Surfing the High Street

With the introduction of online shopping and the ease of surfing the internet, high street retail was in danger of becoming a thing of the past. The likes of Amazon and eBay have captured consumer’s attention with Amazon nearing $75 billion in global revenue and still growing at a fast rate-without opening a single store!

We are currently in a market place where Uber, the world’s largest taxi company, owns no vehicles. Facebook, the world’s most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world’s largest accommodation provider, owns no real estate. Something interesting is happening.

So this raises the question, does high street retail still hold a place for the consumer in the current market? Giants like Amazon and eBay are dominating sales however Amazon do have an Achilles heel- in 2014 they spent $6BN on transportation costs and they expect that to rise by 40% in 2015 – suddenly Amazon are looking at bricks and mortar as a potential asset.

Supermarkets such as Tesco, Asda and Sainsbury’s now all have massive revenues from online grocery shops and all appreciate that offering this service is now essential in the current market. To date 50% of consumers in the UK have tried ‘click and collect’ with Walmart in the US advertising “free delivery- if you come and pick it up in store”.

I along with some of my colleagues at Foundation Recruitment attended the recent ICSC European Conference and listened intently to the interesting discussions regarding the future of retail. One consistent theme that everyone agreed on is that retail has CHANGED. Landlord vacancy rates are higher than ever due to online sales taking a higher % of sales, leases have changed from the standard 25 year lease to 4 year flexible leases- occupiers want flexibility.

However with these changes there is one vital point…brands want to engage directly with their customers. The consumer has changed, people want surprises. We are bored of the standard store and we want pop ups to excite us then disappear before we get bored. One great example of this is BOXPARK, a pop up Mall in Shoreditch. Pop up stores open on short term leases creating a buzz and excitement of something new, before it gets stagnant and replaced with a new brand.

Whilst we are in the midst of a digital world people still want to develop relationships. We value conversations – real world conversations. There are more farmers markets in the UK now than Tesco Superstores. In the US there are more farmers markets than Walmart. People want to deal with real people.

Even stores such as HMV that were forced into administration, partly due to the growing popularity of online sales, have began to report profits again and offer services unavailable online. HMV Chairman Paul McGowan stated that the key to HMV’s success is to hold events that online retailers are unable to accommodate.

When Google, Amazon and eBay were established did they ever think about opening ‘stores’? I highly doubt it but we are now seeing a demand for bricks and mortar. These e-commerce businesses now see the high street as an extension to their business. Amazon has also recently announced that they have plans to open a store in New York, echoing my earlier comments that a physical store can give them an even bigger consumer base and that the high street is a market not to be ignored.

Retailers have to adapt, the customer is now outpacing the retailer and are connected to each brand in a way like never before. Through technology and mobile apps we are able to shop and pay whenever and wherever we want. Social media has allowed us to speak to our favourite brands and all the while the customer is still looking for a relationship. Malls must change how they think, they are now acting as a host and a broker of the relationship between consumer and brand-the destination is key!

So maybe the online popularity and the growing revenue of online retailers do not dominate as much as many seem to think. A recent study confirmed that the majority of people in their 20’s prefer to shop OFFLINE and over 50% of them would favour launching a business in the physical world. High street retailers continue to do well. Even stores that were hit hard by the introduction of the net continue to strive and successful online retailers are beginning to acknowledge the potential growth through stores on the high street. Supermarkets and fashion retailers seem to be leading the way by providing a service that consists of both online and high street shopping.

Ross Bailey (founder of Appear Here) summed up the current market in his closing comments at the ICSC European Conference “The stores are acting as a halo for the online world. It’s not Omni-channel, or multichannel retail its just retail”.

In terms of recruitment retailers, they continue to hire lots of new talented individuals and here at Foundation Recruitment we work closely with numerous high street retailers that continue to thrive in a busy market and are looking to expand their portfolios supporting the fact that high street retail still has a presence.