Three years ago, I gave a talk called ‘Is There Life After The High Street?’ about what I thought the future of retail would look like and why I withdrew my company Argenteus from physical retail in favour of online.
I spoke about the untenable proposition of existing leasing models with over-valued properties and ludicrous business rates amid falling footfall and competition from online – all factors contributing to the perfect storm we’re experiencing now.
Property costs have been a major cause of the recent collapse of several high street chains. Others are currently dodging bullets with CVAs, rent concessions, store closures, staff reductions or a combination of these and other strategies.
“The web has blown apart the received wisdom of every shopkeeper”
But all those moves are just holding positions. Physical space is losing its dominance and without a realignment between costs and returns that decline is going to continue.
Hopes that experiential retail will save the day now look like whistling in the dark, as even the mighty Jamie Oliver feels the heat in the kitchen.
Value retailers such as Poundworld and niche operators like Maplin and Toys R Us point to the demise of the single proposition store, while at the other end of the spectrum department stores are finding that diversity doesn’t seem to be grabbing people either.
More tellingly, sole category survivors Dixons Carphone are also losing ground, and they have a lot of it to lose.
The higher-end stalwarts are sharing the pain. The conspicuous affluence of the 1980s and 1990s and the ‘spend it, don’t save it’ culture of the 2000s won’t carry the middle market in an era of ‘peak stuff’, falling discretionary incomes and rising interest rates.
Announcements this week from the John Lewis Partnership are perhaps the first signs of that. Its renewed emphasis on the partnership with its staff is going to resonate strongly with post-Brexit, zero-hours, generation-rent consumers.
It will be interesting to see how JLP’s plans unfold, but I suspect even they may be missing the bigger picture.
Buzz phrases like ‘omnichannel’ are now quaint misnomers. It’s arguable web sales don’t add to overall turnover, they just shift it from one channel to another, and the major channel for the future of retail is digital.
Life finds a way
The web has blown apart the received wisdom of every shopkeeper and reassembled it into a set of consumer priorities that are hard to deliver in today’s costly physical space.
Concepts like convenience, range, price, value, service and ethics are all driving forces today, and all can be easily served in the digital arena.
Twenty years ago, a store with a website was a novelty. Eventually, if it isn’t already, it will be the other way around.
That’s not to say physical retail won’t still have a place in decades to come, but it will be a very different place: a touchpoint with consumers as part of a purchasing journey that will ultimately end online.
In 2015, I posited the idea of turning the ‘showrooming’ problem on its head. I said we should embrace it. Instead of stores holding stock, they should act as galleries for consumers to touch and try out products before ordering them online.
“We can no longer cling to the idea that things will ever return to what passes for ‘normal’”
I proposed a concept called WIRL (‘web in real life’) where emerging technology would be employed in physical spaces for all types of online retailers to use on a flexible basis.
House of Fraser trialled something like it a while back. Perhaps in the light of its recent difficulties, it might like to consider the idea again. I still have the proposal brochure if HoF directors would like a copy.
Retail is undeniably in a state of flux, leaping from one life raft to another, but we can no longer cling to the idea that things will ever return to what passes for ‘normal’.
To answer my own question, of course there’s life for retailers after the high street, just not as we’ve always known it.