Now that we are into December I feel it is just about socially acceptable to mention the ‘C’ word. For absence of any doubt, that’s Christmas I’m referring to. If you’ve been into any high street shops since early November or, in some cases, even late October, it is highly likely you have already been confronted with Christmas music and seasonal decorations in what seems to be an ever-increasing extension of the festive period by retailers. But who can blame them?
For many UK retailers Christmas has always been their most critical trading period of the year. Given the well-documented challenges facing traditional high street retail businesses, each Christmas takes on an even greater significance in terms of whether some of them will still be there to see out another year.
We hardly need reminding of the struggle the sector is facing as it continues to lose margin to online retailing rivals and feels the impact from the changing nature of how consumers engage with traditional shops. A report issued by PWC last month underlined the true extent of how the market is currently changing, showing around 14 shops closing each day in the UK’s high streets.
The firm’s report highlighted how 2,692 shops shut across the UK in the first half of 2018, while only 1,569 stores opened, a net decrease of 1,123. While there was an increase in the overall number of supermarkets, bookshops, ice cream parlours, stationers and coffee bars, the report showed fashion and electrical stores had suffered as customers are becoming increasingly comfortable making such purchases online. Perhaps more surprisingly, it reported how many restaurants and pubs were also struggling as more consumers are opting to entertain at home, while younger age groups are drinking less alcohol.
While there are new forms of more experiential retail coming onstream, these tend to be more niche and sometimes independent operators, which are prevalent in larger cities. Here in Scotland the traditional retailing market across many of our smaller high streets, where the footfall is relatively low, is becoming increasingly tough as it becomes much harder to attract signature stores that will encourage visitors to shop.
As our high streets face unprecedented challenges and undergo huge transformational changes, the advent of new technology that makes traditional retailers more relevant to the changing needs of modern consumers could provide the lifeline many are seeking. An example of what the future might hold was unveiled last month when Google announced a partnership with the online start-up business NearSt aimed at helping consumers see what is available in their local shops via the web.
This technology gives consumers the ability to search locally for goods they wish to buy. By linking into local retailers’ inventory systems, NearSt is able to provide consumers with key information including the availability of the goods in shops nearby, the price each retailer is selling the goods for and the consumer’s physical distance from the relevant shops. As well as the convenience this offers, it can provide a more sustainable means of accessing goods from nearby shops rather than having them shipped from a distant warehouse.
A more straight forward technology-supported development has been the growth of “ship from store” whereby traditional retailers are using their network of locally based stores as virtual warehouses to offer exceptionally fast delivery to online shoppers. This trend has enabled some high street stores to capture back market share from online-only retailers as they can better service increasingly demanding consumers, delivering their goods just a few hours after receiving an order.
These developments are particularly encouraging as they underline how technology, which has so far had such an adverse impact on many traditional retailers, can be harnessed to ensure their businesses are better able to compete into the future.
The Google NearSt partnership also provides an excellent model as the solution can be rolled out across the high street with the development costs recouped through service fees. This approach benefits smaller retailers which don’t have the resources to develop their own bespoke technologies from scratch.
While we cannot underestimate the size of the challenge facing many traditional retailers in our high streets, the creative use of technology to develop key areas such as integrated logistics, point of sale and delivery solutions, stock forecasting and customer engagement functionality all have a vital role to play in ensuring a successful future for UK high streets.
Duncan Turner, partner and technology specialist at CMS