This article is a continuation of my critic of “The High Street is Dead, Long Live the High Street” discussion hosted by eBay moderated by the Guardian’s technology editor Jemima Kisshad.
In part one I said the panel brilliantly identified the reason for the death of the ‘High Street’ but they failed to outline the role the retail industry is playing in its own demise.
In this section, I am going to discuss the failure of the retail industry to respond to the crisis and outline ways the trend can be reversed.
Yesterday I went to a Samsung store because I was having difficulties uploading files to my phone.
It was my third time going there.
I called Samsung helpline, wasted an hour and the half and they could not help me so I decided to go into the store.
The first time they told me they could not help me because my phone was five years old.
Them I remember I have an SD card in my phone so I went to ask them if there was a way I could transfer the data through the SD card.
Fortunately, the guy I met at the store the second time, told me I did not need a software to upload files to my phone.
He proceeded to connect the phone to the store computer, did some magic with the settings and voila, I was able to view my files.
When I returned home, I forgot some of the steps he took, so I had to return to the store for him to show me what he did once more.
When I arrived at the store, I did not see him so I went to another staff, he repeated exactly what I was told the first time I went into the store.
I tried to explain to him that I had come into the store and another staff member had accessed my data but I forgot some of the steps he took.
He was not having none of it, as far as he was concerned, there was no software to access my data and that was the end of the story.
Fortunately for me, Andrea the guy who helped me previously, walked down the stair and I asked him to show me what he did before and he taught me what to do.
I am glad to say I now know how to upload files to my phone.
Why did I tell you the story of my Samsung experience?
Certainly not to disparage Samsung.
You see, my experience with Samsung is the typical experience customers have when interacting with retail staff.
I was lucky to have met Andrea, without him, my experience with Samsung would have remained a bad one.
I have an iPhone, there is no time I have gone to an Apple store without them solving my issue.
If the first person does not know the answer to my question, by the time they pass me onto the third person, I will have a solution.
This is because Apple understands that people go to retail stores to buy experience.
The Richer Sound Phenomenon
Richer Sound has the highest sales per sq. ft. than any retailer in the world and it has held that position for more than twenty years.
In the same token, Richer Sound has the most knowledgeable retail staff according to Which? the consumer watchdog agency.
Even though most people love the best home entertainment system, shopping for and installing complicated electronic system is not the favourite pass time of many people.
Being well aware of that, Richer Sound ensures its staff are well-versed in it products to enable them assist its customers.
You will find the same in Holland & Barrett. Even though Holland & Barrett sells lots of different products, there is no time someone will go to a Holland & Barrett and require help and there is no staff member capable of helping.
No wonder Holland & Barrett is the second most profitable business in the UK.
Contrast that to PC World. Go into a PC World and ask any of the staff info about their products.
The best you will get from them is they reading the info on the description to you, in the worst case scenario, they will mislead you.
You find similar scenarios in B&Q, Wicks, Home Base and other electronic, computer and DIY stores that you expect knowledgeable staff able to answer customers questions.
In a ‘High Street’ around my area, there is a cowboy computer repair shop that attracts literally hundreds of customers on a daily basis.
Every time you pass around there, there are angry customers threatening to burn down the place. Yet customers keep trooping in there because he is the only computer repair store in the area.
People are buying hundreds of thousands of computers and electronic devices every years.
Businesses like PC World has an opportunity to ramp billions upon billions of pounds from computer repair and maintenance services.
If PC World staff were as trained as that of Richer Sound or Holland & Barrett, PC World could ride the new technology wave and become one of the most valuable companies of the century.
But they cannot take advantage of it because they are still stuck in the old way of doing business, so it is left to fake computer repair stores like the one around my area.
Why have I given the above examples and how do they relate to the death of the UK ‘High Street’?
I gave those example to outline the fact that the death of the UK ‘High Street’ is not the result of revolution beyond the capacity of retailers.
The majority of retailers who are struggling and going out of business are doing so because they have not come to the realisation that the retail environment has changed.
18th century retail operation was about production capacity…meeting customers demand.
19th century retailing was about quality.
21st century retail operation is about total customer experience.
The Richer Sounds, Holland & Barretts and Harrods of this world that understand this simple but important facts are laughing their way to the bank.
The PC Worlds and Samsungs of this world that do not understand that this century is about customer experience are the ones struggling.
I buy a lot of books. With a single click, I can buy any book I want and receive it the following day.
Heck I can even download it and receive it instantly. What should make me want to drive to the city centre, pay for parking, walk fifteen minutes to WH Smith or Waterstones to buy books from them?
What experience will they give me that I will not be able to receive from Amazon?
That is the question WH Smith and Waterstones will need to answer. If they want my advice, they might want to take a leaf from Starbucks playbook.
There are lots of cars. For some reason Mercedes feels different. There is something different about driving a Mercedes or BMW compare to any other car.
Japanese carmaker Toyota has tried their best to rival Mercedes and they have failed miserably.
The ability to replicate the Mercedes or Starbucks magic in retail is what will save the ‘High Street’.
The second thing the retail industry needs to do in order to save the ‘High Street’ is to run their businesses like business.
I know you are confused by the phrase ‘run their businesses like business’.
To be honest, I am confused by the phrase too.
Let me try explaining what I mean.
For the last few years, German duo Aldi and Lidl have been munching on the lunch of British big four supermarkets.
Even once mighty Tesco is running scare of the Germans.
Instead of properly investigating the root cause of the rise of Aldi and Lidl, they quickly reach the conclusion that the reason shoppers are flocking to the Germans is because of their price.
Therefore, they themselves have decided to go on a price reduction binge, which means that they are going to sacrifice their profit in the process.
In the retail industry where profit margin is under constant pressure, further reducing price without taking into account associated cost of operations is suicidal.
I totally agree with Mr. Grimsey’s prediction that Morrison will eventually disappear from the UK retail landscape. Morrison new USP is “We now price match Aldi & Lidl…as well as Tesco, Sainsbury, and ASDA”.
Business is about making profit.
Even charities and religious organisations know that without profit, they are out of business.
So they focus on increasing their profit margin year in year out which is why charities or religious organisations never call in the administration.
The retail industry on the other hand, is the only industry where the concept of Return On Capital Invested (ROCE) does not exist.
As long as sales is up the rest does not matter. Whether they are barely breaking even or running on a loss, it does not matter.
Until retailers change their modus operandi and operate like proper business that is focused on profit instead of just increasing sales, the UK ‘High Street’ will continue to remain a ghost town.
Is the UK High Street is dead?
My answer to the question will be no.
No matter how bad it might look, smart entrepreneurs will find ways of stealing opportunities from the jaws of defeat.
In every adversity there lies the seed of an equivalent opportunity. There lies enormous opportunities beneath the seeds of current difficulties in the new retail environment.
Technology and the new consumer buying behaviour presents new opportunities for savvy retailers who are able to see the seeds of opportunities presented to them.
When online shopping first became mainstream many retailers felt it was going to be the end of brick and mortar retailing.
However, with time, many retailers have learnt to merge online retailing to their brick and mortar retail operations.
The large percentage of Next retail profit this year came from its home directory and online division. Booth has seen its profit rise by 30% due to its online activities.
So technology and the changing consumer buying behaviour is not bad news for all retailers. It is good news for those retailers who have been able to take advantage of the changes.
For those retailers unable to see the enormous opportunity presented to them, it’s just too bad.
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