Back to Basics: How to Thrive in Retail
It’s been impossible to miss the barrage of headlines heralding the death of the high street as a seemingly endless stream of household retail names announce financial woes.
From Toys R Us to House of Fraser, Maplin to Debenhams, everywhere you look, there are profit warnings, redundancies, stores closing, and administrators swooping. Many believe that the high street as we know it will disappear completely within a decade. And around 200 shopping centres across the country are reportedly in danger of folding unless they can find fresh funding.
Does this mean 2019 represents a turning point in the battle for supremacy between the internet and the high street? Not necessarily. Some physical store chains continue to buck the trend and flourish – among them Primark which did particularly well over Christmas, as did JD Sports.
Retail roll of honour
So, what are these retailers doing right, what do they have in common, and what can others learn from them?
Primark now sells one in seven clothing items bought in UK shops. It’s achieved this by keeping prices irresistibly low and luring people into its ever-growing portfolio of stores by striking up conversations with its five million-plus Instagram followers.
JD Sports also reported strong sales in the run up to Christmas, with total sales including newly opened stores surging 15% in the 48 weeks to January 5, with the booming trend for atheleisure – sportswear to be worn outside the gym – and its reasonable prices doubtless having an impact.
Meanwhile Ted Baker too had a good festive season, with sales rising 12.2% in the five weeks to January 5, boosted by more selling space and strong growth online.
These brands have adopted a wide range of strategies that may seem unconnected. But there are broad lessons we can draw from them.
It starts with the customer
A founding principle of retail is to know your customer and give them what they want. Each of our star retailers follows this golden rule. There’s no confusion about what they offer – and the way they offer it appeals to customers.
The other factors our retailer A-team members have in common are clarity of positioning and single-mindedness: they’re crystal-clear about what they do best, and none has been tempted to become a generalist. Crucially, they’re also differentiated from the competition.
All of which is fine for specialists – but what about the generalists? The grocery giants and department stores have such a broad offer they’re in danger of being perceived as not standing for anything. Their stores are too big; they take too long to navigate. Why bother going instore when it’s all available online?
There are three avenues the generalists could explore: simplifying, experimenting, and focusing on own label.
Keep it simple
Struggling generalists should consider what first made them successful. Which hero products will encourage people back into their stores? Look at M&S, whose lack of focus in recent years has caused all sorts of issues. Perhaps it should stop trying to be everything to everyone and concentrate on providing the best mid-priced women’s winter coat on the high street, or the best quality school uniforms. That kind of laser-focused singlemindedness could be its way out of the doldrums.
Be brave – experiment
The grocers have already experimented with a store within a store concept in their hangar-like superstores. Sainsbury has launched its own brands Habitat and Argos, as well as clothing retailer, Oasis, while Tesco has given space to Pets at Home, Next and Timpson. More recently, The Range has announced a strategic alliance with Iceland to offer customers a ‘one stop shop’ with access to over 80,000 different products under one roof. Improving the shopping experience might be the answer – perhaps by offering more personal shopping, or higher-end beauty products and services. The key is to be open to new ideas and be brave and flexible enough to try them.
Own label
Own label should be a core part of a retailer’s offer, not just a cheaper alternative to brands. Cheap is no longer enough; consumers want quality at a good price.
A retailer’s own-label products should reflect the single-mindedness of its overall proposition and bring it to life. They should be goods consumers are proud to buy – and buying them should be rewarding, emotionally as well as financially.
Looking ahead, the retailers that are destined for success will be those that combine deep sector knowledge with levels of creativity, open-mindedness and flexibility that far exceed anything they’ve needed before.
Elizabeth Finn, Managing Director
