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The Retail Industry Is Rapidly Evolving, Can You Keep Up?

    In the last few weeks, Austin Reed and BHS have joined the list of casualties as a result of changes in the retail industry. Both have announced that they will close their stores in the last few weeks, the only exception being five Austin Reed concessions in Boundary Mills outlet villages that will stay open after a buyout by Edinburgh Woollen Mill. Other casualties in this list include Phones4u that closed in 2014 and Woolworths in 2008. Shop Direct Group attempted to rebrand Woolworths as an online retailer in 2009 after buying the brand, but even this has been replaced with its own brand Very.

    These closures have caused the loss of thousands of jobs, and will incur costs to the economy not only in terms of unemployment benefits and income, but also in terms of psychological damage and erosion of skills of the unemployed. It is possible that close competitors could benefit from these closures, but as the closed businesses would have most likely had very few sales beforehand, the increase in revenue for these competitors would be not substantial.

    The retail industry is a rapidly evolving one, and those that do not keep up lose out. With the rise of online marketplaces such as Ebay and Amazon and online retailers like Rakuten, Zalando, and, consumers have now started turning away from traditional brick and mortar shops as shopping online often offers similar or the same items at lower prices, from all over the world. They also offer unique ways to purchase items – for example, consumers on Ebay get to bid for and/or buy items that would normally be sold out in-store – although this may be well above retail prices. For example, the vintage white/lush red version of the Adidas NMD Runner Primeknit shoes retails on the Adidas UK website for £130 and was sold out within minutes on the day of its launch. As of 6th June 2016, the same item was sold on Ebay for prices of at least £300, which would give the seller more than 100% profit. Having worked in a bookstore before going to university, I have seen customers walk in and leave without buying anything, saying – in the many, different languages Malaysians speak – “I can get this book cheaper online.” They had a point; after all, why not save money when the content is the same, whichever publisher it comes from?

    Traditional shops incur a lot more costs than exclusively selling goods and services online, as they hire more workers and experience overhead costs. The introduction of the Living Wage potentially worsens the situation as this raises costs further. However, businesses cannot deny that moving some part of the business to the internet – examples include Debenhams and JD Sports – is extremely important in order to stay in the market. Doing this would require a balance between managing the business in-store and online, which sounds easier than it is to do.

    The Consumer Barometer by Google provides an indicator of the behaviour of online shoppers around the world.    About 49% of consumers in the United Kingdom were looking for prices of products and services online – this gives businesses an idea of what would be best to put on their website in order to generate online traffic and sales. The design of the website not only has to be computer-friendly but also optimised for mobile use as it also reports that 38% of consumers use their smartphone when looking for local information.

    How much consumers use the internet to make purchases differs across countries and regions. As shown in the graph, the United Kingdom has the second largest proportion of consumers who shop online (46%) among the OECD countries surveyed, after South Korea (50%). This differed between the items consumers bought as well, with 75% in South Korea buying clothing online compared to 49% in the UK. Incorporating this sort of data would make marketing strategies successful. 

    It is undeniable that the retail industry will continue its trajectory of evolution. Whether businesses become a casualty of this would depend on their ability to be flexible and adapt to these changes, without increasing its costs. 

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