Retailers are facing what can feel like unprecedented challenges as they grapple to make sense of the accelerating changes impacting the high street store of the future, while simultaneously balancing the convenience of online shopping and all that omnichannel retail promises.
But this is far from the first time UK retail has faced seismic change. When ecommerce first began to gain ground, some retailers failed to recognise the scale or immediacy of the transition that was washing over them and stuck to the strategy they already knew – as we saw in the infamous case of Blockbuster.
Meanwhile, others foresaw the headwinds coming and quickly adjusted their approach to meet the needs of ever more demanding, multi-channel consumers. Now, with giants such as Amazon absorbing £4 out of every £100 shoppers spend, it’s these visionaries who have remained on top and embody the fundamental characteristics of the UK’s uniquely innovative retail ethos – one we often need to remind ourselves can lead the world.
So what is it that global retailers can learn from the UK’s nimble mind-set to weather the current industry storm and see future success?
There are multiple components that make the UK’s retail landscape especially rich. Firstly, consumers have maintained a strong cultural connection with the sector. Not only can shopkeeping be regarded by many as an esteemed profession — previously cited as a dream career — but great customer service is also highly prized: 54% of consumers are more loyal to companies that understand their personal preferences. Secondly, there is the necessity for persistent development.
The UK is relatively small, but boasts a large population. This means that, while opportunities to tap consumer spend are high, so is the competition. Retailers and suppliers must work tirelessly to acquire and retain market share with the core retail essentials while having a mind-set for adaptability and keeping ahead of new trends – an intense, unrelenting reality within which to constantly operate. That’s why the UK has consistently set the retail standard worldwide. Take the digital revolution: home-grown retailers were quick to see the capacity of emerging tech to power greater efficiency and customer engagement — be that by streamlining operations or reinvigorating the in-store experience, for example by providing consumers with the ability to buy online and pick up in store. Today, this has positioned them ahead of the curve, but experimentation continues. Specsavers, for instance, has recently unveiled a Frame Styler tool that enables virtual glasses selection in store via smart imaging software and 3D models.
Matching the success of leading UK retailers, however, requires more than just competitive determination. Those keen to follow in their footsteps must also learn three core lessons:
When the initial wave of ecommerce hit, industry reactions were mixed. Innovators moved to embrace digital, while others simply implemented bolt-on digital services or parked online shopping as a future priority. For the quick-fixers and slow-movers, it’s now evident they have missed the boat. The leap to digital was over long ago, and those who didn’t make the jump are now trailing behind — evidenced by Marks & Spencer’s recent comment regarding the high price of being late to the ‘digital party’. To improve the chances of survival, acknowledging the way incoming headwinds are blowing isn’t enough; retailers must ensure adaptability and predictive technology are an integral part of their ongoing, evolving strategy to identify their most profitable customers.
At present, for example, the focus is on omni-channel exposure. As consumer journeys are increasingly fragmented across varied online channels and physical stores, forward-thinking retailers are adjusting their offerings to provide more flexible shopping. Many digitally-native brands are branching out into bricks-and-mortar, with 850 stores to open in the next five years. For those who don’t want to be left behind, the time to diversify their channel offerings has arrived.
Close consumer bonds are crucial to sustain loyalty and sales, and that means getting to know individuals – as well as their profit potential – and reaching them before the competition. Global market disruptors, such as Netflix, have illustrated that data is paramount for driving better customer knowledge. With intelligent tech that turns multi-channel data into holistic insight – as well as the shift in mind-set to make the necessary changes in response to this information – retailers can achieve a deep individual understanding that fuels more relevant marketing and services, as well as stronger relationships. Among UK brands, direct to consumer (DTC) is gaining ground as a means of cutting out the middleman and enhancing access to first-party data. Vegan powdered food brand Huel, for example, grew from a start-up to achieving a £14.4 million turnover in just two years.
As DTC brands build more direct connections, they will be able to adjust their operations at greater speed, power customer-centric models and smarter business decisions, and represent a considerable threat. Putting the customer first is no longer just a popular industry mantra, but a vital necessity.
Finally, and most importantly, there is the quantum leap forward to a new operational mind-set. The best retailers aren’t leveraging advanced technology to replicate what they have done before with enhanced efficiency, they are realigning their entire outlook. The need to move with digital transformation is a given, but there is a difference between tweaking operating models and re-framing the mind-set across all aspects of a retailer’s ecosystem — from the CEO to in-store teams. Many retailers are keen to fine-tune strategies that have produced great results in the past, and while understandable, this urge won’t help them keep pace with consumer demands. Being open to new ideas, ways of working, and key performance indicators (KPIs) that deliver different answers and actions are what sets apart the leaders of tomorrow.
Napoleon’s famous quip on this shopkeeping nation holds true. Consumers continue to hold a lasting passion for retail and a demand for exceptional service. To weather whatever future challenges may come — the uncertainty of Brexit included — persistent innovation is paramount. Retailers must continue to keep an eye on future trends and refresh their mind-set in line with what consumers truly want. By learning from the consumer-focused, open-minded attitude of the UK’s progressive retailers, it’s possible other global markets can increase their own resilience and results.
Michael Patterson is managing director EMEA at DynamicAction