UK high street's not dead but is being radically transformed
23 January 2013
Retail marketing expert Dr Scott Dacko says the UK high street is in the grip of a radical transformation which will see shops becoming more like depots in the future.
Jessops, Blockbusters, HMV and Comet have all gone to the wall recently prompting headlines declaring it is the death of the British high street.
But Dr Dacko says these big retail chains are the victims of consumers’ growing ‘divergent buying preferences’ and the performance of Primark and Argos has shown that there is still life in many brick-and-mortar retailers yet as long as they adapt quickly enough.
Even though more and more people shop online, Dr Dacko doesn’t believe the high street will soon become deserted. For many retailers, a strong online presence will be absolutely imperative, but he says high street shops in one form or another will still be around.
“The recent results we are seeing from retailers are part of the gradual transformation of the high street,” said Dr Dacko, who is Associate Professor of Marketing & Strategic Management at Warwick Business School.
“Increasingly, businesses will have to provide a seamless online and offline experience for the shopper. They also need to make sure people have a reason to go into their shops by offering unique value. That could be exceptionally strong value such as from 99p Stores or Iceland or in providing the most delightful of shopping experiences.
“But I also think over the very long term a number of shops will increasingly become like hubs or depots where it is convenient for people to pick up orders placed online, and clearly we are seeing that ‘click and collect’ is growing in use.”
Dr Dacko believes retailers have to be smart as well as nimble in their dealing with three sources of competition that have hit the high street.
“The first are the online players, like Amazon, with their lower relative costs and prices,” said Dr Dacko, who has had a book published entitled The Advanced Dictionary of Marketing. “The high street has to deal with high fixed costs and higher labour bills, which, for example, put HMV at a competitive disadvantage.
“These online companies have lower costs and a well-developed system for providing customers with what they need.
“The second source of competition are the stores offering a wide range of markedly lower priced, very good value items and with the tough economic conditions, more and more consumers are migrating to them. We have seen Sainsbury’s and Tesco struggle as Aldi and Lidl have gained ground in the food market. The strong results from Primark fit into this category.
“And then, too, there is part migration by some mainstream consumers to the high end of the market, as they periodically look to enjoy higher quality goods and superior in-store shopping experiences. This is how Waitrose is doing so well.”
Dr Dacko warns there could be more big name casualties as this transformation of the high street continues.
“These dying companies have not been sufficiently adept with their marketing strategies,” said Dr Dacko. “For one thing, many have not had a sufficient online impact, which is increasingly vital. HMV tried to diversify into live music and electronics, but such actions tried to compensate for rather than address the core problem of lost sales to online retailers. There will be others, too, who, similarly will not get their combined brick-and-mortar and online retail marketing strategy right.”
Dr Scott Dacko teaches strategic marketing on the Warwick MBA by distance learning, the Warwick Executive MBA and MSc in Business (Marketing). He also teaches business studies and marketing strategy on undergraduate courses.