Retail Therapy and How to Save the High street
'How to save the high street?' is a question exercising every town and community in the country. With 30 years experience in retail, Mark Pilkington is well-qualified to address the issue and here, in an exclusive article for Warwickshire Means Business, he argues that the only solution is a sustained three-pronged approach from retailers, local communities and central government.
"Retailers need to focus on doing the thing that the internet cannot - which is to provide live ‘Brand Theatre’ in their stores."
We do not have to look too far to see that our high streets are suffering from severe challenges. The big question is how we can save these institutions, which are so vital to the health of our communities?
The answer to this is complex and needs to be addressed at three levels – the retailers themselves, local communities and central government.
Starting with the retailers themselves, they need to understand the profound changes that are being wrought by the technological revolution.
Retailing used to be an expression of local community, as people knew the shopkeepers and fellow shoppers, and local high streets and markets had a vibrant feel to them. Unfortunately, over the years multiple chains replaced a lot of small shopkeepers and, in the drive for efficiency, stores became bland, self-service environments; high streets lost their unique local character and started to resemble one another across the country.
Then along came e-commerce which created an even more efficient self-service environment; it offered a broader selection, smarter search engines and more convenient home deliveries. And without the cost of the stores, it was able to undercut the retailers on price. So if all you wanted as a consumer was a cheap, efficient way of accessing goods, then e-commerce was a better option. Over time, the internet channel grew to be nearly 20% of the UK market, and the high fixed-cost retailers started to struggle.
In order to compete, retailers need to focus on doing the thing that the internet cannot, which is to provide live ‘Brand Theatre’ in their stores. Man is a social animal, and people do not want to spend all their time locked up in their rooms on their smart phones. They want to connect with other people, have new experiences, learn things and feel a sense of collective buzz about something exciting. These are things that can be provided in a store, if you design it that way.
‘Brand Theatre’ can be created in a number of ways:
- Personal attention and pampering by store staff
- Immersive brand experiences which give the consumer a sense of pleasurable escapism
- Activities building a sense of community around the store’s brand values
- Advice and educational activities related to the product and how it is produced
- Other forms of entertainment which may be related to the product
A great example of ‘Brand Theatre’ is Rapha Cycling, which has turned its stores into ‘club houses’, whereby, in return for a small annual fee, members can get free coffee and snacks, inclusion on club trips, special products and advice on fixing their equipment.
In order to free up the space and staff availability needed to deliver these experiences, stores need to shift their focus from just selling goods to creating experiences. The current set-up of stores, whereby 90% of the space is used to house stock, and only 10% is used for customer-facing areas, is wrong for today’s circumstances. Likewise, spending over 50% of staff time on stock processing and other menial tasks, is a waste of valuable resource.
With the latest technology, it is no longer necessary to have piles of stock in the store. Many products can be demonstrated on digital screens – for example customers can actually see what clothes look like on their bodies. And the sale can be completed on the retailer’s website and shipped directly to the customer’s home, without the product ever touching the store. Without all that stock, space can be freed up to create the special experiences and ‘Brand Theatre’ described above, and staff time can be devoted to customers.
However, the theatre necessary to bring shoppers back to our high streets cannot be achieved at an individual store level alone. It is something that needs to be managed at a community level. Retailers, local government and the broader community need to work together to create a unique ‘brand personality’ for the particular town or village concerned. This activity is known as ‘Placemaking’ and it is a combination of four main areas of activity:
- Creating the environment to encourage entrepreneurship and attract investment
- Building leadership and organisation – ensuring broad community engagement
- Designing the area – creating an inviting atmosphere, celebrating historic character and fostering accessible public spaces
- Promoting the district’s assets including unique features
There are many great examples of this in Warwickshire. The Warwickshire Towns Network is supporting Business Improvement Districts in Rugby, Leamington and Stratford Upon Avon and working with the Nuneaton Business Alliance to get a Business Improvement District for Nuneaton.
At the national level, the government also needs to contribute to the revival of the High Street. The biggest issue is that the business rates and corporation tax systems, as currently constituted, favour online businesses over retailers.
The e-commerce companies have low rent distribution centres, which do not attract much in the way of rates, and they can also headquarter themselves in tax havens, so as to minimise their corporate taxes. The retailers are easy targets for the taxman, with their high rent locations and their UK-based headquarters. For example, in 2017, Debenhams paid £80 million in business rates, whereas Amazon paid only £38m (in England and Wales), despite having sales of £9 billion across the UK.
The simplest way to address the rates issue would be to replace the business rate with a sales tax on all retail sales, whether they be online or offline, and to pay the proceeds to the local governments where the sales were made.
Thus, in summary, if the high street is to be saved, it will take concerted action by the retailers themselves, local communities and also the central government.
* Mark Pilkington will speak at an event at Stratford Literary Festival on Wednesday May 1 (6pm).