Member Article

The High Street revolution

The UK High Street is going through a period of immense change. Over the past year well known names like La Senza, Blacks and Peacocks have entered administration; the Portas Review made wide ranging recommendations on the future of retail and the economy shrank 0.2% in the last quarter of 2011.

In the midst of all this upheaval, retailers will need to develop their strategies to respond to the longer term challenge to today’s town centres and retail parks from the growing impact of the internet, both in the form of competition from online retailers but increasingly in the way it is transforming our shopping habits.

While the economy will eventually recover, the proliferation of smart phones and tablet computers mean consumer behaviour is changing in a way that has serious implications for the likes of Eldon Square and the Metrocentre.

Consumers have embraced digital media and are increasingly confident about transacting online and the tough economic climate is accelerating this change as consumers turn to digital solutions to seek out savings and value.

According to the latest Deloitte Mulitchannel Consumer Survey, 80 per cent of travel transactions are now completed on line, while half of electrical goods transactions are influenced by some form of digital activity. It’s too early to write off the traditional high street, as store only transactions still make up the majority of purchases with traditional retailers particularly strong in areas like clothing and homeware. But increasingly important is third option ‘multichannel’ retail, where consumers interact with a number of ‘touchpoints’ including stores, online and even catalogues or direct mail before buying. Importantly, this presents an opportunity for retailers because consumers who research and shop across multiple channels are spending substantially more than those who shop solely online or in store. On average, multichannel consumers spent £143 per transaction compared with direct (online) shoppers who spent slightly less (£102) and store only customers who spent £57. These digitally influenced consumers account for 44% of all non-food sales and retailers need to be on their ‘like’ and ‘favourites’ lists and understand who and what is influencing their purchases. UK-wide 51% of multichannel shoppers use social networks as part of their research before purchasing, 32% use review forums and 13% refer to blogs. 74% of multichannel consumers use price comparison websites, whilst 31% use voucher code sites. Whilst the store remains the biggest single channel, it is just one part of a shopping experience involving numerous channels. This poses significant challenges for retailers who need new capabilities to compete – real time stock visibility, click and collect, customer reviews, same day delivery – and this involves new systems, processes and in some cases, a whole new way of working and measuring performance. Deloitte expect a period of continuing digital disruption to the traditional retail model, alongside incredibly tough trading conditions. There is unlikely to be any real growth in sales until at least 2013, by which time the retail environment will look at lot different from today.

This was posted in Bdaily's Members' News section by David Brown .