Retail Crisis or Evolution: Partnerships and Logistics

Modern Retail are proud to share the ‘Retail Crisis or Retail Evolution’ series, by Naeem Arif, Vice Chair of the Midlands Retail Forum. Naeem shares the ways in which successful high street retailers are adapting to overcome new challenges and thrive, proving the importance of logistics and evolution in retail.

To read from the start of the series, click here.

Success in business comes by having your product available in places where your target customer can find them. The high street is often competing against shopping malls, where customers can park more easily and enjoy a wider selection of shops and eateries. Being in a great location, with a lot of footfall can be expensive though and many retailers are closing stores in locations that are not as busy as they used to be. 

Argos have closed down some stores and turned to partnering and having a Click and Collect location within Sainsbury’s and Homebase. I believe you will see more of these partnerships forming as the need for a high street presence changes. Click and Collect allows a customer to order a product for collection without having the stress of logistics. 

Argos Click & Collect 

US giants GAP, Guess and Macy’s all started 2018 by announcing plans to each close down dozens of stores this year in such “loss making” locations. This is an ongoing trend across the world, with a lot of giants in the UK closing loss-making stores for this reason.

If you have a long-term lease for a location, which does not deliver the foot-flow, it becomes an expensive overhead and drains profit from your other locations. A lot of stores have brought in more efficient racking to reduce the floor space they need. This saves costs on the lease and the upkeep of the store to reduce overheads. 

Michael Kors has also announced that they intend to close down a number of their own stores. So where will you be able to get your Michael Kors handbag from now? They will always be available in branded department stores and of course you have the option to buy online. This will save them the overhead of having brick and mortar stores as well as maintaining their brand both offline and online, simplifying logistics. 

If you are going online, you could sell from your own website or use someone else’s online marketplace, where customers are already visiting. If you sell a product on Amazon, you are effectively making your product available on a high street with a flow of millions of customers. 

“Amazon received nearly 200 million visitors in December 2017; in the same period Wal-Mart received around 120 million.”

Statista.com

The decision to have your own online store or use a marketplace is important, but remember it is not an ‘either or’ decision. You should be considering both and the implications on logistics. 

When Claire’s filed for bankruptcy, they blamed reducing visitors to shopping malls for declining sales, but their statement mentioned only an 8% decline in mall visitors over the last 12 months. This stat is nothing more than a trend since malls are still attracting 92% of the visitors they had the year before. Consumers still visit malls in their masses; so it cannot be the main reason for Claire’s decline.

In the last decade we have seen a massive growth in YouTubers promoting products from online games, makeup and accessories. These vloggers, with hundreds of thousands of followers, are able to raise the profile and reputation of the products they demo.

Claire’s tried to take on this approach themselves, but have been way behind the curve here in adopting this approach. Who knows what would have happened if they have maybe taken a similar approach a few years earlier. 

Online vloggers can have a captive audience