Will the high Street ever be the same again?
Retail figures for April released by the ONS today highlight how much retailers need to change the way they do business says tax and advisory firm Blick Rothenberg.
Milan Pandya, a partner at the firm said: “With the country in lockdown, it will come as no surprise that data released by ONS showed that there has been a huge decline of 18.1% in the volume of retail sales in April 2020 and some retailers reported zero sales. This monthly decline represents an unfortunate record and follows a monthly fall of 5.2% in March 2020.
“The ONS report also shows that all retail sectors experienced a decline in April except for a record monthly increase of 18% in sales for non-store retailing, which largely comprises those which have an online presence only.
Furthermore, with many stores shifting to only online trading, there was an expected large rise in the proportion on online spend to 30.7% from, 19.1% in April 2019.
“With some businesses reporting no sales at all this indicates that they need to change completely the way that they do business.”
He added: “Too many retail businesses have been sitting on excessive bricks and mortar portfolios in the UK’s high streets and not enough of them have embraced Internet shopping.
“That must now all change if retail businesses who have traditionally traded on Britain’s High Streets are to “bounce back” whatever the time frame. It’s going to be a difficult balancing act because for many communities both large and small the ‘Shop’ has an important part to play and social cohesion is going to be even more important going forward.”
He added: “Communities have shown how they can come together digitally over recent weeks now retailers have to show how they can adapt and indeed some start their digital journey to ensure changing consumer preferences are adequately catered for.
“They will have to create a new business plan, but it is one that has to be created. With the majority of shops closing during lockdown, the Coronavirus crisis has driven consumers, and therefore retailers, online. But as lockdown measures are cautiously lifted, there is a growing opinion that consumer habits will have changed permanently and will swing more toward online purchasing.”
Pandya said: “Typically, retail businesses have been too reliant on a physical presence, whether they are in city centre, or out of town. What this crisis and the impact on consumer buying behaviour has done is accelerate the need for those businesses to pivot more toward digitalisation.
“Retailers therefore now need to think about how they can sensibly exit some of their retail space. Doing so reduces certain fixed costs however, there’s also an investment cost to switch online.
“This pivot will have implications for a retailer’s supply chain and stock holding policy, which will also have an impact on staffing levels and how they are used. For example, shifting from staffing high street stores to providing pickers and packers for distribution centers.”
The biggest challenges businesses have when they move to or increase their online footprints are that they:
- Don’t do enough market research to understand what their website should look like, front and back
- Don’t have an adequate stock holding and distribution policy to ensure that they can deliver their products to consumers in a timely way
- Understanding what customers want from their online experience and creating this – many want the in-store experience delivered online.
Milan concluded: “Getting these aspects right will ensure that customers have a simple and positive buying experience and that the retailer therefore doesn’t lose any custom long-term.”