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Mar 26, 2019

Old dogs must learn new tricks

Paul Clapham looks at ways of saving bricks and mortar retail

The business pages in quality newspapers make woeful reading in January for retailers. This past Christmas has reportedly been the worst since 2008 when the recession began.

So is the high street on its last legs, indeed is retailing as a whole dying a slow lingering death? You could interpret things that way, but I think you’d be wrong to do so. Rather, what’s happening is major change. Big retail chains are the ones which are suffering – BHS, Toys R Us, House of Fraser and a number of other big beasts with no doubt more to come. The major change is in consumer habits; unfortunately a lot of retailers haven’t changed their habits at all.

It’s normal to say that online sales are stealing an ever-larger share of high street revenue and of course it’s true. But it’s not just Amazon and their customers who are threatening the high street with tumbleweed.

Start by looking at government, both local and national. The taxation policies of national governments, not just in the UK, seem almost designed to favour the Amazons of this world against the little guys. At the time of writing the Davos Summit has just finished: here was an opportunity for heads of governments to agree to change that collectively. Unless they kept it very quiet, nothing happened.

At the same time British retailers have found themselves hammered by business rates increases of the eye-popping order. Maybe somebody – the Federation of Small Businesses, say – should be telling the country at large that this is what’s closing shops. Personally I haven’t seen or heard that message shouted as loud as it should be.

Far too many shops, not enough homes. It’s generally recognised that there is an over-supply of retail premises and not enough homes. To solve this, look at planning rules. I live in Margate where there is a street of homes many of which have visibly been converted from shops. This could be done anywhere. Also, people living in town centres make them buzzy, lively and more secure.

Let’s take a swing at private equity groups. Around the turn of the millennium these were the investors who took retail groups private, loaded them with debt and then took the money (laughing all the way to the bank, natch).

Senior management – directors – of large retailers might be argued as the worst sinners of all. The football fans’ chant ‘you don’t know what you’re doing’ applies here. Unfortunately, they don’t. They learned their trade decades ago and their skill-set is now so dated as to be next to worthless.

Right now you are probably thinking, ‘hey, I’m a one site sports retailer; what’s this got to do with me?’ Unfortunately, quite a lot. The decline of the big retailers has impacted on the whole of the high street. If the big players close down entirely or close their shop in your town it adversely affects the whole shopping experience there. It’s not your fault and you can do nothing about it but it will hit your passing trade hard and hence your profitability.

There’s an awful lot of rubbish talked about the solution to high street woes. I’ve put below what I consider the best ideas I’ve seen.

1. Create retail theatre where you and your staff are the actors; to misquote Shakespeare, ‘all the high street’s a stage’.

2. Government to be readier to allow retail mergers (although I worry about the Asda/Sainsbury case)

3. Do your best to avoid making your store a trial space for subsequent online purchase from another business.

4. Don’t chase the customer you want; instead satisfy the needs of your existing broad customer base. This was a comment in the Times about where Marks and Spencer has repeatedly got things wrong. It is very simply good marketing practice.

5. Keep the storefront well maintained; even a hint of scruffiness puts off people who are no advertisement for smartness themselves.

6. Have an A-board making today’s special offer or today’s new idea or something humorous – if the outside is fun and interesting the customer will guess that the inside is too.

7. Invest in employee training; poor service loses more customers than poor products.

8. Focus your website on bringing people into your store; if you want online sales too, build a separate site dedicated to that.

9. Sign up for a customer loyalty scheme and persuade your commercial neighbours to do the same – if customers can pick up loyalty points at three or more venues on your street, they’ll come to you.

10. Every piece of marketing activity should be aimed at getting people into your store; make it welcoming with a cup of tea or coffee (something they won’t get from a multiple); persuade your neighbours to do the same, as in point 9.

And finally go shopping yourself! Too many retailers spend too little time in competitors’ shops. This is basic, free market research and you can’t have too much of that.

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