Retailers need to invest in technology and not be afraid of failure – but most importantly, stop talking about the death of the high street and start reimaging it…
Who is killing the British high street? Pantomime season may be over but you still have your pick of villains: Amazon, business rates, and unsympathetic landlords. The list goes on. Somehow though it seldom extends to the British consumer, who has surely done their bit by doing more than 20% of their shopping online.
The list of solutions is shorter – “Tax Amazon!”, the tabloid mantra of the moment, will not in itself resolve the crisis – but some industry analysts believe retailers can help themselves by changing their approach to purchasing technology.
Craig Summers, UK managing director of supply chain solutions provider Manhattan Associates, says: “Attempting to ‘become Amazon’ in two years is never going to work. Pure play competitors are too fast, too slick and too tech savvy. What high street retailers can do is leverage their advantage – their ability to offer a tangible personal experience – and quickly exploit relevant technology to deliver an outstanding in-store experience.”
Technologically, the gap between traditional retailers and disruptors such as Amazon is large – and growing. According to KPMG’s Global Consumer Executive Top of Mind survey 2018, platform businesses (as some pure play etailers are called) invest around 13% of their revenues in technology, compared to 5% for the consumer goods and retail sector as a whole. The same survey found that 66% of companies holding back on digital transformation were doing so because they had doubts about the return on investment.
Such findings are, Summers says, mirrored by his experience of the sector. “Too many traditional retailers are scared of technology. They talk about agility and responsiveness but then spend two years developing a solution.”Traditional retailers are inhibited, Summers says, by legacy systems and mindsets.
As old and imperfect as a company’s existing IT system may be, staff have learned to live with it. In a volatile marketplace, with prices, costs and revenues under mounting pressure, there is a temptation to spend less to bolt something on – such as a new online shopping site, or a new app – than invest in transforming the system.
In Summers’ view, this is a false economy for three reasons. First, in the age of cloud computing, companies don’t have to sign off on huge turnkey IT investments. They can move forward with a technological solution that is more flexible, adaptable and scaleable.
Second, it doesn’t matter how slick or savvy your e-commerce site is if the rest of the organisation can’t keep up. “You can’t compete if it takes you 24 hours to deliver a price match offer when pure play disruptors can deliver the product in that time,” he says.
Third, this “fear of failure – of making the wrong technology investment, or creating the wrong in-store experience, is destroying the high street.”So what would Summers do if he were running a traditional retailer? Focus on the fact that having a physical store is a strength, not a weakness, he says.
“People still want to come to a store and be served. They want to interact with an engaged individual, someone who knows the products and is able to locate an item anywhere in the supply chain and get it to the customer quickly. They want frictionless returns and a smooth checkout process. They also want to enjoy the experience. No one wants to travel to the high street to receive a bad version of what they can get online. They want something different – better.”
Given the pressures on traditional British retailers, he recognises it’s more complicated than that. Declining footfalls, soaring business rates, a playing field with etailers that is far from level – these have all made life harder, as has the ‘death of the high street’ narrative being played out in the media. The relentless tolling of jobs lost – without any attempt to point out that some sectors (nail salons, coffee shops) are growing – isn’t designed to calm jittery investors.
Yet traditional retailers can, Summers says, turn things around. As Mary Portas told Management Today recently: “High street retail is not dead, it just needs to be reimagined.”
If retailers want to be part of that reimagining, they need to ensure their technological investments deliver where it matters. “Stop viewing physical stores as your Achilles heel,” says Summers, “and think of them as golden eggs.”