Christmas is the most important time of year for retailers. It just wouldn’t be the season if they didn’t get into the full, unrelenting swing of things, filling their shops with a profusion of festive paraphernalia and blaring carols on repeat.
At Portas, we’re closely watching how retailers fare over the festive season. We’re predicting there will be some deaths. Shopping is as much a part of the Christmas tradition as turkey and sprouts, but shoppers' needs are changing, and some retailers have been slow in stepping up to the challenge.
So, what’s the way forward? What will get the High Streets’ tills singing over Christmas – and keep them that way in 2018 and beyond?
Trade is tough
In our 20-year history as an agency, we’ve never had so many clients asking us for advice on how to navigate the changing ways consumers are buying.
A quick scan of the current UK retail landscape and it’s clear that trade is tough.
Damp consumer confidence and mounting costs pressures mean we’ve heard very few success stories from the big boys over the past twelve months. John Lewis, DFS, Paperchase, Game and Dunelm have all reported worse than expected profits. And this week Toys R Us announced they’re shuttering a quarter of their UK stores – and 800 jobs with it.
Shoppers are opening their wallets, but they’re doing so cautiously. We’re seeing what we call the ‘Lipstick Effect’, where shoppers forgo big-ticket items in favour of affordable everyday treats.
Even the retail bonanza that is Black Friday disappointed. Three years ago, police and ambulances were called to supermarkets as near-brawls broke out among bargain-hungry Brits. This year, Black Friday was more of a dull grey. E-commerce sites were overwhelmed with hits, but High Street retailers failed to attract the numbers they had hoped.
For us, this is proof of something we passionately believe as an agency – that in a world where online sales are growing exponentially, promotions and price cuts are simply not enough to get people to shop the high street.
The death of ‘stuff’
Fact: experiences account for an increasing share of our hard-earned cash. Take UK leisure spend – it’s more than quadrupled over the last 30 years. Plus, it shot up 30% over the last decade – which, let’s not forget, included the worst recession in living memory.
So, it’s not that we’re not spending. It’s just that we’re not spending on stuff.
Shopping used to be a pastime. Today, it’s not. Placing an order online, popping into Little Waitrose on the way home from work – it’s impersonal. But we still need to connect with people. And savvy retailers know this.
Experience has become the metric for assessing value per square foot. Brands are using shops as spaces to immerse us in their worlds. Within four walls, they teach us, inspire us and encourage us to try new things. We go to them not just to ‘shop’, but for entertainment, education and connection.
It’s interesting that many of the brands doing the best job at this are not what we would traditionally think of as “retailers”. The likes of Tesla, Dyson, Microsoft and Smeg have all followed in the footsteps of Nespresso - moving onto the high street and using stores as brand building tools.
But this doesn’t mean that the only route to success is investing in a five-storey brand temple on London’s Regent Street. Retailers are driving customers to stores by creating unique products and experiences that can only be found for a short period of time in a handful of locations. Take the success of Supreme’s “drops” that cause a line of fans to snake around the block every Thursday morning ; the new hand printed political t-shirts found each week at H+M’s Weekday fascia; or even the Mary Portas Living & Giving charity pop up at Liberty this summer - the most successful fundraising pop-up Save the Children UK has ever run.
Others retailers are seeing success by focusing on community rather than commerce. Take Lululemon. The activewear brand has united a tribe of wellness lovers by offering complimentary in-store yoga classes. And Rapha. Through its in-store cafes and never-ending roster of bike-related events, the cycling brand has galvanised a movement. People go to Rapha stores to meet and mingle with the like-minded and lycra-clad – the fact that they spend big on the gear is just a by-product.
Above: cyclists stop for coffee at a Rapha store in Tokyo.
Feed the omni-vores of retail
There’s no denying that mobile technology, social commerce and the internet of things have conspired to forever change the way we buy. But when a person sees a brand on a street, experiences it in a tangible way, and becomes a part of its community, it goes deep into their psyche.
It’s powerful – and it’s why a wave of digital retailers are branching out into bricks and mortar. Missguided, Bonobos, Warby Parker and now even Amazon have a presence on the High Street. That’s right – Amazon, the world’s largest e-commerce player, controls 460 Whole Foods locations across the US, and last year opened its first physical bookstore on home turf in Seattle.
What can we learn from all of this? The future of retail isn’t online – it’s omnichannel. And for retailers to win, they must feed the retail omni-vores.
A brilliant example of a retailer doing just this is Australian luxury sneaker brand Sneakerboy. Picture this. A modern showroom, walls lined with the latest sneakers. Cool, knowledgeable dudes looking hip in their kicks, inspiring customers to buy. Rent overheads are small because there’s no stock out back. Find pair you like? Order it on an in-store i-Pad and have it delivered in three days.
Retailers have much to learn from the way Sneakerboy facilitates movement across different platforms. Incorporating digital seamlessly into retail experiences is the only way forward.
The High Street, reimagined
At Portas, our client roster includes some of the best known and most loved British high street brands: Sainsbury’s, Moss Bros and Liberty London, just to name a few. We’re champions of these brands not just because they’re our clients, but also because we believe high streets are vital to communities. People have always wanted a place to meet, to spend time, and to transact – and these basic human needs will never go away.
Of course there will be fewer shops around the country going forward. We live in a digital age, and we simply don't need as many. But the shops that we will have will be better. For businesses, they will be build serious brand equity, and for shoppers, they will be places to learn, discover and make new friends.
Despite what the doom-mongers may say – and no matter how many retailers shutter in the wake of underwhelming Christmas sales (inevitably there will be some) – the high street is not dead. It just needs to be reimagined.