<img alt="" src="https://secure.cope0hear.com/215242.png" style="display:none;">
Onecom blog post

Is online causing the death of the high-street?

Onecom ,

There’s been a noticeable change in consumers' shopping behaviours over the past decade, especially their relationship with the high-street. Online giants such as Amazon which started the e-commerce revolution are continuing to soar in popularity; moving from just books - diversifying time and time again – to launch their latest venture within groceries. Whilst on our high-streets there's an increasing number of consumers turning to an online, often mobile platform, to embrace a multi-channel experience or the pure-play online consumer landscape. The question we must ask ourselves - especially in light of the recent wave of well-loved brands closing their bricks and mortar doors - are we facing the death of the high-street?

The high-street today

House of Fraser has been the latest department store to have fallen victim to the struggles on the high-street. They have recently been bought out of administration after it was announced that 31 stores were to close, shortly after Homebase was purchased for £1, and Toys R Us and Maplin’s closed their doors . So, what is going wrong for high-street retailers? According to House of Fraser’s chairman, the retail industry is currently experiencing a “fundamental change” and that their business “urgently needs to adapt”.

One thing is for sure, retailers are finding it hard to move away from their large store units and are struggling to move from a legacy in-store only presence to a multi-channel marketplace. The physical retail units that they operate are often costly, especially in the case of department stores, and operating such large units can swallow up profits. All of these factors have contributed to the UK having the worst year on the high-street of this decade.

However, there are some stores truly embracing online platforms. One that is doing particularly well is Spanish fast fashion retailer Zara. They have been able to move from an in-store only business model into a brand which now has a particularly agile and efficient supply chain which enables both in-store and online purchasing, with turnarounds from drawing board to store in just 3 weeks. You can return orders in-store that you have ordered online. Whilst this isn’t revolutionary, their mobile application allows you to return your outfit so with one scan, you are out the door. Also, they have live stock availability with a supply chain agile enough to move available stock between stores at the customers demand, enabled for both the consumer online and in-store. This way of working could be argued as key to their continued expansion and success across the globe.

Are online moving in-store?

Within the last few years we have seen a shift where pureplay online retailers “born in the cloud” are now moving in-store. The digital-first, ultra-fast fashion retailer Missguided have opened their first store outside of London and appears that growth on the high-street for them is about to emerge. Although, Missguided were not the first to pioneer this idea.

Amazon Books in the US, opened their first store in Seattle in 2015. They offer prices that mirror those on their website and the only sell stock that is chosen based on customer ratings, pre-orders, sales, popularity on 3rd party sites and the curator’s judgement.

The retail space is going full circle where digital-first retailers are understanding the value in physical stores. On the other hand, the physical-first stores are moving away from the physical to online but are finding it difficult to do so in general than the digital-first models. Could the future of the high-street - perhaps old department store units - be plagued by digital-first retailers?

Can technology bring this back together?

Whilst the outlook can seem bleak, it is reassuring to see that 62% of consumers still shop in-store and are still heavily reliant on this environment. Therefore, the answer is an omnichannel approach. There is an ever-increasing shift towards the function of omnichannel shopping embedding the use of e-commerce, m-commerce, social media and email shopping into the mix. The fluidity and unity in their platforms should be well equipped to survive the disruption that is happening in the retail space. You often see customers on their phone in-store; whether it is taking photos, visiting the companies’ application or website, we are starting to integrate in-store and online experiences.

Technology to understand your consumers is becoming more prominent, and whilst it can seem like “big brother is watching” to some consumers, understanding purchasing habits will be fundamental to success. Businesses are often adopting analytics to understand the big data that they have collected to know more about their customers. Knowing for example, at Christmas you may need to spin up more cloud servers to enable your website to work at peak performance for the demand, or the introduction of tablets in-store so that when clothes are sold out, you can direct customers to a device to complete their purchase. 

With more awareness of these new technologies, some retailers are moving some of their IT expenditure from a capEx to an opEx model to benefit their customers. It can give greater agility and scalability, delivering the optimum customer experience during peak times whilst retaining control over costs. 

Want to read more of our latest insights? Visit our website here. For more information, please email info@onecom.co.uk