Last week I heard the funniest thing since the IT director of the now defunct Healey & Baker said ‘the internet is a solution in search of a problem’.
It came via a twitter exchange with the retail property analyst at one of the biggest surveying firms. Responding to comments that the @marksandspencer desktop website (newly rebuilt amidst great fanfare) was actually rather poor he wrote that it was good enough and that anyway ‘you’re never going to buy a suit online’.
Now the Healey & Baker comment dates from 1996, so at least he had an excuse. In 2014 though such wrong headed, ill informed, blinkered nonsense is not only inexcusable, it represents a damaging and dangerous mindset.
How so? Surely you protest too much!
Well no. And this is why?
You cannot understand how the retail property market is going to evolve without a deep understanding of how the online world operates. Who is shopping online? Why are they shopping online? What are people buying online? Which retailers are best at servicing this market? What fulfilment options are available, and what demanded? What are the tools available for bricks and mortar retailers to fight off the online challenge? And how will online retailers counter these?
Answering these questions will tell you:
Which retailers are likely to prosper
Which retailers are likely to wither and/or die
How the High Street will evolve
The future of distribution property
What’s next for out of town retail
And on top of that what marketing strategies are required to reach, engage and persuade shoppers to visit physical shops.
Recently the success of click and collect services has prompted property people to proclaim a victory for physical shops. An audible ‘told you so’ triumphalism has been rumbling around the commentariat. See, they say, you need shops to leverage the demand for click and collect.
But this is nonsense, and is looking through the telescope the wrong way.
For example take last Christmas at John Lewis as indicative of what is going on: Sales at its stores rose 1.2% in the five weeks to 28 December with online sales soaring almost 23%.
Spot the trend?
Shoppers aren’t using click and collect because they want to visit physical shops. They are using it because it is more convenient than staying in at home waiting for a delivery.
And as Planet Retail wrote this month ‘Despite the UK being a hotbed for click and collect, only two-thirds of the top 50 retailers currently offer the service. What’s more, only 14 percent offer more than one collection option (i.e. in-store collection, locker, third-party store).’
So imagine the scenario when online retailers crack either same day delivery (or even within a few hours in big cities like London) or delivery via enough 3rd party outlets that it becomes quicker and easier to order online than click and collect.
The answer will depend on how alluring retailers can make their shops and the shopping experience. In this vein an explosion of technologies are being developed to enhance the real life shopping experience but these are for a different blog post.
The point is that this is a brutal battle, click and collect alone is no saviour, and technology will be enlisted as weaponry by both sides. To believe that ‘you’re never going to buy a suit online’ when the reality is that dozens if not hundreds of retailers are already selling tens of thousands of them online already is truly a damaging and dangerous mindset.
Who wins and who loses this battle will affect the value of property up and down the country and if you don’t get the importance of technology in this equation then your forecasts are liable to not be worth the paper they are written on.
Now, who wants the argue the point?