It’s no real secret that the UK High Street has been under pressure for some time. Recent research from the Office of National Statistics suggests that one pound in every £5 is now being spent online by UK shoppers. We probably shouldn’t be surprised when high street retailers post less than encouraging results, (or worse and close the doors), but is it really all doom and gloom?
Over the next three weeks, Regital’s retail analyst Mike Cullen will be take a closer look at the current state of the retail market.
The Changing Spaces of Retail
There’s no denying that the retail space as we knew it even 10 years ago is vastly different to what we’ve got now. Gone are the days of walking down the high street to scan the shelves hoping for a bargain, more shopping is being done online and the purpose of retail spaces are changing.
Is the high street dead?
If we were to go by fear mongering in the media alone it would appear as though the high street is doomed, and the finger tends to get pointed firmly at online as the culprit. What’s really happening however, is that the retail space is changing, and those that are moving forward with the changes are thriving. Of course, there are a significant number of stores falling behind highlighted by the number of store closures.
It’s no longer uncommon to read headlines reporting store closures on a regular basis, and the fact that we now know what CVA stands for is testament to this (it’s Company Voluntary Arrangement in case you didn’t know) and according to Deloitte the first half of 2018 alone saw 4,400 store closures across the UK. That’s a staggering increase compared to the 103 closures during the same period in 2017. There are a number of contributing factors, but in general it boils down to rising costs, technological disruption and of course changes in consumer behaviour which includes purchasing from online retailers.
The high street is far from obsolete, with almost half of the population still carrying out the bulk of their shopping there. That’s compared to 25% on PC and 22% mobile, but this is a trend that is quickly changing. Mobile sales are growing at 10x the rate of store sales, so in the next few years we’re most likely going to see mobile take the lead.
Who’s doing well?
Online retailers are some of the obvious winners, as they tend to be naturally disruptive and challenge the standard retailer model. Gymshark is a great example of this fresh, forward thinking way of marketing. Gymshark is a conditioning apparel brand, that was started by a (then) teenage Ben Francis, and his friends in his parents’ garage in 2012. It is now one of the fastest growing and recognisable brands in fitness, selling direct to consumers and rebuffing traditional retail channels and methods.
Although the business operation is online first, they have recently been hugely successful venturing into physical spaces with pop-up stores and events. From the very beginning, they did things differently and their marketing has always involved highly engaged social media. They were arguably one of the first brands to use influencers, engaging bodybuilders, bloggers, YouTubers and Instagrammers from the fitness industry to help them build an extremely loyal and engaged customer base. Essentially they replaced the traditional shop window with YouTube and Instagram, but instead of giving them access to a few hundred thousand window shoppers, it gave them reach to millions of people across the globe. In a world where authenticity and human interaction are proving to be the best way to generate sales, using influencers that already have meaningful and personal interactions with their audience was a really smart move, and even though it’s no longer ‘new’, we’d still advocate that it’s one brands would be wise to replicate.
Innovation on the high street
Amazon are always held up as a brand to watch for innovation within the retail sector, and for good reason. They have a huge online presence, with 90% of the population shopping there. They’ve pretty much reinvented loyalty and subscription based marketing with Amazon Prime, which now incredibly accounts for over a third of all Amazon users.
Most recently, and in a world of full of contradictions, the online is now moving offline and Amazon are trialling Amazon Go stores. The convenience stores are totally cashierless, with advanced technology allowing customers to simply pick up their goods and leave, automatically charging their Amazon account on their way out. This technology driven change to the retail space brings together the ease of online shopping with immediate physical availability and convenience. However it’s not without its detractors, and like any first adaptor technology, it might be wise to take a watching brief and see which direction things go.
The future of bricks & mortar
Physical spaces for retail are no longer a place where consumers come to learn about products. More often than not they already have that information from research carried out online. Very few retailers have the capital required to revolutionise the consumer experience in the way that Amazon has, and so most have two options in order to remain relevant and bring consumers in-store:
- Shift the focus of the store towards physical and technological experiences
- Move emphasis towards apps and social-media platforms
Nike are a great example of focussing on in-store experiences, highlighted by their concept retail experience Unlaced. The pop-up stores aimed to disrupt the traditionally male dominated sneaker market whilst offering consumers a unique shopping experience, all curated locally by influential creatives and stylists. The whole experience was much more than sneakers, it was customisation, personalised styling and VIP member experiences. Retail spaces should be seen as much more than shelves and rails. At a time when consumers can easily purchase something online and often for a cheaper price the opportunity to create something special in-store to draw in customers has never been more important.
Missguided, previously an online only retailer, opened a physical store with a focus on the social-media. Nothing about the stores Instagram friendly appeal is accidental, and every aspect of the layout is designed to encourage content sharing and social interactions. The design is completely open and window free, boasting several screens displaying social media content in real time under the hashtag #babesofmissguided. At a time where social media is king, ensuring that your retail space is encouraging online interactions is a key way to increase footfall and get people in-store.
Both options are driven by creating strong marketing narratives and immersive online experiences.
What does this means for brands
- Marketers need to link the physical and online worlds to thrive in the modern retail environment. Brands need to be there the moment a customer wants them, and where and when that moment is, is becoming more and more blurred.
- Social currency is what your audience desires, and pretty much demands. It’s not just retail brands focused on targeting millennials, generation Y or whatever demographic we are terming young people this month, that need to adopt this strategy. Every brand has to give credence to social currency, it’s a social first world in retail now.
- Interaction with people on mobile can be an almost constant touch point, and the capability of advertising technology offers brands the opportunity to disrupt competitor stores and drive footfall to your own.