Many well-known retail brands have shut down in the past few years. Many others are re-negotiating rent costs to buy time to find ways to cope with pressures of reduced customer footfall, sales figures and profits. This spreads retailers’ challenges to a wider community of corporate owners of retail space and their shareholders – which includes millions of us through pension schemes and government investments. So when media headlines shout “the high street is dying,” whether in the UK or in other markets, we ought to take note. Though is it really dying, or transforming? And how can new tech help physical retailers regain some ground by disrupting the disruptors?
Digital transformation
Online shopping has been the first and most visible stage of the Fourth Industrial Revolution. Unlimited possibilities for billions of people connected by personal hand-held devices, with unprecedented processing power, storage capacity, and access to knowledge, have been spearheaded by how we buy things.
This new reality has been provided by tech giants including Amazon, eBay, and Alibaba. Though for many physical retailers the loss of just a small proportion of their sales has been enough to tip them in to a danger zone. Latest figures from the UK’s Office of National Statistics show 19% of all UK consumer purchasing takes place online, and the figure is still growing.
Some business owners, particularly independent retailers and their vocal trade bodies, want to claim “Endangered Species” status and demand regulatory changes. In the UK these include adding a sales tax to online purchases and a review of the entire business rates system.
While online retail is certainly a contributory factor to the UK high street and US main street malaise, it is not the sole issue. The thriving retail fashion brand Primark, for example has no online presence, while its online-only rival ASOS has begun to experience problems and has issued profit warnings.
Lucy Stainton is Head of Retail and Strategic Partnerships at the Local Data Company, which monitors the rates of business openings and closures across 680,000 UK retail premises. In a panel session at a recent event about the retail sector she confirmed a very healthy 64% of UK retail outlets are still independently owned. And when asked what types of retailers are most commonly going out of business, her reply was “The boring ones!”
The fairness, or lack of it, of anyone who chooses to shop online paying a levy to subsidise ‘boring’ shops, presumably run by the less enterprising owners, is debatable. Though the case for a review of business rates has some clear validity: in round terms, retailing accounts for 5% of the UK GDP yet the retail sector is levied nearer 20% of the country’s total business rates.
The role of local government
A bigger issue is that many local authorities remain caught in a pre-online retail time warp. In the UK, reduced access to central government funding through recent years has been offset by allowing local councils to keep a higher proportion of the money raised through business rates. Local retailers are often treated as a cash cow, as if there was no competition and they have an inexhaustible supply of customers.
Road transport policies were geared to reducing town centre traffic congestion and air pollution, partly through restricting the availability of car parking spaces and making what does exist more expensive. Many local authorities fail to see a fuller, holistic picture in which shoppers now need to be encouraged to support local stores rather than deterred from going to them.
And the store owners need to ensure shoppers find it a rewarding experience when they get there. The word ‘retailtainment’ has entered the lexicon.
Social, not just commercial value
A growing number of built environment planners and lobbyists seek ways to establish a social value as well as a commercial value of high streets and local communities, and thus influence local authority decision-making in new ways.
The innovation foundation Nesta has addressed this issue through creating a board game called Flourish! Once downloaded, it can be customised to account for local circumstances and provides an opportunity for a variety of stakeholders to come together and share their relative points of view over a few rolls of the dice to assess policy options for boosting a local economy and strengthening the community.
Some Retail Categories are Growing
The presence of charity shops in high streets and shopping centres is often used as media shorthand to suggest an area has problems of retail decay and community decline. Admittedly, charities are keen to take up short-term leases and they pay just a small fraction of business rates bills. Though this is an out-of-date attitude. Recent research findings released recently by Giffgaff, a contract-free mobile phone service provider, shows the stigma over buying recycled goods is lifting. A third of UK shoppers have bought used and refurbished items, or what some prefer to describe as “pre-loved.”
Some charity shops are actually leading the way in providing a better customer experience. They don’t have new lines or sales to highlight through PR or expensive media advertising. Store volunteers have to recognise the value of conversing with both the shoppers and the people donating goods who come through the door. All represent an opportunity to start the process of converting a casual visitor up the loyalty ladder to become a regular financial donor, or maybe even a shop floor colleague. It requires further skills beyond just transactional.
Others are multi-purposing to add to their social value on a high street and in a community. As an example, Robin Osterley, CEO of the Charity Retail Association told a “Future of the High Street” meeting organised by the non-profit social network Smiley Movement that the British Heart Foundation is distributing defibrillators to all its shops for public use. And they will also soon offer free blood pressure testing.
Lucy Stainton of the Local Data Company added that in the first half of 2019 the fastest growing retail category in the UK was men’s barber shops, and 95% of them are independently owned. Where once there was once only a magazine rack, customers are increasingly drawn in by attractions such as pool tables, and encouraged to treat them as places to socialise.
Online Tech that Support Retailers
As much as the digital transformation of shopping habits has put pressure on bricks-and-mortar retailers, there are also a growing number of tech providers offering to help them. Here is a selection.
Launchd in 2014 by a husband and wife team who began their retail careers with a market stall, Down Your High Street is a service that enables local independent retailers to achieve an online presence in a digital marketplace. Shoppers can source out-of-the-ordinary products from 530 independent shops based all over the country. They can also opt for an interest-free instalment payment plan if they wish through DYHS’s collaboration with the fintech payment platform Clearpay.
Dotty Directory provides advertising for small and medium size retailers on a number of websites with a local focus on areas around the UK. In return, their details are passed on to service providers such as insurance companies who will try to sell to them.
MaybeTech offers courses on using social media for local retailers to raise their online presence and attract more customers. Also, their platform uses AI (Artificial Intelligence) to help larger organisations listen and engage with their customers through social media, benchmark their results, and optimise the ROI of their activity.
LoLo (short for Local Loyalty) has started rolling out a mobile app that enables shoppers to benefit from using online tokens that unlock cash price reductions in local stores. The retailers can in turn use the tokens they accept to enjoy their own savings on goods and services they require for their business, including media advertising. When there are enough consumer users they will also receive customer data feedback in order to improve future decision-making on pricing and offers. The scheme is networked so that regardless of wherever tokens are earned they can be used with any retailer or service provider signed up to LoLo.
Near Street is a search platform that shows the availability of items in nearby physical stores alongside the regular online options of Amazon, eBay and so on. Any stores that maintain online records of stock levels can participate. The system also helps product manufacturers and brand owners check where their goods are after they have been delivered to distribution centres.
BOLD Awards 2020
There are 12 categories in the award programme. Some of the organisations included in this article are relevant to the Advertising, Fintech, Artificial Intelligence and Marketplaces sectors. Other categories include Open Innovation, Crowdsourcing, Agritech and Science. Entries are open now until December 31, and if you think you’ve got what it takes to be BOLD, check the full list of categories and please complete your details here -> http://bold-awards.com/submit-your-project
There will be a round of public voting in January 2020, that we hope you will take part in, after which a panel of international judges will decide the winners. The prestigious awards ceremony is a black-tie event that will be held on the campus of the startup accelerator hub H-Farm near Venice, Italy, on March 27.
Applications for an invitation to attend the award ceremony can be made via this link.
