How can retail remain relevant?

Empty High Street

With there barely being a week go by without the collapse of a British retail business, it should be hitting home to the remaining companies that they need to evolve or they will go the same way.

The death throes that have been all over the news over the last few months have all had a common thread. Comet, Jessops, Game, HMV and Blockbuster. All of them have been large retail names, selling products that evolved faster than the stores that stock them. Comet and Jessops had overheads that meant they could never compete with the likes of Amazon and a growing group of eBay stores. Game, HMV and Blockbuster are facing their markets being eaten up by streaming services (Netflix, LoveFilm and Spotify) and online purchasing (iTunes, Steam and Google Play).

Just think, 5 years ago, the idea of sitting on the bus and downloading the latest album from your favourite band seemed like a far off future. Here we are, 5 years later and Apple have announced they have sold their 25th Billion song on iTunes. Yes, the iTunes Store was around long before iOS, but with over 500 Million iOS devices out there in users hands, it’s clear that iOS was a shot in the arm.

It’s fair to say that content; Games, Music, Films, TV, etc.. Are on their way to becoming a completely digital product. Not today and not tomorrow, but as soon as higher speed internet reaches more people, the ease of access will remove the last great barrier from buying Blu-Ray box sets. The streaming services will be the ultimate winners in my opinion. Why pay £14 for a CD album, when you can pay £9.99 to access every song in Spotify’s library on any device you own? What about buying a £15 DVD when £6 per month gets you access to a movie streaming service.

There will be a popular shift in mindset that will be sped along should/if/when Apple jump in to the streaming game. Only Apple and Amazon are in the position to offer a unified streaming service of Music, Movies, Books and TV. The first one to do that right will make a huge amount of money. Mountains of the stuff, more than they already have.

This will be a problem for the music labels, movie studios, publishers and TV studios and networks who will be boxed in to lower margins as the new distributors take control. At least with retail, they could always take their products back. Not so simple when it’s digital.

While this is the shift for content retail, what about products?

Technology products like the kind being sold by Comet and Jessops have had their margins reduced by the global economy and competition. Online retailers have far lower overheads (and if you’re Amazon operate at next to no margin on some products) and thus can be more competitive with their pricing. This allows people to shop around from home to get the best deal. Heck! Even shop around when in a store. The communicator revolution has meant that you can check on the price of a product in competing stores from the one you’re in. It’s at that point you add up the saving and what, if any, the impact of shipping cost and time would be.

Some retailers have embraced new technologies to their benefit. Tesco for example, have an iOS app that allows you to search for a product in the store you’re in and it then gives you exact directions to that product (not just the isle, but the shelf and position on that shelf). Sainsburys compare the price of the things that you are buying (when you spend more than £20) with the prices in the other supermarkets and gives you the difference at the till.

These companies are using technology to build a better retail experience. Companies that don’t, will end up with pictures of their store fronts on the BBC News homepage with the text ‘another high street giant…

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