The changing world of retail
The retail world has seen a lot of changes in the last 20 years. Retailers big and small have failed, whilst new players have taken over the world! The opinions on the future for small retailers ranges from bleak to very exciting.
The key to success for retail businesses, well any business, is providing what customers want, at the right price, and in the right location. But, more than ever, service and the retail experience is playing a bigger part.
So, I say there is an exciting future and here are my top 5 lessons the big failures can teach the small retailer.
The big failures and the lessons you can learn
Learning from others, and your mistakes is important in making your business a success. There have been a number of large casualties in the retail trade in the last 20 or so years. Woolworths, BHS, Toys R Us, Blockbusters, Mothercare and House of Fraser, to name a few, have all gone. Debenhams and Marks and Spencer, stalwarts of the UK High Street are finding times really hard. These are huge businesses with experienced management and large customer base and loyalty.
What did they do wrong, and what can the small retailer learn from it?
1. The Internet
The rise of online shopping caught some of these businesses out. Failure to adapt and provide a strong online presence resulted in a loss of sales. These retailers stuck to the tried and trusted physical presence on the High Street. Their customers did not!
There was of course a certain degree of customer loyalty, but generally this came from the older generation, who were slower to adapt to the world wide web. However, it didn’t take too long before everyone (well almost everyone) began to understand and trust the internet for their shopping needs. Sales dwindled and businesses got into trouble.
The lesson: Make sure your business has a strong internet presence. A great website, visually strong, with a user-friendly navigation process. And make sure your target market knows about it!
2. A changing market
The easiest example of failure to adapt to a changing market is Blockbusters. HMV also fall into this category. As the world moved to a digital age the traditional market for these retailers disappeared. Their business model simply no longer worked.
The lesson: Stay ahead of the game. A retail business must supply what a customer needs, not what they want to sell them. Keep your eye on the ball for changes and beware, they can happen faster than you realise.
3. Out of control overheads
Overheads are the costs a business has to pay out, such as rent, wages, insurance, gas and electricity. These businesses had massive overheads that they could not reduce quickly enough as sales started to stagnate.
In particular, long leases on their premises, which have fixed costs for a number of years that they could not reduce, led to cashflow disaster.
The lesson: Understand your overheads and get an accountant involved. Avoid long leases wherever possible. Getting stuck with fixed costs can cause huge problems when business takes a downturn.
4. Location
For businesses with a shop front presence location remains vital. There has been much discussion around the future of the High Street in the UK. The fact is, it is not the first-choice shopping area for a lot of consumers nowadays.
The High Street is attracting fewer consumers and businesses within it suffer as a result.
For some retailers a shop front remains necessary, so it is crucial to get that location right. I bet there is a shop near you that is forever changing hands. with new retailers going in every few months. Yet the shop looks well presented and in a decent place. There must be a reason why and location is often one of the factors.
The lesson: Before setting up a shop make sure you understand its history. How many businesses have located there and then moved on? Why did they not succeed? A location may look good, but if it is the wrong place for your target customer then the location is wrong.
5. The customer experience
Whether trading on the internet or from a shop the customers experience must be spot on.
Consumers want a retail experience, a feeling of being involved rather than being seen as just another customer.
These large retailers failed to offer this experience and the customers gradually went elsewhere.
Many products are available online. Customers are increasingly socialising in a café, bar or restaurant and shopping on their smartphones whilst there. Consumers now look for brand loyalty and trust. Reward programs, membership offers, good communication through email marketing.
The lesson: Give the consumer a reason to stick with you. Create a strong but adaptable brand and make the consumer feel part of it.
Need help?
I have no doubt that small businesses can and will continue to play a huge role in the future of UK retail.
I help small businesses from start-up to success with understanding their numbers, support and guidance. As a retailer numbers are critical to your success and I will spend the time helping you to make the best use of them.
Please click here to book a complimentary discovery call with me and let’s see how I can help you with your business, or your business idea!
