Does Virtual Shopping Mean Curtains for the High Street or Are We Being Seduced Back into the Real World?

Question:  What distinguishes those retailers who will survive and thrive on the high street and those who will sink into oblivion under the weight of internet shopping?

Answer: An in-depth appreciation of the things that customers value about a direct retail experience.  The things that make the in-store experience something of genuine added value.

 The economies of scale and reduced overheads, and sheer shopping convenience achieved by a virtual store will never be matched by real life bricks and mortar shops, so the competitive advantage has to lie elsewhere.  Reducing prices and increasing ranges will only go so far in driving sales and eventually the squeeze on profits will force many shops into radical restructuring or liquidation.   Those who survive will have had a concerted re-think about what they are offering over and above the internet.

HMV, the iconic music and entertainment high street retailer in the UK is a case in point.  Despite announcing profits warning after dismal forecast during 2011, the company pushed on throughout the Christmas trading period and continues to insist that it will survive, despite a sales slump (8.1% decline in like for like sales for the 5 weeks to the end of December).

I fear the writing is on the wall HMV.  The internet offers identical products cheaper and without the trip into town.   Your store refurbishment programme is nice but not sufficient and your British stiff upper lip in the face of continual bad results is admirable but Titanically hopeless.  If you continue to do what you have always done, you will get what you have always got – and in your case that is consistently declining sales.  There is only one place it can end up: administration or disposal of assets.

There are many other examples of high street retailers struggling to survive against the combined might of internet retailing and the global economic depression: Blacks the outdoors retailer, Past Times the nostalgia gifts retailer, Hawkins Bazaar the toy shop, Barratts the shoe shop and Thorntons the chocolatier.  What unites them is that they are all long-established high street retailers dealing with the new world around them by doggedly sticking to doing what they have always done.  Perhaps they are reducing prices and making “efficiencies” but essentially, with the exception of an updated product range, when you enter their shops you might as well be stepping back ten years.

The high street is doomed.

But wait!  There is a new breed of high street shops that don’t seem to be declining.  In fact they are filling up the empty shop-fronts with bold new offers.  They include shops like Hollister, Build-a-Bear, and countless beauty emporiums. There is nothing new in the type of products they are offering – we are still buying clothes, toys and lotions as we always have – but  the way these companies sell them is different and they are expanding as quickly as others are falling around them.

The internet and supermarkets have convenience and cost sewn up.  For years, thought leaders all over the place have been saying that most organisations can’t compete on the basis of price any more.  They must offer something else that the customer values and which sets them apart from the competition.

What these new successful high street stores offer is they create a physical place that their target customers want to be.  What they offer in terms of environment and experience can’t be provided over the internet or at a supermarket.  Clearly they start with making sure they are offering the right  products, but they succeed because they understand all the other benefits they can deliver whilst selling the products.  They have focused on the experience that their customers have when they are in the store and have created a destination of choice for the people who want the sort of products they are selling.  They work to reward the time and opportunity cost of travelling to the shop and choosing to spend time in that particular shop with other, non-product based, value.

So Hollister has created a seductive, sensual and tantalising environment to sell its contrastingly outdoorsy all-American clothes.  Millions of teenagers love the way that shopping in Hollister makes them feel and it’s not just about wearing the brand after they have bought it.  The beautiful sales people smooch about the club-like interior, some males topless, if reports are to be believed.  The glamour, the dark interior, the right music and the overpowering smell of perfume appeal to Hollister’s target market using sensory experiences to the max.  The whole Hollister shopping experience connects with a customer’s psyche on a myriad of levels, speaking to their identity, esteem and aspirations.

At a whole different stage of the life-cycle, Build-a-Bear also understands that the customer experience is key.  The only difference is that Build-Bear’s customers are small children and their parents, so the experience it has created is a small child’s dream of teddy bear heaven.  Thousands of soft, fluffy, colourful teddy bears surround the store’s walls and racks, along with 100s of teddy-sized shoes, clothes and accessories priced higher than most people pay for their children’s clothes.

What is more, it’s a party destination.  Skilled sales staff host children’s birthday parties in store for groups of children, all of whom go home with their own unique, personally designed bear.   In reality, from a parent’s perspective, all the “party” consists of is an hour of a sales assistant selling teddies to the birthday boy/girl and his/her friends, albeit a sale that has already been paid for. 

No matter, since the children love it and parents love witnessing the “kid in a candy shop” experience too – especially when it’s their own child.  If harnessed correctly, I reckon that the force of pester-power in Build-A-Bear shop could probably generate enough heat and light to power a household for a year.

And what about those beauty emporiums.  They all know how to entice the weary shopper to the window with glamorous, twinkly-lit shelves displaying lots of little pots of miracles.  But how do they encourage us to part with the shocking amounts of money the little pots require?  Because they have experts on hand to give free and personalised advice, sometimes formally arranged but mostly offered unsolicited after one swift glance over face and body. 

Because it is a real world interaction, the flawless beauty experts can offer tailored and real-time advice about the best potions and lotions to turn your particular kind of ugly duckling into a swan, your best you.  Compelling.

None of this is available on the price competitive internet, but person to person, in a real world place, the environment and the people make  all the difference to business success.  The old high street relied on the products to bring customers in.  On the new high street, the products are just part of the story.  On their own they can’t carry retail any more.  The customer experience is key to success and this depends on a detailed understanding of what specific groups of customers value, over and above the product on offer.   When you know this, you can design a destination environment and fill it with people who bring value and meaning to the interaction, and don’t just operate the till. 

Sure, we all want things we already think we need, at a great price, without too much effort and the internet is a great tool to support this.  But it is the companies who appeal to our aspirations, our emotions and our human nature, and who offer something less tangible and more valuable to us than the product, who will keep us stepping out onto the high street.

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