A summer to remember provides a timely distraction
Newspaper headlines in 2017 have generally been a negative assortment of Brexit noise, administrations, CVA's, jobs at risk and store closures. That was until June, when Gareth Southgate not only singlehandedly brought the single-breasted waist-coat back into fashion but also led a young team of likeable Englishman to our first World Cup semi-final in 28 years, in doing so uniting a nation that has been plagued by failure since Gazza's tears in 1990. And if the dream that football really was coming home hadn't raised your spirits enough, we had the joint hottest summer since records began, basking in 30+ degree heat for what seemed like an eternity.
But as the holidays draw to an end and the school bells start to ring the headlines quickly jolt us out of our collective dreams and sharply back into the real world we momentarily left not so long ago.
UK retail sales growth slows after summer heatwave
Data from the British Retail Consortium showed that total sales in August were just 1.3% higher than 2017, compared to annual growth of 1.6% in July (likely boosted by the World Cup and heatwave) and 2.4% in August last year. These figures come as no surprise, there can be no doubt that businesses have been hurt by Brexit uncertainty, rising overheads, the weaker pound and declining footfall to high streets and retail stores as consumers migrate online. Many have also scored own goals with rapid store roll-outs - a misguided assumption over guaranteed sales and profitability growth, clouding judgement over choice of site location and drawing attention away from core like-for-like performance.
All of these factors have contributed to a significant number of retail failures in 2018. House of Fraser, M&S, Carpetright, Toys 'R' Us, Maplin, Poundworld, Fabb Sofas, Gaucho and Jamie's Italian are just a handful of examples who have either gone into, or come close, to administration, filed for CVA's or implemented strategic restructuring plans which include significant site closures and redundancies.
The optimistic view
It is worth stating that, despite what the newspapers say, it is not all doom and gloom on the high street. According to GfK's index, consumer confidence actually increased in August by three points to -7, suggesting consumers are showing immunity to Brexit babble and may not be battening down the spending hatches just yet. There are also many companies that continue to thrive and where big names do go missing the vacant space is quickly inhabited by the next big thing or established success. This is not a capitulation but a re-shaping of the high street, an evolution and a harder test to succeed.
A focus on the customer experience
The modern-day consumer is more demanding than ever before, they want more for less and in the case of retail this inevitably leads them to the Internet and, more specifically, Amazon. However, the successes on the high street understand this and have created a magic formula, a flexible business model with an ongoing ability to move fast and innovate, with a core focus on the one advantage over the online world, the customer experience.
Connecting with the customer, becoming more than a store, becoming an experience-led proposition, using in-store technology to augment, to create an immersive experience that cannot be replicated online, this is where the high-street success stories lie:
- JD Sport's differentiated 'athleisure' premium offering and relentless commitment to embrace in-store technology has resulted in a 43% increase in share price in the last six months;
- Swingers recently opened its second site on Oxford Street, one of London's most famous retail locations. The epitome of the new high street, an exciting experience of street food, cocktails and crazy golf replacing BHS, the aged UK brand that lost touch with the customer;
- The Works, the discount gifts and stationary retailer, is set for a listing on the LSE off the back of rapid and profitable store expansion, opening c.50 stores in the last year in addition to 63 it acquired in 2017, success driven by a unique and exciting retail experience.
- Disney engages with children by putting toys at child height and is relaxed about them pulling things off shelves - they want them to have the ultimate toy shop experience; and
- Trotters, the upmarket London based children's clothes stores, go beyond just retail and offer a children's hair cutting service across its portfolio. What better way to improve sales by increasing customer dwell time?
There is no revolution, the high street is here to stay, but there can be no doubt that an evolution is well under way. Even the pure-play online companies are joining the act, Misguided now has two permanent stores with innovative in-store technology which focuses on social media to create the ultimate customer experience; Amazon opened its third cashless store a few days ago, a perfect example of innovation driving customer experience. Ironic in many ways, the very companies that threatened the future of the high street could very well be the same ones that contribute to its experience-led evolution.