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GUEST COMMENT Retailers must become tech companies if they want to succeed

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The trend for extreme retail diversification is on the wane, argues Justin Biddle. Retailers should look to becoming more like tech companies as their next evolution instead. 

As of 31st August 2021, M&S Bank is no more. Once famous for knickers and posh crisps, the original quintessentially British grocer has recently subjected itself to multiple contortions in a bid to find out exactly what its customer wants. In 2020, the company announced its first loss in 94 years as the coronavirus pandemic bit, but many would argue it’s been on something of a slide for a while. 

Retail overall has been hit hard, not just by the pandemic but by a shift in consumer trends. In recent years, many have struggled to define what they mean to customers. Several have fallen victim to a case of ‘jack of all trades, master of none’. Hence all the casting about for new product lines and, in some cases, branching out into new sectors altogether. 

Take John Lewis, welded into the national consciousness as the department store extraordinaire. Formerly enjoying national treasure status as ‘never knowingly undersold’ and a purveyor of sensible school uniforms, its staff were reassuringly schoolmarmish and aloof. But even this iconic store struggles to find its place today. As a result, it has now set itself up as a developer ready to build homes in its defunct store locations and a financial services house, launching junior ISAs alongside pinafores and Start-Rite sandals. The company has announced it expects 40% of its profits to come from non-retail by 2030.

Diversification in and of itself isn’t wrong, but there’s a real sense that some retailers are grasping at straws. There is a sense that they can’t quite understand what’s gone wrong with the old model – but something definitely has – so what else can we do that might work instead? I’d argue that the world hasn’t changed so dramatically that it’s stopped wanting to buy those Start-Rite sandals or posh crisps. Customers just want to be sold them in a more effective way that’s more relevant to their lives today. 

That means insight, and that means tech and the companies that have already recognised that are well on their way to building themselves a better future. 

Next is an example of a retailer that is doing it right. The new millennium hasn’t been overly kind to the high street fashion retailer. Formerly famous for its glossy, hard-backed catalogue, the British public had fallen out of love with the retailer’s supply of well-made office wear for the well-dressed middle-manager. During the 2000s and 2010s, its fortunes fluctuated. But a recent drive to expand its digital capabilities, both as an ecommerce store and as a fulfilment house for other fashion brands, are turning the brand around. 

Through the launch of Total Platform, Next transformed its existing warehousing, call centres, distribution and systems to be able to serve third-party brands, handing these ‘clients’ all the look and feel of an established, rapid-fulfilment ecommerce brand but with none of the upfront cost. All while Next enjoys additional revenues and a broader customer proposition – without straying too far from its own, core capabilities. 

Another example is Farfetch, which, on the surface may sell high end clothing but it refers to itself as a fashion-tech company. Farfetch describes itself as “an ecommerce marketplace and trade is mostly achieved through the exchange of luxury fashion items for money.” You can see just how much tech is embedded in the company when a blog on its site, titled: “How to help humans purchase?”, is written by an engineer. Critically, that blog also discusses the digital and tech levers that “Farfetch needs to excel at before an actual trade takes place”.

That’s the word – ‘excel’. All too readily, today’s retailers are failing to excel. Beautiful social shopping pages fall at the first hurdle when a customer clicks through ‘Shop Now’ to discover all but the most outrageous sizes are sold out. Or makes a purchase that doesn’t fit or suit, to be confronted by a tortuous returns process that would reduce Machiavelli to tears of frustration. 

Of course, many legacy retailers would argue the problem is just that. Confronted by the need to rapidly expand customer touchpoints to keep up with digital transformation, and competition from nimble and equally rapidly growing start-ups, traditional retailers struggle. 

It doesn’t need to be that way. Plug and play technology exists today that allows retailers with existing ecommerce and martech stacks to integrate API-based systems that can manage the ever-expanding operational, marketing and strategic imperatives. It can bring together the inspiration of content with the hard-nosed rigour of commerce, making sure customers can make that transition from social to shopping to loyal customer seamlessly.

And critically, it allows for, and in fact requires, a new culture of exploration and experimentation. No-one today has the right answer out of the box. Today’s successful retailers have fostered a culture of openness, from the top down, that allows for collaboration and experimentation. In such a fast-changing environment – there will be more disruption post-pandemic, you’d better believe it – companies must have the confidence to experiment with new ideas and follow customer trends to see where they lead. Even if, occasionally, that’s nowhere. 

Seeing retailers as customer-oriented tech companies first, and fashion, food or furniture retailers second is the way forward. For some, that may mean a more fundamental shift in mindset than others but, with more flexibility and less complexity in an agile, tech-driven environment, the freedom to hone the USP is greater than ever before. 


Justin Biddle, UK Lead at Shopware

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