Insight & Research

January 30, 2018

Can bricks & mortar retailers re-build?


With intense competition and a fickle shopper-consumer landscape, 2017 was another challenging year for UK retailing. Christmas trading results once more gave rise to reports of gloom – with disappointing results from the likes of Tesco and M&S.   There were, however, also more heroic trading stories – including Primark, Next and asos.  So where are we?  Is UK retailing in good shape or standing too close to the edge?

It is undoubtedly the case that the shopper-consumer landscape is changing.  People now apparently love buying online, or so the narrative around the numbers would have us believe.  Online shopping, driven by extensive choice, value, ease of transaction and a plethora of delivery solutions – from near instant arrival to click & collect – goes from strength-to-strength.  At least for some.

Not all online retail is a success story.  There is a danger of glamorising the online channel, rather than appreciating that good retail disciplines still apply; the same disciplines that are essential for all successful retailing.  Simply having an online presence hasn’t helped transform the fortunes of Debenhams, or Tesco, or Marks & Spencer, or HMV, or Comet.  The harsh reality is that bad bricks and mortar retailers tend to be bad online retailers too.

The good online performers are overwhelmingly good retailers; they know what their customers need (not just what they want) and they tend to deliver a good-to-great end-to-end experience that leaves shoppers content. This is a lesson for all retailers and for all selling channels.  Success will depend on retailers continuing to innovate and improve – or failure will happen quickly.

Amazon is a shining example to all retailers and it continues to be the consumer darling.  It offers compelling propositions, evolves at pace, all whilst managing to deepen trust and shopper-consumer confidence.  Amazon is loved by its constituency and embraced as an eminently human-centred brand (despite its algorithmic heartbeat).  An incredible achievement.  But no accident.

Behind the scenes, Amazon works tirelessly to innovate, improve, expose latent shopper-consumer need and create desirable value.  And the digital alchemist now looks lovingly at its one-time nemesis – bricks and mortar retail propositions.  Which, if we listen to the death knells on non-digital shopping, is a rather strange thing to do.

Amazon is moving into physical retail spaces because it believes there is money to be made.  And Amazon is rarely wrong. Moreover, Amazon knows that most retailers are pretty bad at selling stuff.  Indeed, you could argue that its whole raison d’etre is based precisely and solely on this fact.  So past failure is never a barrier to Amazonian logic.  In contrast, past failures represent a seemingly never-ending stream of opportunity.

The travails of bricks & mortar retailing will continue in 2018 and beyond as long as retailers fail to recognise both the opportunities and the fundamental human needs that drive value, appeal and footfall. Large sections of our high-streets and shopping malls are filled with dull, unimaginative and shambolic retail propositions that insult both our intelligence and emotional needs.  Such places often seem intent on refusing that the 1970s have come to an end. And, one by one, the retailers playing here are failing.

The challenge and opportunity for retailers with a bricks and mortar presence is to think long and hard about what really generates success.  The story is not one of simply shape-shifting shopper demand, where online now holds the crown.   It is all too easy to blame shoppers for their behaviour change, without recognising the enduring failures that have been culpable in engineering such change.

There is a lot to learn from why online works and there is a desperate need to escape the fixation with price.  If retailers give people products, experiences and the value that they want, all wrapped-up in an environment that stimulates, rather than removing the will to live, they will then stand a very real chance of prospering.  The appetite for bricks and mortar shopping is still there, but the will to meet shopper-consumer needs has been conspicuous by its absence.