Not a week appears to go by without a household name UK Retailer announcing a Creditors Voluntary Agreement (CVA), multiple store closures or in the most severe financial circumstances applying for administration/liquidation.
It appears that virtually no established retail brand is immune to remedial measures to ensure commercial survival as the rapidly changing consumer landscape has caught large sections of the industry off guard, despite the warning signs and seismic shifts of consumer behaviour being in plain sight since the turn of the century.
Transactional online websites started to enter into the mainstream of consumer usage just over 20 years ago in the UK, but many major Retailers were slow to take advantage of this new technical advance. Stalwarts including Marks & Spencer and Morrisons being prime examples of ‘late adopters’. They are now paying the severe price as they play catch up to the ever technically minded new generation of pure play online Retailers, and tech-savvy consumers who are migrating online in their droves, driven by value and convenience.
As High Street trading continues to weaken in many parts of the country profitable bricks-and-mortar retailing becomes incrementally more challenging to attain for proprietors. Whilst some online retail sales can be argued to be incremental to the overall ‘take’ the reality is that the macroeconomic figures for the retail sector remain broadly the same – in short retail sales are still constant, but just derived from different sources.
The decline of the traditional High Street is also exacerbated by oversupply of out-of-town retail space following the acquisitive ‘land grab’ of major retailers in the 1990’s and early 2000’s, leading to many Retailers occupying far too much physical space Vs. consumer geographic demand. As the recent spate of CVAs has shown, Landlords are being presented the Hobson’s Choice of either accepting large cuts in their long-term rental agreements, or their customers potentially going bust.
The crux and challenge of the conundrum for retailers is to either invest and innovate, or to pay the price of standing still. There are many examples of successes in the sector during this epoch changing time, including Hotel Chocolat, JD Sports and most recently H&M, who have effectively and profitably embraced the challenge of multichannel retailing and continue to grow and expand.
The alternatives, if Retailers are over dependent on bricks-and-mortar Vs. online sales, appear to be inevitably bleak. The latest figures from BRC Springboard Monitor convey a year on year 4.8% decline in footfall on the High Street.
The future is commercially viable for the UK retail sector, but only if the physical space Vs. online sales conundrum is effectively tackled, and an efficient multichannel consumer offering is at the core of the retailer’s brand proposition and operations looking ahead.