The high street is going through a revolution. In 2017, the UK high street suffered around 5,855 closures, in 2018 the high street continues to struggle with the closures of stores at Toys R Us, Maplin, Carpetright, Prezzo, Mothercare, Poundworld, Byron, Topshop and House of Fraser all announcing closures or dissapearing from the high street all together.
An article published on The Guardian published in June 2018 details the continued woes of the high street in terms of closures and job losses. “A total of more than 35,000 retail and restaurant jobs have either been lost or at risk” the article says.
The hardest hit areas of the UK high street are clothing and shoe retailers, in addition to furniture. Around 87% of UK consumers have purchased at least one product online in the past 12 months. In terms of eCommerce purchases, the UK is only second in Europe to Norway in the number of online purchases.
Why are stores closing?
Many different articles sight many different reasons for the closure of stores. According to the BBC, here are six reasons:
- Drop in consumers pay
- The shift to online shopping
- Changing tastes
- Rising overheads
- Too many shops
- Too many debts
Of the reasons sighted, only one of them directly relates to technology. Online shopping has exploded around the world, the UK is no exception to this. All of the reasons listed are perfectly valid ones and are huge contributors towards the demise of the high street.
Let’s look at this from a technology perspective. The UK loves technology many published reports look at the consumers love of their devices, how much those devices are used and what those devices are used for. I want to focus in on two topics:
- In-store technology
- Online presence
In-store technology
Having technology deployed in-store, making use of store WiFi and other types of hotspots is proving a hit with many consumers. Artificial Intelligence, Augmented Reality and Virtual Reality all have a large place in the retail world. The ability to use an onmichannel approach (discussed more later) using technology to join up the different sales channels from one to another is proving popular with a number of retailers.
The problem for shoppers is that while 70% are familiar with AI applications, for instance, two thirds (66%) say they have yet to encounter the technology in a store. This is where UK retail is missing out because all the evidence is that such technologies boost sales.
In a store, AI voice-activation offers significant advantages. Staff can, for example, immediately obtain accurate information about products and services via a headset, saving customers time and hassle. Hassle is after all, what makes so many consumers walk out of a store and go online. Eliminating the irritations is crucial to bottom line success in physical retail now.
Of course, Amazon has taken this much further with Amazon Go. Go stores have no checkouts, products are removed from the shelf and your charged for your purchases when you leave, technology tracks what you remove from the shelf and add to your basket. Stores exist in the United States with reports that Amazon are seeking retail space in the UK to start their Go journey.
Online presence
One organisation which has not struggled is UK fashion retailer ASOS (As Seen on Screen), who have no high street presence and focus online. In their latest results for the four months ending 30th June 2018, sales were up 22% and active customers were up 20% to 18.0m. This is not new from ASOS though, 2017 results saw retail sales grow 34% on a reported basis and a cash strong position.
In today’s world, a strong online strategy is key to success, businesses which are performing well on the high street are backed by generally good online strategies. The high street is facing stiff competition from online only retailers such as ASOS as well as boohoo and Ocado, all reporting strong growth.
One strategy talked about in the industry is omnichannel which treats every channel the retailer is present on as one seamless experience. It acknowledges that in reality customers shop across a range of channels, starting their journey on one channel and completing it on another.
River Island in the UK is a shining example of where this has worked well. Embracing digital transformation and going strong, in 2016 closing close to £1bn in sales. This includes a 30% increase in eCommerce sales and a 40% increase in click and collect orders.
Specifics of the River Island story are the ability to let staff know a customer has arrived to pick up their order. Allowing customers to scan in-store items for availability in that shop and nearly stores. The adoption of a new back office system on mobile devices has boosted productivity at River Island as very little training is needed to use them and staff are comfortable using them.
Getting the online presence correct, providing a seamless experience over every sales channel is key to the success of retailers in recent times.
Summary
The danger for the UK high street is that retailers will be too slow in implementing the new technologies that consumers are so positive about. Shoppers know that technologies they are using at home or on their smartphones will make shopping so much easier, eradicating irritations and anticipating demand.
While investing in these technologies is costly and has hidden pitfalls, retailers need to begin implementing them quickly if they want to succeed. They need be as excited about AI, VR and AR as their customers and much bolder in deploying applications of these technologies to meet new expectations.
Martyn Coupland 