2020 has been a year of records for all the wrong reasons, not least on the high street. The recent collapse of the Arcadia group topped off a year where we have said goodbye to some high street staples including TM Lewin, Peacocks, Jaeger, Laura Ashley, Bon Marche. The Arcadia Group collapse has sent the biggest shockwaves through the industry so far and will likely have the biggest impact to the UK high street – some attributing the failed sale of Debenhams to JD Sports as a response to their troubles.
Although unsurprising to many, the COVID pandemic accelerated realization that the brands that make up Arcadia: Topshop, Topman, Miss Selfridge, Wallis, Dorothy Perkins, Burton and Outfit – are no longer relevant to their individual target audiences. Over the years they, Topshop in particular, lost their spark, their creativity and their ability to not only respond to trends, in clothing and in purchasing habits, but to drive them, the kiss of death to retailers.
So ‘is this the end of the British High Street’, as people have been asking for the last couple of years? Of course not, amidst the looming administration of Arcadia the reality is that even though the face and the names on the high street are irrevocably altered, new ones arise and there is opportunity for retailers that are ready to adapt, to constantly push their product forward, to continue to test and learn, and embrace the new ways that consumers expect to engage with them and their products.
As we step into 2021, the Arcadia Empire will undoubtedly be carved up – there is still value to be unlocked with the most relevant brands, and these will quickly find buyers in (if the rumors are to be believed) the digital natives that led to their ignominious failure in the first place. Perhaps these younger businesses with a more digital-first mindset will return these fondly recalled British brands back into the must have wardrobe staples that they once were. Online fashion retailer Boohoo, a suggested purchaser of Topshop, snapped up the online businesses of Oasis and Warehouse in early 2020, as well as the online arms of Coast and Karen Millen in their hour of need in 2019 to add them to their brand portfolio.
How did this happen though? Where did it all go wrong for Arcadia, and the jewel in their fast-fashion crown, Topshop? The initial problems were there for many to witness all the way back to the early 2000s, when a series of reviews highlighted they had too many stores, and they needed to downsize their retail operations. Over the course of the last 20 years they’ve moved from nearly 1600 stores to just under 600, but even so, a store-by-store performance comparison with their competitors like Zara demonstrated they needed to improve and that points to a fundamental problem in the product they sell or the experience and connection they provide to their customers, or, as in the case of the Arcadia brands, a combination of both.
Instead, they continued to relish in ‘days gone by’ when they could command collaborations with supermodels, and experienced round the block queues from 6am when they opened in SoHo, NYC. They lost their relevance, although they have continued to retain good brand awareness. The right buyer will trade on this, and by crafting a more differentiated, focused and clear product proposition and moving the brands onto a modern digital marketing and commerce infrastructure they have a fighting chance to be reinvented and restored.
It remains to be seen if Topshop will go down the same route as Oasis, Warehouse etc, surviving through digital only. As attractive as some of the Arcadia brands will be to potential purchasers, the appeal is in the brand, product, and audience. The portfolio of bricks and mortar stores is much less certain, which will be of little solace to the majority of the 13,000 people impacted. There is simply no avoiding the challenges here – even before the global pandemic and subsequent lockdowns, retailers were finding it difficult to make stores profitable as the march towards digital gathered pace.
What will happen to the less relevant brands, Wallis, Miss Selfridge, Dorothy Perkins, Burtons and Outfit remains a big unknown. As they became laggards in the hugely competitive fashion Retail playing field they found themselves unable to match on experience, price or product – leaving them with no route to growth, and a dwindling audience.
So, what does all this mean for the future of the high street? Is the future entirely eCommerce?
No, not at all. But the high street will fundamentally change, as the needs and desires of the consumer have changed. The pandemic has forced people online, and people are now creating new habits in how they buy, try, return and they are becoming much more comfortable with the new ways that digital-first brands engage with them. The role of stores in the retail ecosystem is changing, with more of a focus on trying and experiencing brands, or collecting and returning product bought online. This is turn means the placement and volume of stores needs to be adjusted, the financial modelling for the role stores play has to adapt, and the usage of the physical space will continue to evolve as this shift plays out.
Yes consumers will always want to shop in the physical world, they want to touch and see the products, they want the experience of window shopping; they want to browse, be inspired – all of that is as true today as it was 20 years ago when Topshop ruled the retail world with its flagship Oxford Circus store.
However this isn’t all they want. Consumers don’t want to rely on visiting a physical store when they want or need to purchase something. They want options. The high street retailers that remain relevant and successful offer more than the purchase of the latest trends, they offer an experience. They offer a service, in some instances are playing the role of the distributor, becoming a playroom to showcase the best of the products, they predict what the customer wants before the customer knows it.
Whilst store closures are an unfortunate display of COVID’s harsh acceleration and impact on the retail industry, it’s also a wake-up-call to retailers that they need to reimagine their business models to more seamlessly adapt to the consumer of both today and tomorrow.
The high street of the future will be filled with retailers who are not afraid to reinvent themselves, adapt to or even lead the behaviours of their consumers, and build relationships to ensure that they remain relevant.
Guy Elliott, SVP, Retail, Publicis Sapient