The rise of online retailers such as Amazon and e-Bay have undoubtedly posed a real challenge to the high street store and many brands have wilted or disintegrated under the pressure. However, as human beings, we have a huge capacity for survival and the old adage ‘where there’s a will, there’s a way’ is proving true as the high street begins to fight back.
An article in The Economist on this very matter sparked our interest recently, and we thought we would share it’s key points with our clients in both the jewellery sector and the wider retail market. The article itself takes a look at the general scene across four economies and then assesses how companies are faring in different market places. In this first of two articles, we look at the general scenario as the online and bricks & mortar retail sector slugs it out.
The underlying focus of the article, which was based on responses from 256 retail executives from UK, France, Germany and Japan, was on how high street stores are fighting back against stiff competition from online retailers with some significant shifts in strategy and innovative thinking.
The five most common responses from bricks and mortar stores to the threat from online retailers are:
- Investment in online channels
- Well-trained staff
- A wider range of products
- Introduction of loyalty programmes
- Lowering prices
We take a more in-depth look at some of these responses:
Loyalty programmes:
The use of loyalty programmes is one way in which high street stores have been able to gather information about customers’ shopping habits. This is the most effective response to the great advantage that online retailers hold when it comes to gathering information via marketing campaigns.
Customer experience:
Online stores have been able to develop websites and apps that customers enjoy interacting with. For high street stores to counter this, they need to highlight their most distinguishing factor – the staff. Knowledgeable staff, with great customer service skills will be the strongest weapon in the high street store’s arsenal. Making sure there are sufficient staff on the shop floor, all of whom have great product knowledge means the customer and staff can interact and the customer will have a good shopping experience and thus be more willing to return.
Product selection:
Not only are stores increasing product selection but they are changing the range more frequently. There is also a tendency to make the product range more localised and bespoke, playing to the strengths of the local or regional knowledge of the sales staff.
Online strategy
These might be physical stores but a strong online presence and a range of digital channels is essential in today’s retail sphere, they are two facets of the same system. An emerging trend has seen a drop in investment in online systems but a major reason for this may be a period of heavy initial investment which has now flattened out.
Decision-making
The respondents in the survey said that much of their decision-making was influenced by either their consumers or their competitors. Those retailers who have successfully withstood online competition tend to look to focus groups when it comes to decision-making, suggesting a willingness to pursue deeper, more personal customer insights than the more basic insights revealed through simply using customer surveys.
The first section of the article outlined 10 main ways that bricks and mortar retailers can hold their own or better their online rivals.
- Refresh the brand to look more contemporary
- Hold in-store demos and events
- Sublet your space to other retailers
- Introduce price matching
- Merge online and offline channels
- Focus attention and investment on your display window or shop front
- Move to secondary (lower rental) locations
- Shift your focus to higher-value customers
- Augment in-store range with online catalogues
- Introduce bespoke/localised/customised products
Sourced from How Online Competition is Shaping Retailers’ In-store Strategies, by The Economist Intelligence Unit