Unless you’ve been living under a rock for the past few years, you won’t have failed to notice that the UK’s economy - along with that of much of the rest of the world - isn’t in the best state right now. The Covid-19 pandemic is still wreaking havoc, threatening businesses across the board and causing a public health crisis.
However, amidst all of the madness and uncertainty, a retail revolution is beginning to arise. Whether it will end up being a force for good or for ill is yet to be seen... but nevertheless, seismic shifts have started to form cracks in the retail industry as we know it. The end result might well be permanent change in both the way we do business and the way we shop.
Perhaps you’ve noticed the pattern already; familiar and much-loved giants of the British high street are struggling for their very existence, with many big names crumbling in the face of stock value dropping below a critical point, resulting in the loss of investor confidence. Others have been rocked by scandal, and still others have simply failed to keep up with the changing demands of an increasingly woke customer base.
As the old guard continues to disintegrate, a newer, more dynamic, and consumer-savvy set of brands have ascended in their place. Millennial start-ups have transformed into huge consumer megaliths, and they’re coming over the hill to rescue the high street.
Or are they? Certainly at first glance, these headline-stealing newcomers appear primarily interested in their branding and the legacy of their name. Willing to achieve success at the expense of a bricks-and-mortar high street presence, along with the staff members who are part and parcel of that presence, they represent a significant shift and reset in UK high street shopping, egged on by Covid and showing no sign of slowing.
When you take a glance through the names of businesses either closing or threatened with closure, it paints a truly dramatic picture of just how much the landscape has changed. Debenhams, Topshop (in fact, the entire Philip Green empire), John Lewis, Marks and Spencer… the list goes on.
Debenhams is probably the most potent case in point. With 250 years of history, more than one hundred stores spread throughout the UK, and a staff of over 12,000 people, it has long been the quintessential English department store. However, Boohoo - an online fashion company with a mere fifteen years of success under its trendy low-cost belt - has bought the Debenhams name and online presence, and nothing more, for £75 million.
The same scenario played out with Topshop and Miss Selfridge, recently purchased by online newbie ASOS for £330 million… and again, they’re doing away with the high street presence, shifting their focus solely to online sales.
It makes perfect sense that multichannel marketing has been successful during the pandemic; after all, we were instructed to stay at home. And yet the wonders of the modern age meant that we needn’t simultaneously refrain from shopping. What has been surprising, however, is how many brands have used the pandemic as the opportunity to switch to digital-first strategies. Fashion brand Ted Baker made the leap early this year. Even monumental umbrella brands such as Unilever are swapping to ecommerce.
Herein lies the question on everybody’s lips. As we become accustomed to doing more shopping online, and as the high street and bustling shops continue to be painted as unsafe environments in the age of Covid, the effect of the reset on the public is a point of real curiosity and concern.
One key factor is how consumers feel about increased levels of online shopping when it comes to their data security. Brands, as we all know, collect and collate vast amounts of data and information on their consumers, and the increasingly tech tethered younger consumers don’t know who or what to trust any more. The retail reset, therefore, may bring about a significant shift in the power balance between brands and their customers, due to the fact that gaining consumer trust and increasing transparency is, for all practical purposes, no longer an option but a necessity.
That’s the mere tip of an iceberg, however.
There is real consternation regarding how independent businesses will survive this reset, and whether the shift to more online services is going to benefit such businesses, or wipe them out completely. There’s certainly a kick-back against some of more morally-questionable big names out there… but whether it’s enough to allow new brick-and-mortar companies to flourish is yet to be seen.
As for our hunger for retail goods during these difficult times? Well, the data shows that this hasn’t been affected whatsoever. Indeed, we’re willing to pay more than ever before for the privilege of taking our shopping online. During the first UK lockdown, FMCG sales actually grew by over £6 billion, and average prices saw an increase of approximately 4%. Promotional offers took an 11% dive, and average discounts dropped from around 24% to 23% - a clear effort from retailers to protect their bottom lines in a time of real uncertainty.
These numbers suggest that shoppers are seeing more value in familiar brands, trusting them to deliver quality, no matter whether their products are picked up in-store or dropped through the mail. The notion that there is greater inherent value in many brands than was previously suspected is an interesting one; since the beginning of the pandemic, brands have been scrabbling to appear more compassionate, more inclusive, and more buoyed by ‘blitz spirit’ in an attempt to get consumers on-side. The strategy appears to be working.
Good value, it seems, isn’t just about price - it’s about positioning your brand in ways that will keep loyal customers close, even through a reset as dramatic as the current one.
Brian Skewes is a technologist into deconstruction. Over two decades of self-employment, he has accumulated a wealth of inadvertent real-world lessons related to building, running, and preserving a small company