The Great British High Street: a tale of death and disruption

Sometimes the writing is on the wall. Sometimes it’s on the pavement. Once the scene of busy, bustling, commercial activity, the pavements of Britain’s high streets see fewer, and smaller crowds of shoppers these days. Is the bell finally tolling for the Great British high street?

For those UK retailers reliant on feet-on-the-street for business, recent years’ slow, steady decline in fortunes must feel like a death by a thousand cuts. Caught on the hop by the popularity of ecommerce, caught napping by changes in the demographic mix of communities and their shopping habits, and caught out by increases in business rates, retailers find themselves in a landscape that has become a hostile environment where all the old certainties are fading away.

Take Christmas, for example. This is the one time of year when even the most reluctant shopper could be seen out and about shopping. But all that’s changed now; Christmas 2016 was the fourth successive festive period which saw an ever-decreasing number of UK shoppers take their business to retailers’ physical stores.

December 2015 was a real low point – the worst trading month for retail since 2008, in fact. But the downward trend continues, and although the fall in sales of 0.1% in December 2016 might not look too bad superficially, it masks a poor performance in categories like fashion, where the decline is more pronounced.

So, that’s that. Time to pull down the shutters for the final time, give the floor one last sweep, and come to terms with not having to open up in the morning.

No one would blame an independent retailer for feeling gloomy about the health of the high street; times are hard enough for the large retail groups, after all. But while there’s no denying things are tough, tough times call for tough decisions. If the world around you is changing, why aren’t you changing too?

If you keep doing what you’re doing, you’ll keep getting what you’re getting

 

I’m not sure anyone’s yet written a book called ‘What Would Amazon Do?’ although there is one about Google which asks that question. If such a book exists, I expect there’s one thing Amazon’s phenomenal success story would teach us, and that’s that it purposefully seeks out the kind of disruption other businesses fear.

Imagine becoming a global leader in online book sales then declaring war on books. That’s what Amazon did. First it disrupted book retail sector, then it disrupted publishing. Better to be disrupted by your own decisions than by someone else’s.

While in-store footfall has continued to fall over the last four yuletide periods, online sales were up 19% in December 2016, and in the week before Christmas that surged even higher – 51% up on the same week in 2015. That’s a positive metric, but probably small consolation to anyone running a shop. Healthy high streets need people – lots of people. If everyone is sitting at home shopping online, how can high street shops hope to thrive?

Maybe by doing things differently. Maybe by working hard to take advantage of trends and technology. In short, by taking a leaf from Amazon’s playbook and disrupting themselves instead of waiting passively to be disrupted.

One obvious idea would be to become a parcel shop. But don’t just stop there – don’t just sign up with one or possibly two big name delivery companies and expect all your worries will fade away. Do your homework, find one that works for your business and with your business. And when you’ve done that, make sure you let people know.

You might have just transformed your shop into the answer to all my missed delivery prayers. But if I don’t know, then you might as well not have bothered. Tell me, give me an excuse to use your shop, and when I’m there dazzle me with your professionalism, customer care, and range of things I might be willing to buy from you … disrupt me and my usual patterns of shopping behaviour. Who knows, it might be the start of a whole new chapter for both of us.

 

A version of this article first appeared on the Parcelly Thought Leadership blog.

A good start to the new year? You must be choking

So, how’s 2017 working out for you so far? As I sit writing this we’re not even out of the first month of the year, but things are already getting quite interesting. Obviously, over in the US there’s the President Trump situation and I think we’d all agree ‘wow’ sums a lot of that up.

By this point in the month, many people have abandoned their new year resolutions – all those good intentions to hit the gym or lay off the booze, well, they sounded and felt great a few weeks ago, but as the end of a long, dry January approaches, many of us have simply passed what feels like an acceptable limit of abstinence, will power, and good behaviour.

Twas ever thus.

Would you like to know what else passed its acceptable limits in January?

Air pollution levels in parts of London.

That’s right. In some parts of London, notably south London, nitrogen dioxide levels had breached their annual limit before the first week of the year was over.

Nitrogen dioxide, which has the chemical formula NO2, come from several sources, including motor vehicles. Diesel engines are especially good at producing NO2. There are a number of reasons for this, such as the higher temperatures and pressures within a diesel engine, which are required to produce NO2. There’s also the small matter of relatively little being done until recently to capture or filter NO2 out of vehicle exhaust fumes.

South London isn’t the only place where NO2 levels are already a problem; from Gloucester to Edinburgh, this is a nationwide issue. Even the former Mayor of London, now Foreign Secretary, Boris Johnson, once expressed concerns about the volume of commercial goods vehicles on the capital’s roads.

A few weeks ago I was being driven along the M40 motorway at around 1am. It was surprisingly busy, and almost every vehicle was a lorry or a truck or a van shuttling stock and purchased goods from A to B. “That’s ecommerce,” I declared to my fellow traveller. “You click ‘buy’ and a lorry is called into service.”

There is still such enormous potential for ecommerce growth, and all the indicators show that’s the way things are going; it could easily double within size in the next five years. But that would not be without consequences.

All the obvious attention settles on the concerns about what continued growth in online shopping will do to stores and town centres. Not enough attention is being given to the question of traffic, roads, congestion, and pollution, all of which are going to come to the fore as the number of deliveries increases in line with the continued growth of ecommerce.

There are some who have been raising this issue for a while, of course. Not least among them is the UK Warehouse Association, which wants government to facilitate the construction of smaller distribution centres (DCs) in built-up areas.

The next target has to be reducing the volume of delivery traffic in our towns and cities – or at the very least taking steps to stop an uncontrolled increase.

Electric vehicles offer one answer to the problem of pollution, of course. But not that of congestion.

How about Amazon’s supposed plan for a flying/floating DC that hovers over towns and cities while quad-copter drones zip about dropping of parcels, some of you may be thinking. Don’t hold your breath. Can you imagine any municipal authority allowing a huge warehouse to float above the heads of its citizens? No, neither can I. Can you imagine the potential for damage in the event that something went wrong? Yes, so can I. And can you imagine the size of the lawsuits Amazon would face in that event? Exactly.

No, the solution to the problem of growing pollution and congestion is, I’m afraid, somewhat more prosaic. Reducing vehicle numbers is clearly a major part of that solution. How we get to that point, and still enable a thriving ecommerce ecosystem, is going to be the fun part.

 

This article first appeared on the Parcelly Thought Leadership Corner blog.

Returns: the retail crisis everyone could predict

Research from Barclaycard in 2016 highlighted something we’ve all known for a while – handling returns can be bad for business. Almost one third of businesses (31%) surveyed by Barclaycard said they’d experienced loss of margin through returns.

But if handling returns is bad for you, handling them badly is really bad for you. Let’s face it, if you’re likely to have a problem processing returns, while doing your best not to lose margin and at the same time keep customers happy, it’s going to be in the next few weeks. A significant proportion of everything that is being bought in the UK right now is destined to be returned in the not-too-distant future.

Last year, Royal Mail experienced a 50% spike in people making returns on the first day back to work after the Christmas/New Year break. There’s no reason to expect things to be different when 3 January 2017 rolls round.

That, in my opinion, starts to get us close to the heart of the returns issue.

It cannot possibly come as a surprise to anyone that returns will peak in the aftermath of a busy sales period; the bigger and busier the sales period, the more returns there’ll be.

This is a crisis we can all predict from a long way off; no one should be getting caught out here.

The other thing you need to accept is that the returns problem, if we can call it that, is a human problem – it’s caused by customer behaviour. You make it easy for people to return things so they’ll trust you enough to buy them in the first place. The solution, therefore, needs to be one that works with people, not against them.

In an ideal world, every retailer would invest in sophisticated returns processing software that would enable them to track and route incoming returns from the minute the customer says to themselves, “Nah, that’s going back.”

The customer goes online, logs the return, and gets a label. You – the retailer – get the benefit of foresight, and with it the chance to route your returns in a way that takes some of the heat out of your operations, should that be necessary.

The reality, however, is that investing in that many bells and whistles, just to get you through a handful of exceptionally busy times isn’t economically viable for many retailers, especially those trading in commoditised, margin-pressured items. Plus, if you make the returns process the tiniest bit more complicated than absolutely necessary, or ask the customer to make the slightest bit of effort to return something and you’ll be judged … harshly.

So … what to do?

When it comes to returns, there are some similarities with click and collect. People flood your stores clutching the things they want to return, getting in the way of other shoppers, or of staff, and taking up floor space – a little like the queue for collections during peak times. This is not a great experience for anyone. You need as much of that as possible to be taking place away from your physical stores.

Christmas exerts a tremendous gravitational pull on the retail sector. It is always at the same time of year – it is not a moveable feast. Yet somehow there are still yearly panics and crises when it comes to processing sales, shipping items, and – more particularly – handling returns. It really doesn’t need to be like that.

Don’t have the capacity to cope with a returns peak? No problem. Find someone who has and partner with them. Tap into other networks. Learn from other’s expertise.

Will there be a cost? Well, let’s hope so. You’ll be losing margin on returns anyway, so why not invest in outsourcing some aspect of that operation to a professional whose business it is to help mitigate your exposure to lost margins?

 

This article first appeared on the Parcelly Thought Leadership Corner blog.