Why retailers must adapt or face becoming extinct
As BHS becomes the latest big brand to vanish from Northern Ireland's high streets, Donald McFetridge, independent retail analyst, asks if the format has a future
The demise of Woolworths in 2009 marked the beginning of a period of increasingly rapid change in the retail marketplace. Unfortunately, but not unexpectedly, other casualties followed in its wake. The latest of these is BHS, which closed up shop in Belfast last weekend.
Sadly, this will leave a large number of empty shop units on our high streets, which is far from ideal. While retailers like Poundland and Iceland were quick to snap up the vacant units when Woolworths exited the market, it remains to be seen what will happen to the empty BHS stores.
The market position formerly occupied by BHS had become increasingly competitive with clever operators like Primark offering consumers cheap clothes at cheap prices in arguably more contemporary shopping environments.
Post-recession, it seems that we have become a nation of dedicated discount shoppers, shopping around for the best bargains at the best prices, whether it's for food or non-food merchandise. The millennial generation, in particular, is intensely value-driven.
Much has been written about the problems at BHS but it simply boils down to the fact that they lacked vision and had lost touch with their core customer base. They were no longer the cheapest, the most fashionable or the most cutting-edge, and consumers decided to shop elsewhere.
Belfast has seen the department store sector change a great deal over the past few decades. We used to have stores like Robinson & Cleaver and Brands & Norman. Nowadays, we have Debenhams and House of Fraser. The former is still facing a challenging period in its trading history as it seeks to move away from the practice of heavy discounting, while the latter is one of the sector's success stories.
The future of the department store is a difficult one to predict, but for those hoping for a place in the retail landscape of tomorrow, a number of important factors have to be taken into consideration.
It's not enough to simply provide consumers with a wide range of cleverly displayed merchandise in state-of-the-art shopping environments. Consumers demand "remarkable interactions" with sales personnel which they don't get online.
It is imperative that retailers in all sectors try to differentiate themselves from their competitors by becoming much more remarkable and more intensely customer relevant.
Retailers in general, and department stores in particular, need to recognise that the store is not just about shopping; it's also about entertainment, engagement and socialisation. Those who take these concepts seriously will be much more likely to be successful than those who don't.
Creating a unique shopping experience is of paramount importance in building customer loyalty. Shoppers, especially millennials, are craving experiences from brands. This means that retailers will need to focus less on having large amounts of inventory in-store, and concentrate instead in providing customers with a more "connected" retail experience.
Speed is also of the essence for successful retailers. In fact, it's the new advantage which customers actively seek out. Retailers will need to try to find new ways to further respond to shifting perceptions of what is important for 21st century consumers as they strive to emulate the gold standard set by Amazon and other online behemoths.
It is an unfortunate fact that when we look around the high street these days, we see a plethora of retailers, including department store groups, who could very easily follow in the footsteps of BHS. In fact, many are already on life-support and the writing is on the wall. They must try to do more to react to the demands of contemporary consumers if they hope to have a place in the retail landscape of the future.
It has been asserted often that the internet will eventually sound the death knell for our high streets. I disagree. The internet and online retailing is only a small piece of a bigger puzzle, but retailers operating in physical stores would do well to follow best practice in this very important part of the retail world. To fail to do so would be sheer folly.