Retailers may shut shops to fight online rivals, Holland & Barrett chief warns
RETAILERS have to remain highly agile and be prepared to trim their estate according to conditions on the high street in the face of an onslaught of online competition, according to the boss of still-expanding health products chain Holland & Barrett.
Chief executive Peter Aldis, who was opening a concept store in Edinburgh last week, says the company is signing shorter leases and negotiating hard with landlords as he fears some small town high streets may become unviable.
Perversely, the process could drive rents even higher in city centres and premium shopping centres which brands will see as key to maintaining their prestige as an edge on purely online rivals.
“We are in a good place, but I could see that in five years time we might have to do a bit of trimming,” he said. “But that doesn’t mean we would stop opening stores.”
Holland & Barrett, which is owned by private equity giant Carlyle Group, has a robust high street presence with 760 UK stores, including 47 in Scotland. And it is still firmly in expansion mode with 24 openings scheduled for 2013, including one in Glasgow’s Buchanan Galleries.
But Aldis is acutely aware of the challenge from internet retailers, which have been blamed for the collapse of retail stalwarts such as Blockbuster, HMV and Jessops. He says the parlous situation on the British high street “keeps him awake at night”, but, at the same time, the internet offers new opportunities.
Under his leadership, Holland & Barrett is following the likes of Next and John Lewis with a “clicks and bricks” strategy that embraces the internet and offers customers a choice of ways to buy. The firm has invested “tens of millions of pounds” on a new till system and internet platform which will launch later this year.
“If we don’t do this now we would be the next casualty,” he says. “For a company that has bricks and mortar it’s absolutely crucial to embrace multi-channel. You can’t let ‘pure play’ online people just take your business.”
Aldis sees delivery options as a positive sales point for the company to advertise, as Next recently started doing by promising to deliver items bought on its website in the evening the following morning.
He says many consumers “still want to go shopping” while others prefer to order online from companies which they know have a store nearby which can deal with any problems. Quality of service is therefore a good way for traditional retailers to compete against online businesses which undercut them on price, and Aldis is working on a “customer charter” which he eventually hopes to have independently audited.
He thinks some retailers may scale right back so that they just have outlets in larger cities, but that would leave many customers badly served.
He says: “Do I think we will have 700-plus stores in a few years time? I can’t tell, but it’s a good position of strength from which to embrace things like click and collect from.”