The fittest retailers survive downturns; only those that are already struggling face extinction.
Some commentators would have you believe that half the high street is being swept away by a huge disaster beyond their control. The truth is that we are experiencing the first serious downturn in sales for well over a decade. It’s gone on for a few months now – but that’s all.
Put into context, the current experience is a setback; a dip at the end of a trend line that has grown hugely for a long time. Simon Wolfson at Next got it right, surely, when he said that yes, it’s tough – but it’s hardly the end of the world.
But for some it has been the end of the world. Retail Week has been dolefully reporting the steadily growing list of retail failures and recently we have all been transfixed by the travails of Woolworths.
If you look at the list of casualties so far, though, are you really shocked by any of the names on it? I doubt it. Most retail fascias that have disappeared were ones that no longer met a significant customer need, or which failed to do so on competitive terms.
The long boom protected some that would otherwise have gone ages ago. Many had enjoyed a genuinely successful past, but had not adapted to a changing market, which eventually took its toll.
Superquinn was nearly a case in point. World famous as a leading-edge supermarket in the 1980s, it failed to change for the very different competitive landscape of the 2000s. We’ve raced to adapt Feargal Quinn’s ideas to a new generation and thus pulled Superquinn back to a recovery.
But if you look at other supermarkets – especially in the UK – you can see how retailers adapt to thrive. Look at the differences between now and the 1980s – food variety, ethnic ranges, good wines, entertainment, clothing, financial services, local formats: responses to (or anticipations of) changed customer demand. No dramatic transformations, but a steady, relentless process that has caused its share of extinction of weaker species.
Change per se isn’t always the answer. Some changes make matters worse. Woolworths, for example, abandoned many of its core ranges in the 1990s with the Focus strategy that concentrated the business on more glamorous products like entertainment, toys and children’s clothing.
But its store base, with its long tail of small, secondary-pitch units, was always an obstacle to selling them convincingly. Wilkinson, a similar retailer that chose instead to concentrate on value household products, has thrived.
The universal truth of retailing is that we all live at the whims of our customers. If we are not ultra sensitive at all times to changes in those whims, we risk perishing one day when cold winds blow down the high street.