First things first: the high street is by no means doomed, and online isn’t taking over the entire retail world any time soon. Online retail remains under a fifth of UK retail spending, and there are high street chains experiencing real success – look at the stellar growth of JD Sports, B&M, and Primark to name a few.
However, in the aftermath of much-publicised failures like Toys R Us, House of Fraser and now Sears, department stores on the High Street are having to ask themselves tough questions. The most important thing to note is that all these failures have one thing in common, a factor far more important than Amazon or online retail driving them out:
None of them served their customers’ needs well enough.
“The reality is that [Sears] never focused enough on the evolving needs of the modern customer.
Companies that focus relentlessly on the customer are the ones that are thriving today."
Mary Beth Keelty, CMO at PMX Agency
Why should I buy from you?
The implicit question of commerce is “why should I buy from you?” If a business can’t find a compelling answer to this question, it is very likely to struggle or go under. Most crucially of all, the answer must change as consumer habits change and preferences evolve. For companies such as Sears or House of Fraser, the answer never really changed. The assumption was that by gathering a wide variety of products under one roof they could provide convenience, and that their scale would enable them to do this more effectively than other businesses.
Unfortunately, that selling point stopped working as the internet allowed businesses (yes, including Amazon) to scale and offer similar and greater ranges of products for comparable or cheaper prices. Instead of pivoting or adding more strings to their bows, these retailers remained complacent in the belief that their previous success and size would insulate them from competition. They failed to differentiate.
How to succeed through customer focus
We can look to high street successes to understand how they differentiated and evolved over time. Primark does not do ecommerce. Instead, its website functions as a digital catalogue, allowing customers to build outfits from the product selection and find their latest store. Yet it’s one of the most successful high street chains around – because it has a laser focus on its customer base. They want to be charmed by finding a bargain in their local high street, so the prices stay low. They want to be able to pick up an entire outfit and a handful of basic items, so every Primark store has the convenience of a massive range of basic apparel products.
Most importantly of all, Primark invests significantly in its stores, something neither Sears nor House of Fraser were able or willing to do. This keeps customers willing to come back, which they have done in droves. Few if any UK clothing retailers have the same low price and assortment range available in accessible High Street locations. That’s enough to answer the question “why should I buy from you?” for Primark’s customers.
In contrast, let’s take a classic department store like Debenhams. It cannot differentiate as Primark does on assortment – the vast majority of its products are available elsewhere and those which aren’t are not well known. Pricing is effectively dictated by the brands that sell in concessions or supply their products to Debenhams. On top of that, their store estate is “suffering from historical underinvestment”, according to AJ Bell director Russ Mould. Debenhams has struggled to invest in making itself different from other shopping options in a way that appeals to customers.
In the US, Kohl’s has downsized its store presence in order to feasibly invest in the spaces which had potential to return to profit. Using analytics to determine which products were in demand in different regions, the department chain has returned to focusing on its customers in a much more granular way that has seen its fortunes change in recent years.
Retailers and brands alike need to focus their existence on the reasons their customers come to them instead of anyone else. Digital tools and ecommerce are certainly part of how this can happen for many, but a website will not help a business which has outsourced its understanding of the customer to agencies and resellers.