The phrase ‘dropping like flies’ has been often on my lips as we witness one retail collapse after another and watch others staggering into intensive care.
Even the great saviour of the high street that is hospitality has recently fallen foul of a pronounced bout of financial indigestion.
There is speculation as to whether we have finally reached peak retail, the point where it’s all downhill from here. And seeing much of the prime space still empty in places such as the brand new Westgate Oxford shopping centre, it’s certainly starting to look that way for physical retail.
The continued creation of store space has baffled me for a while now. Just how companies can continue to operate in an ever growing amount of over-rented, under-performing locations, looks on face value like a clever magic trick. Until you take a peek at their company accounts and realise it’s more akin to plate spinning.
But for the high street chains that bit the dust this week, a more fitting analogy might involve a canary and a mine shaft.
Specialists more susceptible
The failure of Maplin and Toys R Us seems to be the first signs of a competitive attrition that began with online encroachment on bookstores and record shops which is now gradually wiping out any retailer with a lot of physical space.
In many ways both stores were toy shops, with Maplin selling various gadgets and gizmos that looked like they’d be great fun to play with. These products also have something else in common – their specificity.
Both retailers’ customer bases pretty much know what they want before they step inside the store, and with the online market now secure in its maturity, they don’t need to leave their armchairs to buy this stuff.
I quite liked browsing in Maplin, but I was mostly looking at things I was never really going to buy. Anything I was interested in I knew I could probably get cheaper elsewhere, mostly likely online. The components market is about its only point of difference, but is so specialist as to be almost non-existent.
Similarly, I might visit Toys R Us for a Christmas gift, but it had become a lacklustre affair. It should have been the epitome of retail theatre, selling the stuff that children’s dreams are made of. Instead it looked more like a down-at-heel supermarket.
This is at the core of both failures. Both mostly sold desires rather than needs, fantasy rather than dreary reality, and we don’t want to see our fantasies piled high on generic shelving. If we do, we’re more likely to see and buy them in the supermarkets that are already nibbling at the edges of those categories.
“To compete with the internet, stores have to be big on the one thing you can’t stream down a broadband cable – experience”
If specialist stores are going to prise the mouse from their customers’ fingers and get them walking through the door, they have to be offering more than great prices or niche merchandise.
It’s now a truism that to compete with the internet, stores have to be big on the one thing you can’t stream down a broadband cable – experience.
It’s something to which those that felt the hot breath of online down their neck in its early years had to respond, particularly book and record stores. But all physical retailers are going to have to continually reassess the justifications for the cost of physical space and we’re already seeing companies now pushing back on rents, trying to achieve some sort of equilibrium.
As retailers are squeezed between high overheads and online competition, space is becoming increasingly redundant, particularly for those selling some branded goods.
Maplin and Toys R Us may just be the first high profile bellwethers of this phenomenon. Having already sunk the minor players, those holding large expensive property portfolios, particularly out of town, look like being the next group to be lifted on the digital tidal wave and dumped on the shores of bankruptcy.