The retail headlines over the past twelve months have become increasingly gloomy.  According to the BRC and KPMG, June and July this year were the worst on record and flatlined in August.

As consumers migrate online it seems that the pain is most pronounced for retailers operating physical stores on the high street.  Every week that passes seems to bring news of CVAs, administrations or retailers demanding rent reductions from landlords, weighed down as they are with increasing business rates, labour costs and inflationary pressures.

So, is traditional retail as we know it dead?

It’s undeniable that the sector is going through a period of seismic structural change.  Consumer habits are shifting rapidly, competition in the sector has intensified and cost pressures are increasing.  It’s true that some traditional retailers did not adapt their models swiftly enough to reflect consumer habits, shunning online as a channel or failing to integrate it seamlessly with their physical offer.  Others were slow to see the erosion of barriers to entry, as nimble new start-ups attracted customers with product, service and value which simply couldn’t be matched by the old incumbents battling high fixed costs and legacy leases.    Projected against the current political and economic backdrop, it makes for a difficult case.

However, with data indicating that around 80% of purchases touch a physical store, it’s clear that we are still a nation of shoppers who crave the physical and social connections that come with interacting with others.  Retailers making a virtue of their physical stores know that they need to offer more than purely transactions to encourage shoppers to venture out, however.  When announcing a 10.7% increase in like for like sales last week, Dunelm’s CEO Nick Wilkinson said the secret was “fundamentally understanding what customers want and having beautiful products that are great value for money.”  This is clearly right – customers are a retailer’s most important stakeholder, and if you are not listening and constantly engaging with them to refine your offer then they will vote with their feet and take their custom elsewhere.  Likewise, with mobile technology arming the customer with instant price comparison, offering value for money is a given.

But more than this, retailers need to think beyond selling products.  They need to offer experiences that cannot be matched online.  Take Primark’s new mega store in Birmingham, offering to pamper customers in its salon and blow bar, personalise T-shirts and other products in its Custom Lab or bring friends together in its ‘snap-and-share’ changing room, which can be booked out for parties who want to control the music, lighting and of course capture that Instagram-ready photograph.

They also need to provide friendly and knowledgeable customer service.  It’s often argued that as technology alleviates store staff from the more menial tasks on the shop floor, this will free up their time to foster more meaningful customer engagement.

Above all, retailers need to maintain a clear understanding of who their customer is and what they want. They need to articulate what their brand stands for and communicate a set of values which resonate internally and externally. Whilst many consumer facing businesses, such as Hotel Chocolat and Lush, have built strong connections with their customers, rooted in consistent and authentic communication of their corporate story, others such as Debenhams and House of Fraser clearly lost sight of the customer.

So, times are tough, but retail is very much alive and kicking.  Retailers with a customer-centric model, which can adapt to reflect changing consumer habits and offer service and experience which goes beyond pure retail, are likely to thrive.

Never miss an insight

Sign-up to receive Hinterland, our regular Friday round-up of the week’s most interesting news and views.

You can read our privacy policy here.

Thank you

We hope you enjoy Hinterland.


You can read our privacy policy here.

All insights
Headland Facebook Headland Instagram Headland Twitter Headland Google+ Headland Plus Headland LinkedIn