Another Retailer at Risk? Is This a Sign of Things to Come?
UK retail news has been blighted as of late with a near endless string of permanent closures. It’s no secret that there are more retail stores closing their doors in the UK than ever before, painting a rather bleak picture for the UK retail sector as a whole.
The most recent casualty to join the apparent downfall being Bonmarché, which is now under threat after more than 35 years on the UK High Street. Currently operating 312 stores across the country, the company is expected to post significant losses of more than £5 million for 2019. Its owner, billionaire Philip Day, has given a reason to suggest stores and jobs in worrying numbers could be under threat.
Reading into the headlines, you begin to wonder how many retail businesses are there in the UK that can survive long term? Considering what percentage of retail sales are online in the UK, you can’t help but feel a sense of pessimism for the High Street as we’ve traditionally known it. Right now, an incredible £4 out of every £100 spent in the UK is scooped up by Amazon alone.
This represents just one of many thousands of online businesses making life difficult for the traditional British retailer.
How Much Is the UK Retail Industry Worth?
With figures like these, you’d expect the total value of the UK retail industry to have plummeted to next to nothing. In reality, this simply isn’t the case. In total, the UK retail industry is valued in excess of £358 billion annually. Despite the on-going challenge posed by web retailers, online sales still account for just 17% of overall annual retail sales.
That’s according to the Office for National Statistics, suggesting there’s still plenty of room in our lives for the traditional retailer.
Somewhat less surprisingly, the 21st century retail landscape of United Kingdom is led by the four biggest supermarkets. Tesco, Sainsbury’s, Asda and Morrisons account for the lion’s share of the revenues generated on the High Street, attributed largely to their convenience, ease-of-access and impossibly low prices.
Nevertheless, the web retail industry is accelerating at its fastest-ever pace – growing at a rate of more than 20% annually. As far as economists are concerned, this is set to continue indefinitely and could further increase pressure on the High Street.
By eliminating any number of overheads from the equation, online retailers are able to sell products at significantly lower prices than their High Street cousins. From physical premises to vast workforces to general upkeep costs and so on, the reduction of operational expenditures results in huge savings being passed on to the customer.
At the same time, retail property leases, taxation and general operational costs are increasing for traditional retailers. All compounded by the convenience of 24/7 accessibility, free shipping and the most enormous range of products now available online at the touch of a button.
But does all of this spell the complete demise of the High Street? Not exactly – it’s simply a case of shifting focus to a different aspect of customer expectations.
Experiences Over Products
When polled, customers who continue to favour traditional High Street retailers spoke of their preference of the ‘experience’ as a whole. Being able to walk into a welcoming and atmospheric store, speak to a knowledgeable representative, examine products first-hand and generally make an experience of the whole thing.
A sentiment shared by the CEO of Harrods, who stated that the key to long-term success on the UK High Street lies in focusing on the benefits online retail cannot replicate. Challenging perhaps, but achievable by getting to know what exactly any given target audience responds positively to and providing it at the highest possible level.