The £1.2 million “High Street Innovation Fund” launched a year ago, as part of the British government response to the dying UK High Street seems to have had no impact according to an exclusive research commissioned for BBC Radio 4.
The research revealed that in 10 of the 12 towns, more retail units closed than opened in the past year, with a loss of 95 units in total.
While this information may be breaking news for the BBC, I saw it coming, the scheme was doomed to fail from the start. In fact when Mary Portas published her finding that led to the “Portas Pilots”, I published a White Paper in which I predicted the failure of the scheme.
The causes of the death of the High Street highlighted in the Portas report and the recommendations she made dealt with the symptoms instead of the root cause of the retail industry malady.
There are two root causes of the demise of the UK High Street:
- Failure of the retail industry to recognise the difference between the profession of retail and the business of retail
- Failure of the retail industry to respond to the changing retail environment
Retail is the only industry where the word profit is a taboo. Even charities understand that without profit they will not remain in business or to put it in their terminology continue to serve their clients.
The focus of most retail organisations is increasing sales at the expense of making profit. When retailers reveal their annual reports, they do not talk about how much profit they made but increase in sales.
There is a benchmark for measuring success in every spectrum of life…In football it is about scoring goals, religion is about winning souls and business is about profit.
If you do not make profit in business, you are not in business you are a charity…well sort of even charities make profit.
So how does one make profit in retail?
This brings us to the first root cause of the death of the UK High Street: the difference between the profession of retail and the business of retail.
The profession of retail is about supply chain, store design, visual merchandising etc.
The business of retail on the other hand is about three things:
- The profession: supply chain, store design visual merchandising etc.
- Marketing: attracting and retaining customers
- Finance: knowing the numbers
Most retail organisations even the bigger ones focus most of their attention on the professional aspect of the triangle to the detriment of the other two areas of the business of retail.
In the BBC report, they interviewed a few retailers who were moaning about difficult trading conditions, let them go back after reading this article and ask each of those retailers how much resource have they expanded on marketing this year.
I can wager all of them will respond zip…nada…zero…not a single red penny on marketing.
Ask them how many of them have ever attended sales and marketing training, again I can wager zip.
The problem is most retailers open their shops in the morning and just sit hoping that customers are going to walk in by default.
This point brings us to the next point which is failure to respond to the changing retail environment.
Change is the only thing that is constant. Technology and the internet has completely revolutionised the retail industry and that is the way it is going to be from now onwards.
The internet is here to stay…
Ecommerce is here to stay…
Online shopping is here to stay…
Retailers better get used to that…
The choice that most retailers have is whether they will be agents or victims of change.
As things stand, many retail organisations are being victimised by change instead of figuring out ways of mastering change.
Books and entertainment retailing is all but wiped out by Amazon and iTune because they are not responding to the technological changes taking place in their sector.
HMV got a reprieve but for how long before the hangman came calling?
I will wager not long!
Online shopping is continuously increasing and it is going to continue to increase. The question that most retailers need to be asking themselves: is how can they respond to the changing retail environment.
It is not a question that Mary Portas can answer for them neither can the British government answer that for them. It is left with individual retailers to figure out their response to changes taking place around them.
If they don’t, more shops are going to close and there is not a thing Mary Portas or the British government can do about it.
If you are a retailer reading this article and you need more resources about building your retail business, please log onto: http://theprofitexperts.co.uk/Retail_Management_And_Marketing_Strategies/
Or email: firstname.lastname@example.org to learn how we can help you create a profitable business.
Previous post: Was Steve Jobs a Liar? Did He Lie to Entrepreneurs?