This holiday season has reportedly been the worst for retailers since the global recession a decade ago; it has been particularly bad for high street shops, where fashion and large department stores are bearing the brunt of unenthusiastic consumers.
With a staggering amount of shops already being closed in the first half of 2018, 2019 is gearing up to be a bumpy year for brick and mortar retailers and the brands who rely on them for distribution. With online shopping gathering up larger proportions of retail, the government has even proposed high street rates relief programmes.
So could this be the beginning of the end for the brick and mortar store?
What do the numbers say?
The real problem is not retail per se, but actually (right now at least) a more industry specific one.
Casual food retail for instance – places like coffee shops, ice cream parlours and grocery stores remain relatively unaffected.
Instead it’s consumer goods that are being hit – with department stores and fashion retailers seeing a substantial hit with 2,700 such shops closing in the first half of 2018 alone.
Looking ahead into 2019, there is a 4.2% reduction in physical shopping predicted during January alone, and 20% of retail shopping is now done through online eCommerce stores.
Can the government help?
The economic impact is beginning to grab the attention of Parliament. Back in October, the House of Commons thought the situation serious enough to propose a £900 million relief plan to re energise local high streets and basically intervene by putting enormous amounts of money on the table.
Personally I think this is just papering over cracks. Trying to stop the shift in consumer behaviour and how we increasingly prefer to shop (ie online, where we can find more faster, without dragging ourselves through carparks and shopping centres and stand in queues) is a bit like trying to stop evolution.
Once upon a time there were people’s whose job it was to be a ‘knocker upper’ – which meant they walked around the streets knocking on windows to wake people up so they could get to work. This was during a time when alarm clocks were neither cheap or reliable.
Once the alarm clock came in – that was the end of the knocker uppers and no amount of government intervention would have made a difference. The knocker uppers had had their time and that was the end of the road. And to be honest, alarm clock makers are no doubt struggling too right now as the mobile phone has taken over that role.
I am not saying there is no place for bricks and mortar stores, but looking ahead and factoring in that the % of retail shopping done online is predicted to rise to 95% over the next 20 years, then never has direct to consumer via digital been more important.
In a retail environment, digging your heels in and trying to maintain the status quo will only lead to a hard game of catch up which you may not be able to win in the future (if time or money are not on your side). Right now we are in a landgrab situation with savvy retailers pouring money into social platforms – not even always profitably at first – in order to gain audiences, brand awareness, customer loyalty and to secure their slice of the future pie.
The more and more big brands with huge marketing spends come into platforms such as Facebook, Snapchat, Instagram and Pinterest, the harder it will be for smaller brands to secure their own particular plot of land. Think of it like securing one of those corner units where Oxford Street and Regent Street meet. It’s a question of money, being in the right place at the right time and knowing that those locations are worth the investment as they will deliver over the long term.
The numbers don’t lie, consumers are changing how they shop and the media they consume is changing as well. Understanding this expanding marketplace and having the right digital marketing strategy that can engage, retain and increase customer loyalty will be a winning formula for weathering this retail storm.