Latest figures have revealed the highest net number of high street store closures since monitoring began in 2010.
Each day in the UK during the first half of 2019, 16 shops closed their doors while only nine opened: a net decline of 1,234 on the country’s top 500 high streets.
Yes, footfall is falling. Yes, offline spending is falling. But for retailers, rising against this rhetoric is essential.
Yes, footfall is falling. Yes, the increase in offline spending is diminishing. But for retailers, rising against this rhetoric is essential.
At this year’s Planning and Productivity: The WFM Forum event, hosted by global technology consultants REPL and productivity specialists Re:Think, a group of UK retailers heard and shared how to harness that positive attitude.
Here we explore insight from speaker and retail intelligence expert Diane Wehrle, marketing and insights director at Springboard, about the importance of retail employees in this challenge. Employees who are engaged, motivated and ready to deliver an exceptional in-store experience.
Understanding the Retail Landscape
Over the 12 months between September 2018 and August 2019, Springboard’s data shows a year-on-year -2.1% drop in high street footfall. And over the four months between May to August 2019, this declined further to -3.5% compared to just -0.3% over the same period last year.
In the last decade, high street footfall has dropped by -19.7%. It’s an ongoing trend that shows no sign of stopping.
And Springboard’s data show that bricks and mortar sales have also dropped to -2.7% from September 2018 to August 2019, compared to -2.2% the year before. The only categories with increases are home and garden/DIY, food stores and food and drink outlets.
But Diane stresses it’s not all doom and gloom: “Declining footfall means that many retailers inevitably have a smaller pool of customers from which they can draw. It’s tricky out there but there’s also potential. Some stores have increased sales despite these challenges. What is key is that stores maximise the potential of the locations in which they trade, and vital in achieving this is understanding stores’ Capture Rates – the % of footfall in a location that enters a store which represents its market share. Diane adds that “maintaining its market share is vital for a store.”
Offline Versus Online
Retailers know that their stores are competing with the allure of online shopping. But it’s worth noting that at the end of 2018 online sales accounted for just 17.8% of overall retail spend with 80% of spend still remaining in store. The percentage is forecast to decrease to 70% by 2028 but that isn’t at the rate that some people are fearing.”
“Two to three years ago we were seeing double digit growth in online sales each year. That has slowed down,” says Diane.
Indeed, non-food, non-store year-on-year sales were up by just 4.3% in 2018-19 compared to 7.5% in 2017-18. Growth will continue but the rate of increase has diminished.
“This slow-down gives physical stores a great opportunity,” explains Diane. “The gap between online and offline can be bridged and the differentiator has to be experience.That doesn’t necessarily need mean flashing lights and bells and whistles like hologram store assistants. It’s about walking in and being served by someone who’s engaged, has great product knowledge and can deliver the type of personal customer service we all want.”
The Future High Streets Fund
Against this backdrop of store closures and in response to pressure from retailers and unions, the government has launched the Future High Streets Fund.
100 shortlisted towns are submitting proposals for a slice of a £675 million pie to regenerate their high street. The aim is to broaden and diversify usage through non-retail, creating communities that embrace retail but don’t disproportionately rely on it.
Operating in conjunction with the fund is the High Streets Task Force, of which Springboard is a partner , which will mentor and monitor the towns under the directorship of the Institute of Place Management.
Diane said: “For the high streets that are successful in their bids for funding, this initiative will support the change that will future proof high streets, broadening their offer whilst ensuring that each high street retains its individuality. Retailing will be supported and complemented by the wider non-retail offering around them.”
Diane went on to say that “In addition to regeneration, the key to ensuring the longevity of bricks and mortar retailing is to deliver an optimum in-store experience for customers, and one of the key ways to do this is through informed staffing decisions.”
Getting Your Staffing Right
Springboard has clear evidence on the decline in footfall in retail destinations, but it has also identified that the Capture Rate of stores is dropping. The Capture Rate is the % of footfall in the destination that enters a store, and a declining rate indicates that stores are losing proportionately more customers than the location in which they trade.
Diane says “declining customers in store is a clear challenge for retailers if they are to increase, or at least retain, their sales. There are two key structural changes in consumer demand that is causing this; the growth of online means that people carry out more pre-shopping research online and so don’t into stores to browse as frequently as they once did (although they perhaps spend longer in a destination once they are there), and the demand by consumers for leisure based trips, rather than trips that are solely transaction based continues to grow. Many consumers are now as likely to visit a high street to meet a friend for coffee rather than to go shopping, or they may be in the town centre to go to the cinema.
Exacerbating this change is the adverse impact of poor service levels in store. Could a decline in your store’s Capture Rate be a result of the fact that the last time they visited your store, they were met with disinterest, poor knowledge or long queues at the till? “To get more people into their stores and therefore make more sales, retailers have to up their customer service levels,” says Diane.
“We often see a negative correlation between the number of people in a store and the conversion rate. This is because the store staff aren’t serving well. They could be overwhelmed by the number of shoppers, ill-equipped and insufficiently trained to focus on engaging with customers. Or maybe they see their role as monitoring for shoplifting, too concerned about loss to focus on sales.
“The solution here is getting your staffing absolutely right. Having the right staff in the right place at the right time can sustain your business. This is thanks to engaged employees who know where they need to be and when, and what to do when they’re on the shop floor. And of course to do all that well.”
Diane refers to the explosion of retail in the 1970s and 1980s when store openings were at a peak and readily available credit encouraged people to go out and spend.
“That was a period when retailers didn’t even have to try as customers were plentiful and demand for new goods was huge and growing,” she says. “The quality of the shopping experience started its decline as traditional levels of customer service faded away.
“Retail is constantly evolving, but the 1970’s and 1980’s typified a period when quantity overtook quality. Now, there’s a shift in culture back to where we started from: personal, knowledgeable service delivered by people with a passion for what they do. The stakes are higher now because the economic climate and amount of competition is making the need to keep up with customer demand even more urgent.”
Giving Employees the Tech They Need
When retailers embrace technology, they’re taking major steps towards equipping their workforce with the tools they need to deliver this essential customer service.
From bespoke workforce management systems that support work/life balance to communication platforms that foster a sense of community, and information-packed tablets to respond instantly to customer queries on the shop floor, tech can both empower and motivate.
The ripple effect is passed from employee to customer to basket size to turnover to profit.
Get the right staff delivering amazing customer experience and you can even use tech to monitor the positive effects on shoppers’ feelings.
Facial detection technology can be used to understand customer sentiment in what Springboard call a ‘sentiment index’. Perhaps a customer enters a store looking angry but after an engaging exchange with a store member, their mood changes to happy and they leave having made an unexpected purchase.
For those retailers worried about being part of next year’s high street store closure statistics, harnessing technology and the insightful data it provides can significantly overhaul their operations and chances of survival.
As Mike Callender, executive chairman at REPL, says: “Bricks and mortar shops can collect just as much data as online operators. The problem is, they’re not analysing this data or using it to improve. If high street retailers begin to use the tools at their disposal and learn from their online counterparts, they could start to buck the trend of store closures.”
Diane concludes: “Consumers are far more leisure driven than they used to be, and so retailing will need to continue to evolve to meet this changing demand. This will make trading conditions challenging for the foreseeable future but, with 80% of retail spend still in store, there is still much to play for.
“And there are steps retailers can take now to get future-proofing. But those who ignore the importance of getting their staffing right will do so at their peril.”
Ready to revolutionise your workforce? Contact REPL, the retail transformation experts.