… or high street dirge? Walter Hale looks at the recent retail sector figures and wonders what mood they will put you in.
You can’t have a silver lining without a cloud. As good as digital technology has been for British wide-format printers, it could impact the volume of work generated by one of the industry’s biggest markets – the retail sector – in the next five years. Britons are the most frequent online shoppers in Europe. This year, we will spend roughly £1,174 per head online, according to the Centre of Retail Research (CRR). It estimates that online accounts for 15.2% of all retail spend in this country. And, with online sales per shopper increasing by 9.6% this year, online’s share of the total spend will keep growing. This is worth note if you print in-store POP/POS.
Two years ago, the CRR studied how such a surge might impact the UK high street, which has been the subject of a well-publicised, and slightly ineffectual, rescue mission by government-appointed consultant Mary Portas. The figures make for grim reading. Between 2013 and 2018, it forecast that the total number of stores in the UK would fall by 22% from 281,930 to 220,000.
As bad as that sounds, it doesn’t fully account for the impact ecommerce will have on store numbers. The CRR also found that, in an online age, a British retailer needs only 70 stores to create a truly national presence. Ten years ago, it would have needed 250.
There are no great surprises here. Before the credit crunch, retailers – especially supermarket chains – were engaged in a space race to build bigger, bolder stores. How things have changed. The list of store closure programmes is long and ominous: Tesco (43), Morrisons (23), Homebase (81 over three years) and B&Q (60 in the next two years). Marks & Spencer has not been as aggressive but it is withdrawing from Accrington, Great Yarmouth, Pontypridd, Stevenage, Wood Green and Woolwich. On the upside, Asda has bucked the trend, outlining plans to open 17 supermarkets and revamp another 62, while Waitrose is looking to open 14 stores in greater London and the home counties.
As bleak as this litany of closures sounds, it doesn’t tell the whole story. The big supermarkets have been wrong-footed by changes in consumer behaviour, particularly the waning popularity of the big weekly shop, and, as has been widely publicised, by cut-price competition from Aldi and Lidl. So the new fashion is for more compact convenience stores which are typically smaller than 280m2 – Sainsbury and Tesco now have more of these than they have supermarkets.
And retail consultant Clare Rayner argues that the high street would be in a healthier state if more retailers learned from the success of John Lewis which uses its stores as a showroom where shoppers can see and touch goods while maintaining such a strong online presence that one in three purchases from the company are made via the internet.
Management theorist Rosabeth Moss Kanter once remarked that: “Every change can look like a failure in the middle”. And this, Rayner optimistically argues, is where the British high street is caught at the moment. What we will see, she argues, is more diversity: “Certain things cannot be done online. People will always need nail bars and coffee shops. Part of the solution is to be more niche, which is why we have seen a resurgence in businesses like butchers and bakers.” She has a point - although butchers, bakers and nail bars probably spend less on signage than retail chains and brands.
Data analytics firm Walkbase is convinced the very technology that is undermining the high street could save it from what managing director Adrian James calls “a horrible, cruel death”. Although six out of ten stores have Wi-Fi, many retailers ignore the data when making decisions, preferring to rely on time-honoured gut instinct. The result, says James, is that “many retailers live and die because of footfall trends they don’t even begin to understand.” He has a point: data could help even if it did something as simple as identify repeat customers. At the same time, even directors at larger retail groups will, in private, ruefully admit that they find it hard to specify how exactly their investment in data analytics has helped their bottom line.
Let’s not kid ourselves: the number of bricks and mortar stores in the UK is still going to shrink over the next five years. And if there aren’t as many stores, would retailers need as much in-store signage?