Retail Survival – The bigger they are …!

This week the Arcadia Group (Topshop, Topman, Evans, Wallis etc) announced the closure of its flagship Topshop store on St. Stephen’s Green in Dublin, along with 22 others throughout the UK and Ireland as part of a rescue plan for the group. But Arcadia is just the latest retail giant (c. 22,000 employees) to be shaken by changes in the retail sector, in the US household names such as Gap, Abercrombie & Fitch, Victoria Secrets etc, have all had their share of bad news this year too. This has led many commentators to suggest that the omnipresence of online retailers means that “traditional” retail businesses are now just simply unfashionable, and it’s no longer a question of “if” but of “when” and “how many” are likely to suffer the fate of the dodo!

But is this prognosis correct? And, more specifically, does it really only apply to those that refuse to accept the need to innovate in ways other than following their online nemeses? After all, Topshop, Gap and House of Fraser all have online offerings. Meanwhile, for example, Penney’s in Ireland or Primark in the UK with a more traditional fast fashion retail model that continues to grow and they have no plans to introduce an online store, but how is this so? We believe that for every problem there is a solution, the challenge is finding it. However, the first step is clear and obvious: you must be completely self-aware of your ability to innovate and have a stomach to implement the changes that will inevitably follow. This article looks at the stages retailers, and other organisations, need to undergo to assess their readiness for change, identify the right innovative solution and successfully implement it.

Innovations in Retail

The history of retail is one of innovation – after all retail is at its heart a way to solve a customer’s problem. A lot of business success is about being the first to take advantage of opportunities when they arise. The Sears catalogue began in the late 19th century, taking advantage of the newly expanded railroad system to sell everything from watches to flatpack houses. Amazon began selling books online and is now the largest online retailer in the world. More traditional retailers are innovating to use Amazon’s reach to their advantage. Recently the chain Kohl’s expanded a partnership with Amazon to operate as an Amazon returns centre. With almost a third of online purchases being returned, it’s a clever way to increase footfall in their stores and lure disappointed customers to buy in-store when returning their unwanted goods.

Getting a fuller picture for a more strategic solution

They say the first step to making change is to acknowledge that change needs to happen. With the rise in online retail more traditional stores are aware of the threat to their existing business model. The death knell of the traditional high street has become a favourite narrative for business journalists looking to generate column inches. And while traditional retail may be in decline, simply mirroring a bricks and mortar business online or trying to replicate online competitors’ businesses is not a guaranteed path to profitability or even sustainability. Rather than resorting to knee-jerk responses, retailers need to think strategically and assess which innovations are right for their business.

Fostering a culture of innovation

Innovation in retail is about more than adding an e-commerce function to an existing website or creating a new social media campaign. Retailers need to continually think differently about the problems and challenges of this new retail climate. The solution to the problem requires an innovative approach from all staff. Staff on the shop floor, in the stock room, and in the back office analysing the numbers all will have different viewpoints to offer which can contribute to getting a fuller picture of the challenges and potential solutions.

Unfortunately, in many workplaces, not just retail, there is a lack of acknowledgment that having a culture of innovation means involving every employee, not just the management. Innovation is rarely successfully imposed from the top down. In order to implement strategic innovation it is vital to assess the baseline level of understanding amongst all staff as to what innovation means and how it manifests itself (or doesn’t) in the company.

Implementing change successfully

Once a decision has been made on which solution(s) to implement, then the importance of managing any changes comes to the fore. It’s here that the perseverance and resilience of management together with the willingness and commitment of all staff will be put to the test. The quality and likely success of the solution comes down to a number of factors, including the breadth and skills of those involved in delivering the solution and more specifically the ability of those communicating it to convince others of the need or benefits.

Making change is challenging for everyone, even those who claim to enjoy it. And implementing change can quickly reveal the leadership wheat from the chaff in a way no other business challenge will. However, with proper planning, awareness and communication many of the pitfalls can be avoided.

“Bricks vs Clicks”

The world would be a much poorer place – in more ways than one – if, in the future, almost every purchase happens online. Aside from the serotonin rush and instant gratification of buying something you want when you want it, many human interactions arise around buying and selling to create community. In Ireland retail jobs account for 14% of national employment, according to Retail Ireland. With 70% of retail jobs outside Dublin the role retail plays in sustaining the Irish economy is significant. Other businesses such as transport, logistics and food services depend on bricks and mortar retail spaces for spin-off trade. Retailers have a duty to us all to fight back and fix this – and of course us consumers have a huge part to play too!

John Crimmins is the Managing Director of Prospectus Management Consultants who are experts in the areas of innovation and change management. Prospectus’ bespoke Corporate Innovation Index enables companies to measure their innovative capacity and culture and then benchmark against others. For more information see https://prospectus.ie/cii/