Partha Goswami, CEO of OOSTOR.com, discusses the current High Street crisis.
Online shopping has grown massively within the last ten years, with more and more consumers opting to update their homes, wardrobes and pick up gifts from the comfort of their own homes. This digital uprising has obviously had a huge impact on the lives of High Street shoppers and businesses alike.
Why Are So Many Consumers Shifting to Digital Shopping?
More and more modern-day consumers are trading walks down the High Street for their laptops and duvets. Buying behaviour has changed more in the last decade than it has in an over a century, with shoppers wanting an easier, instant and more cost-effective shopping experience.
Nowadays, all you need is a relatively decent WiFi connection and basic internet know-how to buy something online. You don’t need to worry about the weather, bus times, traffic, or ‘being back in time to make dinner’ – you can buy pretty much everything you could ever need or want from the likes of Amazon, ASOS and eBay – all whilst under the covers of your warm bed or from your sofa.
The 21st Century consumer wants ease and minimal leg-work when shopping, they want to be comfortable whilst they browse; they don’t want to walk around a multi-storey shopping centre for hours, only to find nothing they like or can afford.
Consumers also don’t want to spend their time lugging copious amounts of bags around for hours on end and would rather buy those 20+ items via the internet and have them delivered to their home. Add features such as Reviews, Wishlist’s and Live Chat and you get a non-pressuring, consumer-friendly, environment that is instantly more appealing to shoppers.
Shopping on the High Street has become more of an investment than an enjoyable activity. It takes time and relative planning. You have to account for busyness, weather, traffic, parking and whether or not the shops will actually have anything you actually like. In today’s world, people are busy and time is an incredibly valuable commodity – working in the time to go shopping on the High Street often takes more effort than is viable for the consumer, especially if you are after one item, which you could buy from the comfort of your home and have it delivered the next day.
You have literally millions of options whilst shopping online, you are not limited to what is in the X amount of sq. footage that brick and mortar shops have. Don’t like what is in one online shop? Open another tab and find another, no need to walk or drive somewhere else, just a few clicks and you have a whole shop full of products on your screen.
Why pay £100 for a dress on the High Street, when there are multiple online shops offering it for £75 or £50? The internet is full of retailers all competing for your custom, lowering their prices and offering deals to win you over. You have services such as Google Shopping which will show you the best prices for the item you are looking at, as well as hundreds of comparison websites and apps offering the best deals to ensure you, the consumer, pays less.
The Marketplace Effect
ASOS, Amazon, eBay, FarFetch and Etsy – all of these are what are referred to as ‘online marketplaces’; hub websites that feature vast collections of products from different brands across multiple categories that give the consumer a seemingly infinite level of choice. To the customer, it is like having a whole shopping centre in one website, minus the bag carrying and walking. This trend has become more and more prevalent within online retail – shoppers want everything in one place.
Why Are Businesses Moving Away from Physical Retail?
It isn’t just the consumer leaving the High Street behind, businesses, both big and small, are shifting their focus to online retail. Gone are the ‘golden days’ of the 1960’s High Street. Now with such a lack of consumer interest, retailers are putting much more time and money into their online presence, creating easy to shop websites and running advertisements through social media.
Real estate in the UK is more expensive than ever, with rent costs rising each month and the space businesses are paying for getting smaller and smaller. It is no longer easy or cheap to set up shop in the High Street, so much so even some bigger retailers are being priced out of their storefronts.
On top of the cost of space, businesses also need to shell out for staffing, upkeep, insurance and stock – All these factors are large overheads that can put a strain on businesses, even more so when the shops custom is down.
Businesses run on ROI, and with less and less consumers frequenting the High Street each year, the costs of running brick & mortar stores are becoming increasingly unjustifiable. It takes a microscopic fraction of a physical store’s cost, to build a basic ecommerce website and with companies such as Shopify, becoming an online retailer is easier than ever.
Where the consumers are
Shops are there to sell to a consumer, and if the consumer isn’t where the shop is then that process obviously doesn’t work. If retailers see that their demographic is moving away from the High Street it makes perfect sense to put a focus on online retail. According to Europa, in 2016 87.6% of UK shoppers bought goods and services online – it is clear to see that the internet is where consumers are spending their cash and time, and in order to stay relevant and in-business High Street retailers need to adapt.
Online retail combined with the prevalence of social media, allows ecommerce businesses to achieve a level of demographic targeting that has never been seen before. Services and tools such as Facebook Ads, Pixel, and PPC allow businesses to reach new shoppers and reconnect with previous customers, all for a relatively low cost (in comparison with brick and mortar) which makes it an accessible option for retailers of various sizes.
Retailers can target consumers that otherwise would never have seen their stores, and with platforms such as Facebook & Instagram implementing ‘Shop Now’ features, consumers now can buy directly through those apps.
The Golden days are over
If you looked back at Carnaby Street in the 1960s you would see a complete parallel to what you see today, Companies like ASOS and BOOHOO have shown the world that millennials aren’t interested in visiting the High Street. Why would they be, when they can get an entire outfit from their favourite brands all in one place, and have it delivered next day? The current generation of shoppers want an instant, effortless experience such as that of Netflix, and now more and more retailers are putting focus on things such as next day delivery, free returns and pay-now, buy-later schemes.
What is the impact of the shift to online retail?
With such a focus now being put on online shopping, what does it mean for the brick and mortar stores and the ‘High Street culture’ in general?
From shopping to leisure
As big brand and indie shops alike begin to move out of the High Street, we are going see a much larger focus on the High Street becoming a leisure destination rather than a shopping one. With cafes, coffee shops and various other social based businesses taking their places. People now look at the High Street as a day out, rather than a place to get their latest outfit or spruce up their homes, so it makes sense that it caters to the more social and activity-based demographic that is visiting it. Although, if the High Street begins to become popular with leisure-goers again, this may incentivise some retailers to start to return to try and snag them.
Adapt or die
It sounds very blunt, but as can be seen in the recent news, if retailers don’t put enough focus into their online stores and adapt to the now internet-centric retailscape they most likely won’t survive much longer. All you need to do is look at companies such as Toys R Us, Maplin and Claire’s Accessories to understand just how important focusing on digital really is. When you have the likes of Amazon, who sell everything under the sun, to compete, brick and mortar companies can’t afford to put off investing in their online presence for much longer.
Brick and mortar shops closing = Jobs going with them. The chances are, that a lot of local people work in these shops and when they go, so does their income. Obviously, it doesn’t make financial sense and isn’t viable for businesses to stay open simply to employ people, but for locals the loss of work can have a massive impact on their quality of living. Although, if the High Street does move to a more leisure-focused area, jobs will be created by the companies that move in after retailers.
We can already see this happening in High Streets across the country. Big brand businesses opting to close only some of their stores to make running the rest more financially viable. Doing this allows companies to still occupy the physical retail market but run either more profitably or invest the ‘spare’ funds into building a better online presence. This slimming down of physical stores forces companies to let employees go, which then creates unemployment and further negatively on the local areas in which High Streets are housed.
So, is the death of the High Street really upon us?
My personal opinion is both yes and no, I think it will certainly be a lot scarcer in terms of retail businesses, but the leisure and social-based companies that come in afterwards may breathe new life into the High Street. People will start coming to the High Street for more social and less-consumerist reasons, and if brick and mortar retailers can adapt stores in some way to incorporate this change of climate, then they may be able to ride this ‘wave’. If you look at Apple as an example, they have started turning their ‘stores’ into not just shops, but a place to socialise and learn – with public speakers, educational classes and more creative layouts, to turn shopping into an experience rather than a chore. We should expect to see this ‘reimagined’ shopping experience become more and more popular. You can already see it happening in a varied range of businesses with companies like Spar adding in Subway food counters and Waterstone’s creating cafés within their bookstores.
I don’t think the High Street will die per se, but it will be vastly different to the days gone by.