Three big high street retailers have gone into administration this week and it’s only Thursday. This follows a scary pattern which has been developing over the past few months whereby big iconic brands have been disappearing overnight. Unfortunately it doesn’t look like this pattern is going to stop any time soon.
Just a few days ago it was reveled that Begbies Traynor (a renowned business recovery firm) noted a 35% increase in the number of retailers experiencing significant distress before Christmas. It also transpires that they have a list of 140 UK high street retailers that are on a “critical watch list” and are sadly under immediate threat.
But what can we learn from all this (besides the fact it is a good time to be in the administration business)? I guess the most important lesson is that change is vital. Now, more then ever, is the time for businesses to evolve and keep up with the ever changing marketplace. Businesses can’t rest on their laurels, they need to make prompt and bold decisions. I am not saying the the lack of adaptation is the only factor to the demise of some of these business, but I do think it’s a big one.
For example, take a look at Blockbuster. When I was a child, they had control over the market. If you wanted to rent a VHS, Blockbuster is where you went. When the online rental market was born, this was the time for Blockbuster to evolve. They had the brand awareness and strength to do it. If they had done it well, LoveFilm and Netflix wouldn’t have the huge market share they have now.
You can apply the same principle to HMV and online streaming. In this day and age, it is imperative for businesses to keep up.
Retailers can no longer rely on customer loyalty alone. I am a big believer in building up customer loyalty, but it’s not as strong as it used to be. In the current economic climate, countless customers are leaving their favourite brands in favour for cheaper and more convenient options.
This doesn’t mean that the high street will eventually die out. People love going out to browse through shops and some retailers are doing very well. Interestingly enough, we have seen an increase in successful independent retailers in the last year or two. They have the advantage of being able to evolve much faster then the bigger chains.
However they can’t rely on brick and mortar alone. In this day and age, an online presence is vital. But it doesn’t necessarily have to be the age old “mail order” model. Consumers are increasingly opting for the best of both worlds by using the “click and collect” option whereby they can order online then collect their purchase from the shop shortly after.
Really it’s up to each and every business owner to look and see which route works best for his or her business. The key thing is to keep adapting and stay current.
It is terribly sad to see so many big businesses falling into administration and our thoughts go out to all their employees. I will miss some of these shops, however the lessons are there for all of us to learn from. As creatures of habits none of us likes change but in this current economic climate, adaptation is vital for businesses.