It is hardly controversial to suggest that the high street, as we know it, is doomed. Since the internet started to make inroads into our shopping habits, the high street has been swimming against the tide to compete with the many advantages that the internet has. I remember my first experience with online shopping was with a company called CD Wow. I could not understand how I could buy DVDs at half the price of HMV or WH Smith and have them delivered to my door. I was sure it was a scam. Once I realised how easy it was to buy online and have the item with me in a few days, I never really looked back and CD Wow, followed by Amazon, have had a lot of my money.
For a long time, the high street has tried to compete by reducing prices. Specific retailers, such as HMV, have moved away from concentrating solely on music and film, and have branched out into electronics, books and increasingly memorabilia such as Pop-Vinyl. High street shops have also moved away from keeping large inventories of stock on-site and I’m guessing we have all walked out of shops such as Currys, PC World, John Lewis, Schuh and others frustrated that they did not have in stock what we wanted. The staff in-store, inevitably, direct us to their website where we can order the item we wanted. If this was a boxing match, it would be like a heavyweight (the internet) squaring off against a featherweight (the high street) as the featherweight has one arm tied behind its back (low in-store stock) and is using the one good arm to punch itself in the face (directing customers online).
John Lewis has today announced their half-year profits have fallen by 99%. I’m not actually surprised. My only surprise is that John Lewis have plodded along for so long without such a drastic crash. The leaders of John Lewis are blaming this performance on challenging market and political conditions such as Brexit and a prevalence of promotional offers from other retailers. I think it is much more basic than this.
Let’s turn our attention to why people shop online over the high street.
Quote taken from Daily Mail. Link to article at bottom of this post.
Taken from BBC. Link at end of this post.
I’ve just done a little google-fu to compare John Lewis with Amazon. This is not supposed to be a comprehensive exercise, but just a quick snapshot of the difference between the two retailers. I’ve compared fragrance, kitchen devices and electrical.
Nespresso Expert Coffee Machine
John Lewis: £249.99 (Magimix) or £202.49 (KRUPS)
Boss Eau de Toilette (100ml)
John Lewis: £47
Samsung UE49NU7500 49-Inch TV
John Lewis: £649
These were honestly the first three things I searched for. Why did I choose these? I recently bought a new TV. I’m also looking for new aftershave and was browsing new coffee machines earlier. Like I said, not particularly scientific but I dare say that this would be replicated for many items John Lewis sell. Generally, the internet is cheaper. If you are shopping for a new coffee machine, then the Nespresso Expert is a great choice. I have one and can’t find anything better.
There have been times when I have wanted an item immediately. I’ve walked into a high street store, such as John Lewis and wanted to buy an iPad, activity tracker, laptop and so on. I browse the display and choose the item I want. I wait for a member of staff to become available. I wait some more. I wait a little more and eventually I either leave the store empty handed or someone comes over and asks how they can help. A few minutes later I am told they do not have the item in stock, but it can be delivered within a few days. Normally, I leave the store and before I have physically left the premises I have ordered the item for next day delivery through Amazon Prime.
Expert Opinion and Advice
It’s great when you can go to a store and get advice about a purchase. But what good is that advice, if the store can’t then meet your need and supply you with the product when you want it? With information being available in quantity and quality for free via the internet, even this supposed advantage of expert advice on the high street is being eroded. If you go to a store, you will get a single opinion of one member of staff. Online, you can quickly skim dozens, hundreds or thousands of reviews of a product before buying.
With the retail battleground skewed so far in favour of online shopping, retailers have had to adapt to meet this challenge but in my opinion they are just making their own chances of success more unlikely. The high street will never be able to compete with cost or convenience when it comes to online shopping. Think about it, a large electronics store can either have products stored at dozens of locations around the U.K. to cater for shoppers going into physical stores. Alternatively, they can have one centralised warehouse with a fleet of drivers ready to deliver items within a day or two or being ordered. An example from personal experience, I ordered some protein supplements from MyProtein at 22:00 and they were delivered before midday the following day.
It is far cheaper to run an online business and much easier to fulfil customer needs than it is from a high street store. So, what is the high street’s answer?
Reduce Staff Levels
Over recent years there has been a very real reduction in the number of people working in retail. The Guardian (link at end of article) reported in July this year that a fifth of retailers were looking to axe jobs in the coming months. This is not the answer. The one advantage that the high street has is the face-to-face interaction with another human being. Promote this advantage. I’ve lost count of the number of times I have been in John Lewis, HMV, Waterstones or Next and walked out as I can’t find anyone to help me. I end up taking my iPhone out, firing up the Amazon app and ordering what I wanted as I leave the store. I want to give these shops my money, but if they don’t have anyone to take my money then how can they hope to compete or survive?
What is John Lewis?
Another tactic the high street has adopted to meet the changing nature of retail is to diversify. The retailers move out of their niche and start trying to appeal to everyone. This is also counter-productive. My local John Lewis has twenty-plus TVs on display, as well as a huge number of phones, laptops and audio equipment. The high street cannot compete with the internet for choice, so why fight that battle? Focus on quality. Know your niche and stick to it. Have those products in stock and have the staff ready to take the sale. What is the point in having twenty variations of a product on display if half of them are not in stock? Why reduce staffing levels so that the few members of staff still employed spend their time having to check when the items will be able to be delivered, whilst the customer can order it themselves through Amazon for a lower cost with an earlier delivery date?
It is not just with their products that John Lewis are attempting to diversify, but also it seems with the customer they want to attract. For a long time, John Lewis was seen as a retailer appealing to the middle class and above. However, they have increasingly moved into having their own “basics” range of products, and their Price Match policy (“never knowingly undersold”) is in my opinion counter-productive. You cannot appeal to everyone without alienating your core customer base, so stop trying. Know your customer and appeal to them. Is John Lewis trying to be a premium retailer appealing to those with lots of disposable income? Or is it trying to attract those from poorer backgrounds? From a marketing standpoint, I can’t see how you can effectively attract those two customer groups without alienating the other.
It would take a brave person to look at John Lewis and say the solution is to hire more staff, reduce product range and scrap the Price Match policy, but if I had the keys to the kingdom that is exactly the first three things I would do. The John Lewis brand is not yet beyond repair, but if they decide to go the other direction and fire more staff, increase their product range and double down on the price match policy then they are just voluntarily tying one arm behind their back and punching themselves in the face with the other arm.
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Daily Mail: https://www.dailymail.co.uk/money/markets/article-6164241/How-did-John-Lewis-let-virtually-profit-making-wiped-space-just-year.html