Comment: How retailers can ensure the tills keep ringing

Russell wonders if anyone believes Brexit is stopping 15-year-old girls from buying pleather skirts. Picture: Neil Hanna.

We’ve seen company voluntary arrangements, profit warnings, household names fall into administration, the British Retail Consortium announcing that festive trading was the worst Christmas for ten years – and the vast majority of retail shares are in freefall, with some down as much as 80 per cent in the past 12 months.

How do we change this, and what does the industry really need to focus on and be supported with to make sure things get better in 2019?

The high street isn’t dead

But it’s on life support and it needs help quickly. I’ve heard lots of people demand that the high street be saved by our politicians, but sadly they’ve got their hands full just now and many of the issues are beyond their control.

We need to look at landlords and the always-upwards rent reviews they have previously insisted upon. In a changing economic model, where consumers are moving online, these organisations need to realise their asset is not as valuable as it once was and start to reduce rents to keep tenants in place, potentially even moving to a revenue split model as Mike Ashley forced some to do for House of Fraser stores.

The same needs to be said for city centre car park owners. This would be short-term pain for long-term gain – a mass exodus from their properties would be very hard to recover from.

Brexit is a problem, but not the only one

You only have to look at my Twitter feed to see I’m far from a Brexit fan. It’s potentially the greatest act of sabotage a people have ever made upon themselves, but is it really having the impact on consumer spending that some retailers would have us believe? Does anyone really believe it is stopping 15-year-old girls buying pleather skirts? Or do the problems stem from retailers no longer fully understanding their customer and having their market share eroded by new entrants?

Pull over push

The push economics of high street stores have been shown to be broken. The strategy of putting products in a shop and expecting those in the vicinity to buy no longer works in this age of globalisation and choice. Instead, brands need to move to a pull approach to retail, listen to the customer about what they want and quickly bring it to market. This underpins the runaway success of ‘fast fashion’ brands such as Boohoo and Zara and, sadly, has too often been ignored by established brands and retailers, often due to an inability of their supply chain to keep up.

Product is king

With all the Instagram posts, new customer relationship management systems, pop-up stores, multimedia marketing campaigns and many other distractions in retail, it’s easy to forget how important product is, and how it needs laser focus to ensure commercial success. Many companies lost this over the last few years as transformation and technology became vital to their success, but the winners in retail know product is king!

Customer is queen

Knowing them inside out is the core driver for success. Companies that understand this and link it directly back to their product are able to avoid the discounting epidemic.

Discounting is an epidemic

A total of 62 per cent of clothing ended up being discounted at some stage last quarter. Okay, some companies make discounting a core part of their strategy, but this has gone too far. It’s a short-term sticking plaster that crucifies margin. Consumers are now being conditioned to only buy at a discount and that’s a very slippery slope.

All of the above would help – but time is running out. Sadly, I expect that we will see many more retail casualties in 2019.

Cally Russell is chief executive and founder of fashion app Mallzee and retail analytics business Mallzee Insights.