Crisis on the High Street but E-commerce points the way forward

The BBC’s three-part documentary ‘Robert Peston Goes Shopping’ made for grim viewing recently, showing the British high street hit since 2007-8 by a perfect storm of recession, very high rents driven by an over-inflated property market and punitive business rates. At the same time, disposable incomes have dropped by 7% in real terms in the period and shoppers have cut their cloth accordingly. Sainsbury’s boss Justin King reported that the average shopping basket dropped by 5% in size in Q1-Q2 2010 and that it is yet to recover, a trend reported widely across the attractions sector this summer and last.

At the same time, out-dated business models from video rental to shoe shops, record stores to Woolworths have been made obsolete in a matter of a couple of years by on-line shopping, a phenomenon which has see the British making 10% of all on-line purchases made world-wide !

The high street that we knew is unlikely to ever make a comeback and one in seven shops in the UK lies empty according to retail research group, Local Data Co. (@LocalDataCo), a figure that has remained at this level for several years but which is forecast to rise further to as high as 1 in 3 by 2020 as online commerce takes and ever greater hold.

Peston reports that E-shopping is becoming the norm for many, whether home delivery or ‘click and collect’, resulting in unlikely winners such as the Royal Mail, suddenly boosted by a huge rise in demand for parcel delivery of all those Amazon packages and Argos, whose model of on-line catalogue shopping followed up by collect in store has proved immensely popular. Surveys show that over 75% research their purchase online before shopping and will buy that way if the price and convenience is right for them. In the meantime, with penetration of smartphones in the UK mobile market expected to rise to 90% by 2016 and with global tablet sales having risen by 100% in 2012 and still rising, consumers are m-shopping in increasing numbers when they are out in town.33% are already treating shops as showrooms, carrying out a quick price comparison and then ordering on their mobile or tablet to collect in store or have delivered back home, whichever is most convenient.

The UK online fashion retailer, ASOS has been at the forefront of another new phenomenon, utilising S-retail, a business model built almost entirely on social media with users sharing and creating demand for the products themselves at virtually nil cost to ASOS themselves (for example, they are the biggest online retailer in Australia despite never spending a penny on marketing there). The smartest retailers are following them in targeting shoppers using Facebook communities and building Twitter followers, although clearly, this is a strategy that can only work for products that consumers can get enthusiastic about and which they want to engage with. Leisure is just such a product of course and at Petersham Group, we will be looking out for examples in our sector of organisations and businesses that do more than just pay lip service to the opportunities created by social media, both to drive business in the first place and then to retain it and use it to drive repeat visits.

One thing is for sure, the days of attractions and museums spending most of their marketing budget on printed collateral and paid-for advertising are long behind us and those who want to compete in this new environment need to acknowledge and react to these trends and to use their imagination to take advantage of these opportunities.