How retailers can think big but act local
It is easy to blame the arrival of Uber Eats and Deliveroo for restaurant failure; to assume Amazon can drive every high street retailer out of business. But that misses the point: they are not competing with high street operators at all. They are not interested in product sales but in customer acquisition and leveraging customer data to deliver long term revenue. This is the fundamental change in retail economics that UK high street businesses need to understand. Today customer acquisition online is highly effective, low cost and untaxed. Customer acquisition on the high street is poorly achieved, highly expensive and ruthlessly taxed. High street economics can work. High streets can evolve into profitable and desirable locations. Businesses need to embrace technology; they need to think big while acting local.
Technology as a game-changer
Can we avoid the dystopian vision of the UK high street compromising nothing more than trampoline parks and tattoo parlours? Yes – but it will take work and it will take Government support. The Government needs to understand that technology has fundamentally changed the way retail operates. The retail model operated by Amazon et al is not about making profit on each sale, it is about customer acquisition and right now that is skewed very heavily in favour of online companies. The premium paid for high street locations makes zero business sense in an ecommerce world. Why pay thousands of pounds in business rates and rents on a high street shop when a top ranking organic search costs a few pence?
Creating a destination on the high street
The frustration for many UK companies is that they understand the new retail economics. For retailers that means creating a showroom destination where products can be tried on; where a customer hovering the phone over the label can see Look Books, reviews, even other people wearing the item on Instagram. Goods can be bought – for the same or next day delivery – providing that essential customer data capture. Store size can be reduced, and with limited shelf replenishment and mobile payment, staff numbers cut. Lower overheads, a great experience and a successful customer acquisition model. With the right approach, companies can drive down costs, become far more efficient and create a model for customer acquisition that takes the competition to the online players.
Think like a technology business
Clearly technology adoption is essential to realising these business models. But this is not technology of the future; this is technology that is not only mature but already used by thousands of businesses. By integrating the core EPOS system into a raft of other applications – from loyalty platforms to accounting software, Retail Price Index (RPI) to inventory, workforce management to ecommerce sites such as Shopify and BigCommerce - even the smallest sole trader can gain the efficient business model of the largest organisation.
Companies are beginning to embrace the concept of a high street as a destination that delivers high quality customer experiences. They are investing in technology to become more efficient, to deliver consistency and, critically, drive down the cost of customer acquisition.