Retail is NOT dead! But good enough is no longer good enough.

In a digitally led, rapidly evolving world of retail, the store proposition needs to be sharper than ever before.

Retail is Dead. The retail apocalypse is here. Everybody just buys everything online now. What’s the point of the physical store anymore? Just some of the more dramatic headlines or comments I’ve heard or read over the last few years. Yes, the world of retail has changed dramatically and is still changing, driven at the macro level by a convergence of several major developments in technology, shopper behaviours/preferences and legislation, while the hangover of the financial crisis still looms to this day. But this is not new. Retail regularly evolves and adapts to change, producing a range of winners, losers and new propositions in the market and almost always to the benefit of the shopper. Riding on a wave of constant change, every now and again, something major happens, so big that it causes seismic rather than glacial change and everything is thrown up in the air, taking some time for the dust to settle – I believe this is exactly what we’re experiencing now. Despite what many proclaim, retail is generally a highly resilient and adaptive business, readily taking on new challenges, adopting new technologies and often creating fascinating new experiences for the shopper. However, those retailers unable or unwilling to adapt to the change invariably suffer while others readily step into the space that they vacate. Therefore, I believe we can look forward to a healthy, exciting new world of retail, albeit one that may look quite different from the one we’ve been used to.

I’ve worked in retail for 26 years and I have seen many, mostly exciting changes in that time. I have been a part of driving some of that change and have been proud to be a part of it. I’m passionate about retail and its future and I would like to offer a counter to all those out there who predict its death. Therefore, I’d like to share a couple of thoughts about how we can continue the success of this great industry.

Firstly, remember that people still love to shop and remember what is great about physical retail that online cannot offer. Physical retail at its best is engaging, interactive, human, face to face, convenient, entertaining and fun. It’s a great place for discovery, where shoppers can find new products far more easily than they can online, especially when faced with a large range of product to browse through. It’s a place for shoppers to get hands on with products and to imagine what it would be like to own them. It’s a place to put a human face on a brand, meaning that you can build real and meaningful relationships with shoppers. When online and offline work seamlessly together it can create a much more powerful experience for the shopper (which doesn’t always mean loading your store full of screens and digital experiences – shoppers already have a powerful smartphone shaped digital tool in their pocket). 

Secondly, you must understand your shopper. Not just understand them, but really, deeply know them. This is where the best online retailers potentially have a huge advantage through the vast amounts of data that they are able to collect. Providing online retailers have the right tools and people to be able to break down, interrogate and interpret the data, they can continually and rapidly optimise their proposition, taking advantage of the latest trends, innovations and tools to drive more traffic and conversion on their websites. For traditional offline retailers, this can be a more difficult challenge to solve. Typically, every shopper that walks through your doors remains anonymous until they declare themselves to your store staff, often at the very end of their shopping journey (or one of your best members of staff recognises them), whereas shoppers entering a website can be quickly identified through multiple data points they carry with them, even before they decide to sign in. The best retailers are working hard to close this gap, gathering as much data about their shoppers as possible and not just through their online store. Whether through the collection of data or via other means, it is vitally important to understand your shopper, their behaviours, lifestyle, motivations and actions. When you understand this fully, you can tailor the retail proposition accordingly – shoppers will identify themselves with your stores and will reward you through visits and purchases.

Thirdly and possibly most importantly, have a very clear proposition. A reason to exist. A reason for shoppers to shop with you. Not just to shop with you, but to talk to their friends about their experience and encourage them to try it for themselves. Typically, you have a number of levers you can pull (i.e. service, price, product range, convenience etc…). Ideally you need to be the best at one of those things. If you can’t be the absolute best, you’d better be within a hair’s breadth of the best. Better still, be the best at two or more things together – that’s when it gets really challenging for a competitor to emulate or improve on what you have to offer. Importantly, if you’re the best at one, two or more things, you often don’t have to amazing at everything else as well. Best on service and product range/selection? You don’t need to be the best on price (Selfridges). Best on price and product range? You don’t need an amazing store environment (Costco). This is a very important point because trying to be the best at absolutely everything probably isn’t possible and almost certainly isn’t financially viable. It’s almost certainly impossible to provide the best level of service as well as the lowest prices – this is why Supermarkets generally don’t have visible staff on the floor other than the cashiers and why Harrods don’t sell everything at a discount. It is therefore very important to decide what you’re going to be best at, good at and where else you need only be OK. Case in point is JD Sports, which is consistently rated as one of the UK’s worst retailers for service, yet continues to grow both its size of business and its share price.

When you can create the best in class proposition and shoppers understand exactly what you’re about, they will continue to seek you out and spend their time and money with you. Equally, when you know exactly what you stand for and why shoppers shop with you, you know where to focus your investment to strengthen your competitive advantage.

Over the many years that I have worked in retail, I have spent a great deal of time thinking about the value proposition of different stores on the high street and why some continue to succeed while others fail. It has also been interesting to observe the retailers that had some initial success, only to hit a later rough patch. In an attempt to better understand what differentiates the winners and losers, I started to create a framework for different types of retail format to see if it was possible segregate different retailers into their different value propositions. I wanted to understand why a retailer like Sports Direct could continue to succeed where JJB had not or why Jamie’s Italian had initially enjoyed some success and then spectacularly failed. I am convinced that the reason for these successes and failures is much more strongly related to their proposition than how much online retail has stolen their lunch. The result is outlined in the slides that can be accessed via the link below. I’m not claiming that the theory is perfect and I’m sure there are bits that I’ve missed or haven’t quite got right yet. Therefore, I welcome your thoughts and feedback to refine and develop the model.