Are We Once Again Becoming a Nation of Shop Keepers? The Demise of the Large High Street Retailer Need Not Spell the End for High Street Businesses

Are We Once Again Becoming a Nation of Shop Keepers? The Demise of the Large High Street Retailer Need Not Spell the End for High Street Businesses

It was sad but not entirely surprising to see that Jessops had gone into administration yesterday, the latest in a long line of major retailers to have gone out of business. These are businesses that have found it impossible to compete with the internet-only companies who sell the same services and products. So, for industries that are competing with internet-only businesses, is this the end of the High Street retailer as the Press tend to dub these things? No, in my opinion! In fact, I think the High Street will thrive again, but probably in a very different format from how it has evolved in the past few years.

No Service or Value in a Shop Experience…Well, Why Not Just Use the Internet?

The problem as I see it is that the massive High Street retailers who have gone out of business did nothing but sell items. The level of service and expertise added very little value to the customer experience. So why not just buy it on Amazon? You have to wait a day, but even if you don’t actually save any money whatsoever, you can get better, more informed information about the goods from the Customer Reviews, many of whom are clearly enthusiasts and experts.

To me, these massive retailers’ shops aren’t even shops: they are warehouses that you can walk into and walk back out of with what you want. There’s no real added value in my own experience of them as someone who is genuinely interested in everything they have to sell. These are the massive, impersonal stores that are no more than a way of buying something you knew you wanted before you walked in. In this category I would put stores like Waterstones and HMV, two other ailing retailers, as well as Jessops. I have asked for recommendations for books that are similar to what I am interested in and simply been pointed to the section in the shop where they are all situated. Just last week I went to buy a microphone from HMV because they now sell electrical goods and I had a voucher that I wanted to spend: I had to interrupt a sales consultant from his conversation with a colleague, was told they didn’t have any and hadn’t for a while, and then given absolutely no suggestions about what I might do about the clear need and desire that I had to spend money. In the end I bought an iTunes voucher: irony not lost on me!

The problem, as I see it, is that these companies have become too big: they have become the physical embodiment of an internet-only business: pretty much self-service, do your own research in advance of buying, and then pay and leave. The larger retail units drove the smaller ones out of business. So the record stores, the book stores, the specialist shops, went out of business because the larger groups could buy and sell the items cheaper. This isn’t a Guardian newspaper article: I’m not going to suggest that this is an abomination caused by the ‘big corporations’: it’s just a sad fact of business, as I see it, that you have to adapt or die. However, the ultimate loser is the consumer: gone are the experts, the people who started the business because they are genuinely interested in the product and can provide great, expert advice and recommendations. However, the entities that caused this in the first place are starting to die-out: Goliaths being felled by the David of internet retailers, many of whom don’t even have to hold stock at all and just buy-on-order.

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So, does this spell the end for non-internet based businesses or businesses that have an internet presence but also high street stores? In this day and age, is there anything that CAN’T be provided on the internet without any face-to-face human contact? The answer is, ‘virtually nothing’. So if everything can be bought online, any service provided online, what future does the High Street actually have?

Reconnecting and Establishing Value With People in Your Locality – the Increasing Role of ‘Local’

I actually think that the High Street does have a future. However, I think it will look very different to how it looks at the moment. I am sensing a push towards ‘local’ business again. Ironically, much of that push is actually coming from the Internet!

There is a big push at the moment from many huge companies to re-connect with communities that they, or their sectors, had abandoned. The large banks that took the money from customer deposits and then invested it in the commercial side (to fairly ruinous effect, in the end), are now marketing themselves, post-State bailout, as being ‘banks of the people’, with wee vans taking ATMs into communities, cuddly mortgage advisers giving jocular advice to fellow-actors in their own homes in TV adverts and an emphasis on the low-fi, local aspect of banking. Banks that did not have to rely on any State-sponsored bail-out like Co-Operative Bank have bought branch networks to connect them physically with their customers: in Co-Op’s case, several hundreds of branches throughout the UK.

Virgin Media is a company that could definitely be an internet and phone only company but which has High Street units: not huge, just enough to give them a physical presence. In reality, I’ve only ever dealt with them online, but it’s good to know the shop is there, a few hundred metres from my home. Virgin Money (the ‘good bit’ of the old Northern Rock) is starting to open branches through the UK. These aren’t your traditional bank branches, right enough. But they provide a new way for clients to connect with the company, aside from just phone and internet. And they provide an added benefit to actually having an account with them: whether or not you actually use it.

What is interesting here is that they are actually competing, for the first time in a long time, on service, customer experience and adding value to the experience versus companies where you can only interact via the internet or an impersonal call-centre.

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The Internet, the medium that allowed these new online retailers to kill-off the larger high street chains, is ironically leading the charge towards ‘local’ presence. Google and others return results for businesses in the vicinity of your search location, based on their proximity to you. So if you search for a solicitor, estate agent, mortgage adviser, electrician, builder etc etc you will get results that are ‘local’. Of course, there will be equivalents who are ‘web-only’, but I’m guessing that the search engines would rather have multiple companies paying them to get to the top of the results rather than two dominant internet companies who will clearly be no.1 and no.2 in the Google results and therefore not need to pay to get near the top of the rankings. But far from leading customer opinion, my feeling here is that the search engines are responding to the desire of customers who want to be able to use someone who isn’t based on the other side of the world or country.

But Being Local Isn’t Enough: How to Argue Against DIY – Provide Convenience, Extra Trust and a Great Customer Experience

In spite of the tendency that there is towards ‘local’ at the moment, there is always the non-local option: your iTunes, Amazon, eBay, Moneysupermarket, ComparetheMarket type of company. If you can do it yourself, why would you want to go local?

The answer is, for some things, you probably won’t go local. I can’t see why the majority of people would want to go to a record store when there are so many resources out there that can provide you with great advice about stuff you want to listen to, or why you would go to a book store when similar resources exist for books. I honestly think that these types of stores will die-out. And that’s a shame because frankly I really enjoy going into stores like this: but then everyone I know who bemoaned the demise of Woolworth’s hadn’t been in one for several years and I think the same could probably be said for these types of stores.

However, I believe that the future of service-based industries like, for example, our own industry (legal, estate agency and financial advice) have a future on the high street, as do utilities, banking, and clothing. But on one very big condition: we have to up their game significantly to overcome the tendency towards just doing it yourself: the ‘DIY Tendency’ of customers.

There are Internet-only companies in all of these sectors and these will only increase in their scope and wealth. However, I believe that they will hit the same wall that the large high street retailers did: complacency, taking their customer for granted, getting too big to care. The challenge for companies who decide not to go entirely web-based and who want to thrive on the high street is to provide what these large website/call centre combinations cannot.

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What is that then?

Let’s start with trust. If you know a company is relatively local then you can pop in if you want and get a face-to-face impression of whether the person advising you is actually trustworthy rather than relying on the advice of someone you’ve never met.

In a way, the more that rides on a purchase or sale, the more likely you are to want to use someone who, push come to shove, you can visit. You’d buy a £20 book online. But if you were buying a £1500 camera, are you more likely to want to have to option to return it to a shop for an instant refund or to have to arrange a return ticket, arrange a Courier to take it back, then wait for several days for the refund to be processed and hope that a company you’ve never seen will refund that money?

Linked to trust is the ability to judge competence: it’s difficult to do this at the end of a phone or via the internet, and it can be even harder to judge your own competence to make the right decision based on the research you’ve done into a subject. And in areas where a mistake can cost you dearly, this is most important. For example, you can arrange a mortgage through Moneysupermarket, but how do you know you’re getting the right deal?

If you get the right deal, it can save you hundreds of pounds per year. The easiest money to make is the money that you never spend! Is selling your home online with someone you’ve never, and CAN never meet, going to fill you with confidence that the actual person dealing with your transaction knows what they are doing? In these services: banking, mortgages, financial advice, professional services, for example, when they are done well they can make you money and, when done badly, they can lose you a lot of money. For this reason, the ability to judge someone’s competence face-to-face will remain important to people in my opinion.

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How about convenience? This relates more to dealing with a person-based business rather than a pure DIY website, but ultimately those people have to sit somewhere and this does give the High Street business an advantage over the solely web-based DIY service. Knowledge is out there all over the internet and very easy to find. You only need to go to Moneysavingexpert.com to have a bunch of people telling you their esteemed opinions on what you should do in every possible scenario. They will often point you in the direction of the ‘black letter’ rules and regulations that they actually get this information from. In previous generations lawyers, accountants, business advisers and financial advisers kept all of this information to themselves and then sold that information. Those days are gone. However, to hunt for that information takes time. To implement that knowledge takes time. To have someone else do it for you is just convenient.

And, finally, what about the simple satisfaction of having a good experience? As stupid as it might sound, there’s no reason why taking financial advice, property advice, legal advice, can’t actually be an enjoyable experience too. In the midst of all the calls we have to make on a daily basis to call centres, for all the time we spend ‘on hold’ to people we simply want to give our money to (including many of the large companies who have gone out of business in the past couple of years, incidentally), isn’t it lovely just to have a really nice call with someone who is nice, who is genuinely interested in you and what you are doing or to be able to pop in, say hello, and get an update on how your case is going face-to-face with someone who has to give you the right answer otherwise you simply aren’t going to leave! That call or visit can actually become the highlight of your day in amongst all the frustration of call centres and online support tickets with 5 day response times. Why can’t we provide this as service providers? We can!

We are already seeing many large companies, some of them mentioned above, who are making moves in this direction. This combined with the increasing importance of locality in search engine business results, I believe, will fuel a return to the High Street for many larger businesses and help smaller companies to maintain their position versus internet-only companies providing similar services.

The Future?

I believe that any company that want to survive or thrive on the High Street has to focus on the fundamentals of customer experience throughout and to not to differ too much in price versus the businesses that don’t have a physical presence. I also believe that such a company has to provide additional value compared with internet-only businesses, that they have to absolutely nail the customer experience and to use their physical presence to establish more trust and more convenience to the customer than someone buying online.

As this happens, we’ll see much more of a division between companies that are solely web-based and cater for the DIY market and those companies that use the web for marketing but provide the service on a personal, face-to-face basis for people who know that they could do it themselves but who are sold on the additional value of using a local-based service provider. The key will be to be local for as many people as possible and this will mean smaller units in more locations rather than less units in larger out-of-town locations.

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Service-providers with a high street presence who do not nail the customer experience, the convenience, expertise and trust aspects of what they provide will simply be killed-off by internet-and-call-centre providers of the same service as their previous or potential customers will see no additional value to going into the local store than to just doing it themselves.

That’s exactly what I believe has happened to the large retailers like Jessops: let’s not let it happen to the rest of us smaller businesses.

  

I'm Robert Carroll, Managing Director of MOV8 Real Estate, Estate Agents and Solicitors. MOV8 is an innovative and forward-thinking estate agency and solicitor firm with its Head Office in Edinburgh, UK. It is one of the fastest growing firms in the east of Scotland. I see first-hand every day what is actually happening in the property market and am regularly quoted in the Scottish Press in property stories. Through this blog I aim to give an honest, fresh and sometimes light hearted take on what is happening in the Scottish property market for anyone who is interested in that kind of thing...

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