The Demise of British Retail

Regular readers will know that every now and then I use my blog as a soapbox for things that just need saying. This week it’s all about how and why our high street is failing us and where the problems truly lie.

We’re Not Spending

So let’s look at the facts. We’ve been in recession since 2008 (momentarily out and then in again) it being the deepest since WWII. Unemployment stands at 7.8% (Source: Eurostat) and is the highest percentage since 1994 with the biggest cuts in the public sector and until October 2012, the minimum wage hadn’t been increasing inline with inflation.

So, not only were we not as well off, we were terrified; terrified of spending a bean, just in case we lost our jobs, our savings or our even homes. The media aided this along with the most over-inflated sensationalism, utilising their finest scare tactics, escalating national panic and selling millions of papers in the process. This lack of confidence stopped us spending, not knowing whether we’d be able to afford heating, food or water, let alone the latest flat-screen TV.

What we didn’t realise was that if those of us with disposable income carried on spending away as normal, the problem would have been significantly reduced. In 2001 a whopping 65% of our GDP was from consumer spending, which plunged to 63.73% which is a pretty huge drop, but we’ve clearly regained a little of our spending confidence and this shakily on the increase. So why are shops closing?

The High Street is Failing Us

EVERLASTING SALES

The following is a bold statement, but one I know to be true – we are being failed by our once loved high street; a high street that believes it can bring us all back by suspending themselves in a permanent state of ‘SALE’.

I was in Meadowhall at the weekend and walked past The Body Shop, a company many will know is close to my heart.  I was shocked and appalled to see a stack of 5 or 6, full-size Body Butters, wrapped roughly in cellophane with a hand written price tag of £15! I could hear the late Dame Anita turning in her grave as her beloved brand was cheapened and her beautiful creations were being sold off at just £3 a pop – which despite being a good deal (and were ‘end-of-line’), I would hardly be able to justify purchasing a Body Butter at the original £13 price-tag ever again, as it says to me that the full RRP is clearly over-inflated.

On entering the store and being totally ignored (I’ll get onto that), the brand spanking new and rather delicious Absinthe hand range (review and giveaway TBA) was being sold as buy one – get one half price!

These perpetual sales and eternal offers ultimately damage brands in the long run, and whilst it brings in customers temporarily, it cheapens a brand and looses their ability to justify RRP price tags. We’re not stupid. The experience and enjoyment has been taken out of shopping as from January to December, there are endless sale-bins to be routed through and new-lines, seasons and creations are over-shadowed by gaudy red banners. So the answer, lower the prices across the board, reduce full RRPs to encourage us back into the stores.

THE DEATH OF CUSTOMER SERVICE

Customer service in this country stinks. There, I said it. Consultants have a deeply engrained hatred towards customers, a hatred towards management and no faith, respect of love for the brands they supposedly represent. Maybe it’s due to the age-old problem that if you pay peanuts, you get monkeys? I don’t think the blame rests squarely on the shoulders of the consultant however; it’s hugely down to how management treat the staff, as expendable drones.

Management often under-equip your pissed-off looking consultant, removing all their powers but assign them with 100% of the blame. Instead of resolving their problems, they will simply use delay tactics until the staff member leaves and can simply be replaced.

I find myself continuously ignored, dismissed, rushed and disregarded as a customer. I don’t enter a store feeling welcomed and I rarely leave feeling inspired. There are massive exceptions however that I’m gradually beginning to understand. Firstly EVERY Lush store I enter, I am immediately greeted, shown around, inspired, and nothing is ever enough for their consultants who will treat you like a friend, but are always sensitive to signs that every so often, I may wish to be left alone. M&S are amazing, often employing older staff, I am left to shop but as soon as I need help, I am responded to as if I was royalty, with kindness and respect; the same can be said of John Lewis, ALDI and Matalan!

THE GREY POUND RULES

Today’s young people haven’t got a penny, not a bean, not a sausage, with 21% youth unemployment and tuition fees blown out of control. All those stores that think they’re hip, cool and down with it, marketing to sexy young people, are way off the mark. Powers need to be focused on the 50+ market, the grey pound. They invested wiseley, are often drawing both private and state pensions (although that’s been pushed back); these are the people with disposable income. Their mortgages are paid for, lowest level of debt, kids are out the house, let the good times roll.

More Are in Danger Than You Think

Let me tell you about the H-Score®. It’s a number between 1-100, assigned to a company based on their financial health, taking results from their financial reports and comparing how closely they resemble those of the companies who failed. There’s a likelihood that 1 in 4 companies with an H-Score® of 25 or less will fail. The following data was correct as of the 5th November [Source: Company Watch].

HMV: 4, The Hut Group: 2, New Look: 8, House of Fraser: 9, Pret a Manger: 4, Debenhams: 11. So these are all on ‘death watch’ and it could go either way. My two biggest predictions over the last few years have been both Debenhams and House of Fraser, with stores that look like they’re falling apart at the seems, bad branding, poor stock levels and lacklustre customer service.

What can be done?

DEMAND MORE / EXPECT MORE

It’s time to be vigilant, and our high street needs treating like a rude and lazy teenager. If you receive bad customer service, complain – numbers, addresses and email contacts are always available on a brands website. Don’t take crap from customer assistants, you’re in charge, you’re the customer and do you know something? You are always right. You should always be treated with respect, expect nothing less and retail businesses need to learn that without you, there’s no them. High street stores no longer have the strongold on retail they once did, as we can, and do, revert to shopping online so be vigilant.

LISTEN MORE / DO MORE

Retail businesses need to listen to their customers, ask their opinions and introduce solid mystery shopping programmes to route out front-line weaknesses. Stand by your brand, don’t think we need everything to be plastered with sale banners and temporary price reductions with tatty and bulging rails of crap, just make sure you’re charging an honest and fair RRP, it’s all about value of service. Bust long queues and don’t leave potential customers looking lost, but equally, don’t pounce, push and provoke. Bring the experience back to shopping and treat the customer like you need them, because you really do.

Finally, town centers and councils need to ban the operation of ‘chuggers’ (charity muggers). The man or woman collecting for Huddersfield Guide Dogs, or singing to raise money for McMillan Cancer Research is amazing, and there should be more of that, but upper-middle class undergraduates, smarming their way over to try and guilt me into setting up a direct debit of £10, £15 or £20 a month, I’m having none of it. You may be unaware that they’re actually paid to do this, and paid really well at that.

  • Lizzie Maitland

    The current recession was built on the irresponsible spending and provision of credit to millions. Yes the media over sensationalised it (Robert Peston should be hanged for his self-aggrandising reporting of the banking collapse) but quite simply the recession is the result of too many people over-spending when they really couldn’t afford it. So thé option of keeping spending really wasn’t a feasible one. Simply put, the well ran dry. Not enough people have enough disposable income to support the economy.

    As for the unemployment rates there are a lot of reasons for it. Firstly, we have far too many people going to university and then expecting to get graduate jobs. It doesn’t work that way. There is a finite number of grad jobs, you can’t expect companies to magically create graduate jobs because more people are going to university. As for public sector unemployment, the previous government reduced unemployment by creating public sector jobs that essentially were little more than paper shuffling (I have done a couple of these jobs so I speak from experience). These jobs have now been cut. There’s a lot more going on than you’ve covered.

    Also if you want to discuss shops that are overpriced, I would put lush at thé top of my list. Their products are not high quality and yet they are relatively expensive. I wouldn’t touch them with a barge pole and I’m quite surprised that you, as an established and respected beauty blogger, are shopping there.

    I think customer service in this country is a huge problem and definitely agree that John Lewis and M&S are among the market leaders. The high street needs a USP to outperform online shopping but with the general trend of rubbish customer service I do worry that the British high street is on borrowed time…

  • I left the retail enviroment just over a year ago now (I was an account manager for a concession). I decided to leave due to the increasing pressures on managers to proform but as you mention have any kind of power taken away from them.

    It seems that pay is going down but the hours and workload is increasing. I am now classed at ‘too expensive’ because of my experiance (10 years in beauty retail). If I was working over Chritmas this year I would of only got Christmas Day off (unpaid).

    They are turning off the more experianced staff away by turning to the younger and cheaper work force, scarifcing customer service because in my experiance they don’t care – they still get paid at the end of the day.

    I loved working in retail and I loved customers – nothing gave me more pleasure than spending time with them and solving needs. These days they want people to get in, spend money and get out. I could easily name a few beauty brands where this has been said to me in interviews.

    This was really insightful and I agree with what you say: The media I think have gone overboard with it and blown it bigger than it is. Yes, I have had to cut some of my spending but it made me realise a lot more I have the power to spend what I have where I want.

  • Loved reading that comment! I think my point, which I probably didn’t put across as well as I could have, was to spend if you can spend and have the disposable income to do so, but completely agree with the way the credit system basically collapsed.

    I can imagine you deliver excellent customer service which is worse in a way, because then the customer is left thinking, well if she can be so incredible polite, attentive etc, then why the hell do others behave as they do!

    As always Ali, I love your opinions and comments on my articles and thank you for taking the time to leave another great one!

    Thom

  • Ali

    I’m not sure I agree with the “ignore it and keep spending” theory. Too much of the pre-recession spending was funded by cheap, easily available credit. Credit that was handed out like sweets by the main engineers of the current global financial mess ie: the financial sector.

    When the poop hit the fan, that cheap credit suddenly became very expensive in the form of increasing interest rates. Add to that the steadily climbing cost of living, the perpetual threat of unemployment and the fact (which you point out) that the average consumer hasn’t seen a decent increase in income in years.

    Little wonder folks quit spending. They quite literally can no longer afford to. I expect there’s a lot of people out there who are wishing they’d never got on the spending bandwagon to begin with because it has resulted in a debt load that is crushing the financial life out of them.

    I work in retail and do not ignore my customers. I quite enjoy them. I like what I do, just not where I’m doing it at the moment, but I’m working on changing that. However, I agree with your statement about managers. But I think I understand why they behave like they do nowadays. Their jobs are as much under threat as the staff on the store floor. The company I work for fired a big chunk of its lower and middle management last Spring, so their all running scared. Suddenly they are expected to perform or it’s their butt out the door,

    One other thing I’ve noticed; good customer service hasn’t existed in this country in a very long time.Lack of competition and a captive audience as it were meant keeping the customer happy didn’t matter. Cue the arrival of technology that has given people the freedom to travel (shop abroad) and buy online from any seller on the Planet. So in some respects, the consumer no longer has to put up with high prices and shoddy service. The British service industry and retail sector have, for the most part, been too slow in accepting this change. Failure to adapt, combined with outmoded business practices means your no longer in business.

    Just my opinion. Great article Thom!

    Ali

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