Following Homebase’s recent escape from collapse and the recent announcement from Debenhams reporting losses of £492 million and the closure of 50 stores, Marks & Spencer has now also reported further falls in sales meaning that the retail sector has been thrust into the media spotlight once more. Last year saw a record high rate of high street store closures and this trend has continued into 2018 with data from Business Insider UK indicating that more than 3800 retailers are expected to close their doors. Maplin and Toys R Us were recent retail casualties and following its announcement in June of the closure of 31 stores, House of Fraser recently announced that it was going into administration with the loss of 17,000 jobs. In addition, Mothercare, Gap, Marks and Spencer, Carpetright and New Look all face financial difficulties and potential store closures. Why is this happening and are we to blame?
The rise in e-commerce has taken its toll on the retail industry with many stores now closing as a result of the change in our shopping habits. The convenience of online shopping, low prices and the speed and ease of home delivery have meant a rise in online purchases and a definitive shift of customer preference from stores to Internet with online shoppers in the UK now spending more per household than any other county. In addition, many high street brands over- expanded during more profitable times and are now paying the much higher price for doing so as online shopping has continued to increase in popularity. If this wasn’t already enough, companies are fighting a losing battle with high business rates and rip off parking charges in town exasperating the problem further.
High street stores offer the opportunity to try out products and provide that all-important visual link between a brand and the customer. However, increasingly customers are researching products in stores then going away to buy them online instead at a reduced cost. For example, Toys R Us was unable to move with the times, it cut staff to save money, which impacted on the quality of customer service it delivered and ultimately was unable to offer anything more than just branded goods which customers could easily find for a cheaper price elsewhere.
Essentially, in order to survive in this new purchasing environment, stores need to offer much more than just a product. As such there is a developing trend towards providing excellent customer experiences rather than just sales. It’s only the strongest in the high street who can survive this downturn, those who are willing to change, innovate and adapt the shopping experience to meet the ever changing needs of the today’s consumers.
It’s disappointing to see major retail giants and much loved brands falling by the wayside but it is sadly a sign of the times and a development, which, as customers, we have inadvertently caused and the consequences of which, if we prefer to continue to enjoy the benefits of online shopping, we will just have to live with.