We were told ecommerce was on an insatiable march against the high street but shoppers wanting great social experiences have had the last word. Linda Ralph, SVP International at Mood Media, gives her thoughts on the high street resurgence…
The headlines have said it all over the past couple of months. After years of those talking about the ‘new normal’ being relentless ecommerce growth at the expense of the high street, three of the biggest online retailers have seen their share prices literally decimated (to a tenth of their previous value) while the high street has quietly been getting back to business.
May’s retail figures showed a modest rise in UK retail sales, just as the figures for preceding months indicate a significant return to the high street. Each month that passes this year is producing footfall figures that are up by around 6% to 10%, year on year, driven in particular by a return to weekend shopping in malls. People are proving they are social human beings who want to go to stores in-person, with family and friends, to touch and feel potential purchases and take them home that day, rather than wait for delivery.
You only need to take a look at the exciting new flagship store launches on popular high streets and the biggest malls, from a wide range of retailers from Nike to Adidas, Selfridges to River Island, and a whole range of upmarket, smaller outlets. There is a palpable sense of excitement returning to in-store. Face-to-face retail is coming back and it’s being upscaled to offer personalised beauty treatments and advice, spacious merchandise displays in beautiful settings, social events, entertainment and, crucially, recycling and repair facilities that today’s eco-conscious consumer demands. Service is going premium, and so too are the products on offer. The result is shopping is a form of social entertainment again. The high street is back, driven by upscaled experiences.
As recently as just a year or so ago, talking about the high street in positive terms was seen as rather old-fashioned and too optimistic. We have recently come through a couple of years where Asos and Boohoo, in particular, were seen as the leaders of this new, unstoppable online charge. Asos was emboldened by taking over the well-known Arcadia brands, such as Top Shop, and Boohoo was riding high on stellar growth in online sales to a young audience. Fast forward to 2023 and both are in the headlines for all the wrong reasons as boardroom battles and a shareholder revolt over boardroom pay have rocked Boohoo, as well as rumours of takeover bids being put together. There is no need for rumour with Asos and THG, both have firm offers on the table.
The reason behind this interest could possibly lie in the businesses not only having very strong brand names but also very low share prices. Current trading prices for all three are roughly at roughly just 10% of their previous highs. That is a drop of 90% or more at the same time as Next’s share price has risen by 10%.
This is not finger-pointing but rather rebalancing the argument that the future of retail was always going to be about these stellar brand names. Right now, trading conditions are tough with the cost of living crisis, supply chain pressures and the unavoidable truth that inflation is running higher than wage rises. For the online stars from a couple of years ago, this is also coming at a time when NAO figures show that from accounting for a third of retail sales during the pandemic, the online channel now accounts for around a quarter of UK retail.
So, sales are shifting back to the high street just as e-commerce operators are having to face up to another hidden cost of online sales. While returns can account for anything between 5% to 10% of in-store fashion purchases, this leaps to around 20% to 30% of clothes bought online, according to a variety of research papers. When around a quarter of what you sell is sent back, at your expense, meeting customer expectations around choice and free returns in tougher trading conditions is clearly proving difficult.
Of course, successful retailing is not a choice between online and in-store but rather how they are blended into the perfect omnichannel experience. One must always work with the other, only the balance has been normalised now the high street is back to healthier days.
To keep up the momentum behind this positive trend, Mood Media asked thousands of shoppers across the globe what they want from retail. There are geographic differences, of course, but overwhelmingly this research shows nearly three in four, 71%, reveal they now shop more, or at least with the same frequency, as they did before the pandemic.
The big draw is the shopping experience with more than four in five, 84%, saying getting the atmosphere right will encourage them to return, and 79% say it will make them stay shopping in-store for longer. The top three things customers are looking for are knowledgeable, helpful staff, an uncluttered layout and things to touch, see, hear and smell. Shoppers are human and they want to create an emotional bond with a store.
Having said that, in-store technology, such as self-service kiosks, mobile checkout and smart use of AR and AI are also gaining popularity, as are interactive digital screens that introduce visitors to a store’s full range or explain promotions.
The key thing here is the experience. Online will always have the convenience of purchasing from the sofa, but humans often want more than that. They are making social shopping trips to discover goods in person and the retailers who are getting that experience right are the ones who will reap the rewards.
