“Retail isn’t dying; it’s evolving. The real problem lies in how we talk about it. Until we stop equating retail’s health with the state of the high street, we’ll keep missing the real story: growth, innovation, and a consumer that’s already moved on.”
Jon McNeish, CEO of MacGregor Black
The retail industry isn’t the only one to be slightly fearful for its future. Talk of economic recovery across the board feels premature, and global imbalances have everyone on edge. But the prevailing winds of doom and gloom in retail paint a picture that might not be as accurate as it first seems.
Detaching High Street performance from overall retail patterns may be its first necessary step. MacGregor Black CEO Jon McNeish looks at whether retail should and could present itself more successfully when it comes to its future forecasting.
The Fall of Familiar Faces
WH Smith’s brand decline in recent years has felt like a slow and painful one.
Playful social media accounts successfully triumphing the sighting of more ‘brown tape’ solutions to weathered flooring or botched price labelling became more than a metaphor for a High Street business that, having stood the test of time for more than 230 years on the High Street, appeared to be in its final throes.
The recent news that WH Smith is preparing to offload its 500 High Street stores to new owners and concentrate instead on its travel-related operations, predominantly in airports, train stations, and travel hubs, was met with the usual media forecasts of doom and gloom for retail.
But when you take a peek behind the headlines, we can see WH Smith is making reasoned business decisions. A whopping 85% of its trading profit comes from its fast-growing travel retail outlets. What business wouldn’t focus on its profit-making elements and make the tough, but necessary, decisions about the parts that aren’t working so well anymore? A month feels like a long time in retail, never mind 230 years!
The Misalignment Holding the Industry Back
Nostalgia for a once-loved brand can do funny things to the mind. It’s an incredibly popular way to hook readers, to hark back to halcyon days of buying newspapers, magazines, and greeting cards from a stand. But let’s be honest here; we can make those purchases far easier, on a daily basis, online. Should the media really be so negative about WH Smith evolving?
Retail analysts would be better served talking more about its future than bemoaning the setting of the sun on a rapidly changing concept of ‘the High Street’ as being its North Star. Retail’s issue isn’t that it’s struggling per se. No, the bigger struggle is that it’s far too closely aligned with performance on the high street. The two, as we know, have become so very different.
Need another example? Sainsbury’s 3,000 job cuts, announced at the start of the year, come not because it’s doing poorly—its Christmas trading was up 3.7% year on year, increasing its market share in the process—but because they’ve seen a shift in consumer behaviour. Admittedly, the government’s NI increases from the November budget are adding huge financial strain, but those job cuts are coming more at senior management and HQ levels, and because of the introduction of more hot food and ‘food on the go’ provisions on the shop floor, the popularity and necessity of in-store cafes have diminished dramatically.
It’s a lesson for any business. Stick rigidly to what you’ve always stood for, or make hard business decisions to focus on the profit-making elements that customers do value you for? If Marks & Spencer had stood still all these years, it’d still be selling nik-naks from a single market stall in Leeds.
A New Narrative?
Let’s be honest, we all understand bad news can attract the media headlines far more readily than any good news, so does it come as any surprise that the ‘bad’ headlines from WH Smith and Sainsbury’s get more widely covered than the fact that someone like Evri, the parcel delivery giant, delivered 173 million parcels in November and December, a 12% increase on the previous year? Yodel, one of its main rivals, had to offer embarrassing advice to some of its key customers that they were going to struggle to meet surging demand over the festive period.
I know what you’re all saying: the chances of Evri or Yodel actually delivering one of our parcels to our door, instead of over a garden fence or to a house inexplicably five streets away, are slim. But that’s a subject matter for another day, perhaps.
With news of Amazon’s 10% increase in net sales reaching $187.8 billion in their quarter that includes Black Friday and Christmas trading periods, we always knew what to expect. This is how we shop today. The convenience of having the proverbial shop shelf on our phone or laptop screen, of not having to do loops round a retail site that lacks parking, or of paying top dollar for nipping into a city centre. Retail and the high street are no longer the same thing.
So aren’t these the more telling signs of retail’s continued potential? Signals from those operators are more aligned with how we, as consumers, like to shop. Deliveroo, more akin to serving our Saturday night pizzas to our door, made a telling announcement prior to Christmas to say it would be partnering with independent retail champion Not On The High Street to support a rapid delivery offering that could see some buyers get their gifts to their intended recipients within 30 minutes.
Maybe ‘big retail’ needs to be more vocal about such pioneering developments to talk up an industry that feels embattled. Isn’t this a more compelling indicator of where retail patterns are heading and have been for some time now?
Names like WHSmith, Marks & Spencer, and Next have long been purported retail bellwethers when it comes to performance. But the point remains that these have traditionally been High Street retailers, and they have long appreciated the difference between high street performance and retail performance.
Immediately after Christmas, the British Retail Consortium offers its annual overview of what is obviously the most important time in the retail calendar. It wasn’t pretty. Once again, though, the media’s view of ‘retail’ is focused heavily on big high street names. Could the BRC have used this opportunity and its undoubted influence over the media to have painted a slightly more upbeat picture for the industry? It’s the British Retail Consortium, not the British High Street Consortium. Would it have been so bad to point at Evri’s successes or to what radical moves disruptive operators like Deliveroo were making?
It’s churlish to suggest the retail industry is doing just fine. We know there are enormous challenges ahead, but it would be a boon for everyone if those key players within it could just start to point more often at some of the great things that are happening.
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