In the second edition of the University of the West of England’s (UWE) Bristol Distinguished Address Series, Andrew Jennings – Chairman, Board Member and Senior Advisor – gave his expert view on the ever-evolving world of retail and how to rise above the competition in such a challenging market.
Jennings began his lecture by breaking down the importance retail business across the world – no matter if it is online, bricks and mortar, or omni-channel – despite the ongoing struggles the high street and wider sector are currently facing.
He commented: “Retail is an integral part of how we all live today – we rely on it for our very existence.”
In the UK, over 2.9 million people are employed in the retail sector, with 30% of consumer spending (out of £380bn) goes into retail. Jennings believes that it is still a dynamic and interesting sector to be involved in, and an important people-centric part of our economy.
Jennings has worked within retail for almost 50 years and has seen it evolve to the point where it has become increasingly more important to our everyday lives. However, he does concede that today’s sector is being disrupted in ways it has never seen before.
He said: “This industry is going through unprecedented change – change that I have never seen before. It is said that retail has never moved faster than it is right now. I say that it will never move slowly ever again.
“High streets and city centres around the world are under the microscope. Traditional bricks and mortar businesses are crumbling under the pressure on high rents and rates – and they are being replaced across towns and cities the world over by a conveyor belt of fast food operations, bars, vaping stores, medical centres and entertainment venues.”
This evolving retail sector has led to some high-profile casualties for the UK’s traditional retailers.
Jennings explained: “Many retailers have gone under, hundreds more are struggling. In the last year, we have had Toys R Us, House of Fraser, Maplins, HMV all go under – and that is just to name a few! And it is going to get more depressing!”
Throughout 2019, we have seen leading UK brands like Debenhams, L.K. Bennett, Bon Marche, Oddbins, Marks & Spencer, Mothercare, and Jessops have all struggled, with some falling into administration.
This equates to thousands of employees and hundreds of stores across the country – causing countless other problems for the wider society and economy.
So, why is retail struggling?
Jennings told the audience: “It is a complex answer – but let’s unpick this.”
The reality is that bricks and mortar retailing is a high, fixed-cost business – where heavy investment in infrastructure, significant stock inventory and long-term leases are needed. This means that it only takes a short period of negativity to drag a business under or cause serious financial difficulties – many of which retailers can no longer recover from.
“When things go wrong, they go wrong very quickly. In a world where online retail is growing exponentially, the bell has been tolling for companies not at the top of their game.”
According to the Office of National Statistics (ONS), online sales were only 5.9% ten years ago – and this summer it was at 19%. And high street numbers have been dramatically falling over the same time period. Over the last 12 months alone, there has been a 2% drop in footfall across the UK.
Will the negativity around the retail sector continue?
Jennings believes that this situation is difficult, but there is hope for the retail industry. He said: “However, the death of some businesses, doesn’t mean the death of all.”
This is through new working practices and more experiential opportunities for shoppers looking for more of an instore experience.
“These businesses are innovating and inspiring – and thinking in new ways.”
If you look at Harrods, the store is constantly introducing new features and retail opportunities. New restaurants, new shops, omnichannel opportunities. The same can be said for Fortnum & Mason – a 230-year-old London-based department store, showing that established British retail giants need to evolve with retail and keep up with the lightning pace of retail. If a retailer can do this, then they have more of chance of succeeding.
Both of these retailers were looking ominously over their shoulder, as over the last few years, established British institutions continued to falter, but they took action and looked into the causes of the problems and addressed the universal and industry specific issues they mutually faced. They then swiftly actioned a plan to make sure they did not suffer the same fate as some of Britain’s long-standing retail businesses.
And it is not just the high-end businesses that are succeeding. Jennings talked through how Primark has driven through the uncertainty head on by investing in new technology and offering something experiential – very relevant to succeeding in modern retail.
“In 2019, we are operating in a world, where a customer is no longer just the king, but a super-being. The customer knows more about what is going on than the retailer across the industry. Customers want and demand convenience, transparency and value for money. If you don’t provide that – you will lose that customer.”
The modern customer can compare prices in an instant and can check product reviews – they know more about the product than the retailer, and they are “ruthless” in the way they use this information. More than 50% of in store purchases are checked on our smartphones beforehand.
“To be a successful retailer in 2019 – you have to understand this. Any retailer that wants to stay in the game – let alone be ahead of the competition – must think in an entirely different way. Get it wrong or move to slowly, and that customer will be lost forever.”
“You need to remember two words: Be relevant”
There is no doubt that there are a lot of challenges facing retail, but Jennings believes that the key to staying in retail and even growing in this current climate is to remain relevant to the modern customer.
“Relevance is a simple, yet powerful word. It encompasses everything needed to be successful and thrive in retail today.”
Jennings believes that to stay relevant, a company must constantly look to innovate its own business, as well as being a beacon for the retail sector. Doing this can lead to a more positive outlook for retail.
He also believes that recruitment is also a key asset to the future of retail. Passion and willingness to embrace change is needed across a business in this ever-changing world of retail.
“Keep change at the centre of everything you are doing.”
To hear the full lecture, click here.