Even the most casual observer of retail trends over the last fifteen years cannot have failed to notice the irresistible rise of ecommerce. Indeed, this week it was reported that one third of all retail sales will be online by 2022.
And in the news on Thursday came the unsurprising headline that electronic chain Comet will be going in to administration. Some reports called Comet the “internet’s latest casualty” But that suggests Comet isn’t responsible for its own fate. Whilst obviously there must be concern for the thousands of staff who will likely be laid off, why should there be any sympathy for Comet itself?
Comet’s failure stems from an inability and reluctance to adapt to changing consumer trends over many years. Comet has ignored evolving shopping habits, developing consumer expectations and has displayed a woeful lack of awareness of technological advance.
Comet wasn’t an attractive place to shop. I recall visits over several years and remember pushy sales staff promoting products they took commission incentives on rather than what I wanted to buy, prices higher than other outlets both on and offline and the relentless up-selling of needless, over-priced insurance packages at the checkout. Comet relied on dinosaur practices.
Compare and contrast Comet’s refusal to change with Argos. They announced recently a scaling back of their famous printed catalogue, retrenchment in their High Street presence over five years and the adoption of a ‘digital first’ strategy. Bold moves from an established company. But then Argos have benefited before from taking radical steps. The promotion of the ‘Click & Collect’ service has proved to be a huge success for them in the past few years.
Deloitte recently noted that the High Street focus on high sales volumes and high shop numbers was holding them back and several had too many outlets. Deloitte predicts that 4 out of 10 retail chain shops will close in the next five years and recommends that companies with spare cash should use that now to negotiate their way out of leases that could prove to be very expensive and burdensome in the long run.
It seems that many High Street firms are still concentrating on bricks not clicks. But some are taking advantage of the new retail economy. John Lewis now enjoys 25% of its sales from online and the ‘Click and Collect’ service has grown 77% in the past year.
That firms like Game, HMV, Waterstone’s and Comet have problems suggests that some products will inevitably only be available online. Consumer electronics, music, games, DVDs and books surely head that list. Growing fashion sales online should be a wake-up call for retailers in that sector.
But this isn’t just a boring tale of digital vs. the High Street. Ecommerce itself is an arena of intense competition and commensurate innovation. Amazon is getting smarter, pioneering drop boxes where buyers can collect their purchases at their own convenience. Stateside, Amazon is also investing heavily in a network that can deliver the goods ‘same-day’.
eBay and others are reacting to the astonishing rise of mobile commerce. Smartphones are changing how people shop online and consumer expectations are growing. These are young companies that are changing. And the pace of development is fast.
Reports of the death of the High Street are greatly exaggerated. But the apogee of clone High Streets and soulless out-of-town malls has passed. The big chains must realise that they must be ‘bricks and clicks’ operations and that when you get more clicks, you need fewer bricks.
In many ways the possibilities are tantalising. As chains depart, they leave a vacuum that could be filled by the hopeful and imaginative pop-up shop movement. There is also an opportunity for independent stores if rents fall and local authority rates become less onerous. There remains a passion for exciting local enterprises offering something special, providing a unique experience and delighting customers in a way ecommerce never can and big chains never have.
Only this week, by way of example, the queue of people to meet David Attenborough at my local bookshop, City Books in Hove, snaked down the street. That’s because they cultivate a loyal following and don’t just sell books these days. They organise events and signings, provide superb personal service with a friendly smile and are part of the community. Long may they prosper.
High Street retailers need to evolve and respond to the digital challenge. Pureplay online retailers need to innovate and flex with the changing ecommerce landscape. Change remains the only constant. And none of that should be a cause for concern: the future will likely be better than the present. “Business as usual” is a suicide note.