From the street to the screen: the demise of our high streets
In recent weeks, we have seen further retreats from trading on the UK high streets from some longstanding retailers; a possible result of the national COVID restrictions. This has left shop owners across the country wondering if normality will ensue when restrictions ease, or whether shopping culture has changed to the point of no return for the high street.
In the last couple of years, pre–dating the current COVID lockdowns, we have seen several brands fall into administration as consumers move to online purchasing. Brands such as Jack Wills, Game, House of Fraser, Evans Cycles and countless others seem to have failed to balance online versus high street selling in the face of competition from Amazon, Asos, Boohoo and other online e-commerce retailers. There has been an urgency for brick-and-mortar businesses to ensure that they have a Unique Selling Point (USP) which offers something the likes of Amazon does not. Thus, moving consumers from the screen to the street.
In January, we have seen Sr Philip Greens Arcadia empire succumb to receivership after the Coronavirus lockdown has prevented shoppers from visiting stores. However, in the past Arcadia did have a strong online presence, therefore posing the question “does the recipe to success include more than simply setting up a shop online?”.
As we have entered the third lockdown in a year, the consumers expectations for a higher quality digital service have skyrocketed. Therefore, e-commerce has needed to quickly adapt to meet these expectations in their service provision, specifically, perfecting their supply chain management.
Indeed, often a Cinderella profession, business supply chains have recently been thrust into the limelight in the UK, with debates as to how supply and demand will be affected in the face of Brexit and Coronavirus. A topical example of this is the cold chain required to distribute the COVID vaccinations. But how does the varying capability of this hidden side of retail influence shoppers?
One particular challenge for businesses is the complications caused by outsourcing parts of their production. For example, the lengthy transportation time products take, from the initial factory to the ports, National Distribution Centre (NBC), warehouse destination, and so on. How the goods are stored in the NDC is critical to the capability that the retailer can offer in terms of high street versus online buying. Far from having a slick website or click and collect, which are also important aspects, once the goods have been purchased how are they going to get from the NDC to the customer?
If a store needs items then pallets might be broken down and individual store orders created. However, the store typically receives its items in bulk.
Although this is great for delivering to brick-and-mortar shops, when a retail customer buys online, they want to receive single items, not in bulk. The impact on the design, layout, staffing, machinery and equipment required in the NDC to be able to pick single items rather than SKUs is huge. Now all the items need to be broken down from the shipping container, the pallet and into individual items that can be picked singularly.
There are a range of technologies that can be applied to support this, with Ocado’s auto–picking of individual grocery items, and Amazon leading technological developments in this market. However, the price point is high for this advanced capability and companies that have not invested in this technology are less able to compete. Added to the challenge, the companies that have highly automated services can efficiently serve an online customer, compared to those who are relying on manual labour to achieve the same outcome. Thus, companies with a purely online business model can implement this efficient product provision service, whilst those also focusing on physical business models fall behind.
Beyond the warehouse, there are many key differences between the actual shopping experience on Topshop versus ASOS’s website. For example, a better selection and variety, greater inclusivity, easier to navigate user interface and cheaper delivery options. All of which contribute to a much better digital experience on ASOS. Comparing this experience to Topshop, there is clear winner with Topshop not meeting the demand for a top-quality digital shopping experience for the COVID customer.
Contrarily, in light of the recent news about increased taxes for online retailers that heavily profited during the pandemic, it seems appropriate to question to what extent businesses will be watchful of the government’s attempts to re-balance the tax revenue from offline and online activity.
In summary, it is clear that businesses without an optimised online experience or the adequate technology will need to consider their future in the post–COVID climate. As displayed by the closing of all physical Arcadia stores, it is apparent that customers voted with their mouse clicks.