail businesses should at least have a website, and ideally be able to trade online with a click and collect facility, and these websites must be built with mobile devices in mind.

“In short, they should learn from the likes of John Lewis and offer a full service package that allows consumer, to buy in store and online at competitive prices; and via home delivery.”

Paul Batts

Paul Batts

Offline service

Service is vital as well says Ken, as is recognising how the customer wants the process of buying to feel.

He comments: “Big names such as Comet and Jessops went into administration because the products they sell can be bought easily online, from businesses such as Amazon, at much lower prices.

“In addition, neither offered good customer service both in store and in terms of after-sales and availability.

“Why is it that John Lewis have continued to trade up through the recession – it cannot just be about the product.”

Sucked out from the centre

Paul Batts, who owns Outdoors and Active in Weston-super-Mare and is the current Weston BID Chairman, believes that for independent retailers, there needs to be more investment in town centres because together with the rise of online, the environment is becoming ever more challenging.

He comments: “There is a national trend of having great big retail developments built on the edge of towns, which are sucking investment and people out of the middle and seeing town centres lose key traders such their independent butchers, bakers and green grocers. Supermarkets offer it all and it is making it impossible for some independent retailers to survive.

“I don’t believe this is market forces and I don’t believe it is inevitable – why not invest in the town centre and build outwards and build units inside.

“And why not have more sensible planning permission so you don’t end up with five coffee shop chains in one high street.”

Those Portas Pilots

And what of government’s Portas Pilots, which saw retail guru Mary Portas lead a review of England’s struggling high streets, and twelve ‘Portas Pilot’ towns, including Bedminster in Bristol, were given a share of just over £1m to help regenerate them.

Despite raising the profile of Mary Portas herself, will the scheme deliver retail nirvana? According to the Retail Futures Report, it doesn’t look as though it will.

In spite of the Portas Pilots, the High Street will continue to suffer; with around 41% of town centres losing 27,636 stores in the next five years.

A BBC report also recently found that ten of the 12 government-funded ‘Portas Pilot’ towns have seen a fall in the number of occupied retail units.

But was it really ever going to make a difference, considering the relatively low level of investment it offered.

Ken Simpson comments: “I personally thought most of the Portas Review was bonkers, but it served to raise awareness of the increasingly desperate situation many of the countries shopping centres face.

“And to be fair, I think the fall in the number of units is down to market forces, with mergers and failures accounting for many of the empty units; which coupled with rents and business rates being slow to follow the market, has meant that many entrepreneurs are reluctant to expand.”

The future

When considering the future of the retail sector, the report argues that high streets need to shrink to survive.

It recommends that a pump-priming fund of £320 million is required to start re-developing problem town centres and turn failing and empty shops into good residential accommodation; and create leisure and office facilities for which there may be a local demand.

Ken comments on the future of the retail sector: “The change we have seen over the last twenty years will probably slow; we will not see as many big edge of town sheds developed by the food retailers and existing developments will be tweaked to accommodate different brand requirements.

“There will continue to be a number of mergers and failures whilst the economy is in the doldrums.

“I think that we will also see a significant number of online only retailers develop a bricks and mortar presence. 66% of Oak Furniture Land’s sales now come from their stores; and Screwfix – the trade arm of B&Q now has 300 stores.”

enewsletter