Just over 20 years ago, Amazon founder Jeff Bezos wrote his first letter to shareholders. The online retailer had just floated on the stock exchange and looked very different to today – its revenues were yet to exceed $150m and it employed just 600 people.
But Bezos was clear about the opportunity. ‘As we’ve long said, [online commerce] should prove to be a very large market, and it’s likely that a number of companies will see significant benefit,’ he wrote. ‘We feel good about what we’ve done, and even more excited about what we want to do.’
In the early days of the internet, it was widely thought that online retailers like Amazon would deliver a fatal punch to the British high street. Bricks and mortar shops were marked redundant, tipped to be the first casualties of a new digital era. But this dark future has not emerged.
Today, Amazon is an e-commerce behemoth, with a headcount of 500,000 and revenues of $136bn. But while internet shopping has led to new challenges, it hasn’t engulfed bricks and mortar retailers as expected. Despite repeated death knells, the high street is far from dead.
High street support
RSM’s survey shows healthy sentiment towards the high street. Consumers still prefer to visit physical stores when buying clothes and shoes, homewares and beauty products. The ability to touch and feel products, and take them home there and then, are the top reasons many continue to buy offline.
Consumers also prefer to walk in to restaurants to make a reservation or dine there and then. While booking online or over the telephone is considered more convenient, consumers say visiting a bar or restaurant in-person creates a better experience. Increasing consumer demand to talk to staff about seating, menus and dietary requirements, will continue to drive this trend.
Yet there are some products and experiences that consumers prefer to buy through digital channels. Shoppers across all generations and demographics say it’s more convenient to purchase technology products online. The ability to compare prices and find a good deal are the top reasons for doing so.
Likewise, consumers also turn to digital platforms when organising holidays. While many say booking through high street or telephone agents offers a better experience, 73 per cent complete their purchase online. The glut of price comparison websites and online reviews is a major pull for today’s digitally savvy holidaymakers.
With consumer support for the high street still strong, retailers must be careful to not overlook their bricks and mortar offerings. While digital is important, it must not become a distraction. Employing great people who can interact with shoppers and deliver a memorable brand experience is just as important as optimising the online customer journey.
In October, Selfridges posted another year of record sales. As other consumer businesses grappled with the biting aftermath of a global economic crisis and stared down the barrel of Brexit, how has the high street bastion reached new heights year after year?
The company’s managing director, Anne Pitcher, indicates that Selfridges’ triumphs have not come from standing still. As she told the media: ‘Our success story for last year came from our driving ambition to be creative and courageous, offering customers extraordinary experiences and destinations.’ The roots of this outlook stretch back generations.
Whenever I may be tempted to slack up and let the business run for awhile on its own impetus, I picture my competitor sitting at a desk in his opposition house, thinking and thinking with the most devilish intensity and clearness, and I ask myself what I can do to be prepared for his next brilliant move. – Selfridges founder H. Gordon Selfridge.
Today, Selfridges is not just a place to shop, but a place to experience. The store has continued to innovate, opening its doors to music collaborations and launching a £300m capital expenditure programme to transform its London store and online offerings. Its collection of well-defined, niche spaces allows it to stand tall in a crowded market.
What can others learn from its success? We know that consumer businesses that thrive today have one thing in common: flexibility. They’ve kept on the front foot and been ready to adapt to stay ahead of fickle consumer habits and preferences.
In the retail space, well-branded companies with unique store concepts and products continue to flourish. Those that have pared back their inventory to keep a laser focus on a single niche have been rewarded. Those that have failed to differentiate have often fallen.
Likewise, leisure and hospitality businesses that offer distinctive and ‘Insta-worthy’ experiences continue to stand out. As consumers become more open to experimentation, bars and restaurants that innovate and offer personalised and customised experiences will forge ahead.
Businesses must also keep a careful watch on their real estate portfolios. Over the past decade, travel operators that were quick to adapt their bricks and mortar offerings were able to survive the shift towards online bookings. Focusing on smaller premises in buoyant locations will help many stay relevant in a volatile operating environment.
We also know that consumers increasingly crave dynamic high street experiences. They want to shop, browse, visit bars and restaurants, and spend time with family and friends. In this new landscape, creating novel destinations that blur the lines between retail and leisure will offer the multi-sensory days out that today’s consumers demand.