The best discussions are often also the most contentious! When something matters people are passionate, and so it was at MBS’s latest event, held in partnership with Livingbridge on the future of the high street. It’s no surprise that when you bring together some of the most successful and visionary executives from the worlds of retail and private equity fireworks ensue. Our theme, ‘The High Street is Dead: Long Live The High Street’ was intentionally provocative, a starting point for conversations that ranged up and down the challenges and opportunities that currently face the sector, from the rise of the millennial pound to the unstoppable encroachment of technology on every aspect of the shopping experience.
Mark Advani, partner at Livingbridge, opened with an A to Z of the retail businesses that have gone bust over the past fifty years, from Athena and Dewhurst Butchers (which at one point had 1400 stores across the UK) to What Every Woman Wants and Woolworths. Many brands brought back fond memories and nostalgic smiles but many more elicited a blank stare or two. The point was twofold – first, that retail has always existed in a state of creative destruction. The high street is ever-changing, and though retail’s current troubles may feel particularly acute, ‘it has ever been thus.’ Second, that brands fail because they fail to be brands. Many of the retailers listed were forgotten precisely because they were forgettable – just as the sector has always existed in a constant state of flux, the first rule of retail – to connect with the customer – continues to be its most important. The lessons of yesterday remain the lessons of today. Retail businesses will survive and thrive based on their ability to forge relationships with consumers.
Mary Portas, our most excellent speaker, picked up on many of the same themes. The high street isn’t dead – it’s undergoing a profound and transformational reset. Retail has always been about reaching consumers where they are – the challenge for the modern era is working out exactly where that may be, online or off, in-store or out, or perhaps everywhere at once. And anyway, this challenge might just be the catalyst retail needs; too many businesses have been slow to change. This led Mary to one of the main themes of the evening, and one which proved to be a lively staging point for discussion – the need for vision.
At the centre of brand is surprise and joy – the key to the future is to connect to customers through emotion.
In many ways, retail is a sector suffused with opportunity. Growth markets are everywhere, from beds and pets to conscious consumerism, to name just a few. If connecting with consumers is the first rule of retail, then vision is the key to unlocking it. In far too many businesses vision leaves when the founder does and crucial to the future will be figuring out ways of preserving the visceral, emotional connections that brands (often through founders) are able to achieve. One proposed solution was to knit entrepreneurial values more deeply through organisations to preserve the customer-first mentality visible in so many young businesses. Brands, as ever, remain at the heart of everything.
However, we shouldn’t lose sight of the immense power of the internet. The worldwide web’s name is, after all, a clever metaphor for its ability to connect individuals, groups and businesses across the planet. With the rise of data (and perhaps more importantly, our increased ability to effectively analyse it), the potential for algorithmic advertising to unlock new avenues of customer acquisition is set to grow exponentially. Retailers need to win themselves a seat at the table of consumer consideration before they can access consumers’ wallets, and fundamental to that is, and will be, algorithmic marketing.
From there the discussion turned to the question of space, and more specifically, what exactly we should do with it? It is the debate occurring across the industry, as shopping habits change and the primacy of the street as the tool for reaching customers is challenged by the web. Mary prodded us to think big and to act bigger. Space needs to be completely reimagined. Everyone agreed on its continuing value as an asset – shoppers exist in the physical world, and retail space is unmatched in its ability to communicate brand, product and experience to the consumer. But, are enough stores doing that now? Radical and innovative new approaches to space are required.
In some senses, this means bricks-and-mortar shops may have to more closely resemble bricks-and-mortar shop fronts. As spend shifts from real-world to online, the value of space is transitioning from being focused on its utility as a place to close transactions to being focused on its ability to communicate. That means thinking and acting boldly (with vision, you might say).
Space, naturally, brought us to government regulation. One attendee suggested that local governments have not been empowered to support retailers by Whitehall and that more can be done to give councils the tools they need to bolster the commercial hearts of their communities. Key to this is the question of tax, and in particular, alleviating the disproportionate burden placed on high street shops.
Bravery, ultimately, could become the dividing line between success and failure in this new era, from government ministers down to shop-floor managers. While there was lively discussion about what space should look like and how it can be used, on how to create more entrepreneurial cultures and how retailers can live and breathe their brands and communicate them to consumers, there was consensus that conviction and vision was the order of the day. In a period of massive and rapid change, the ability to think fast and act faster, to meet the customer where they are by knowing where they’re going, will depend on executives being, above all else, brave. Conviction is risky, but riskier still is stagnation.
This, of course, applies to all retail businesses, not just those on the traditional ‘high street.’ As one guest persuasively argued, retailers themselves must reimagine what the high street means because consumers, particularly those under thirty, are already doing so. Big box out of town stores are now defined by what they share with high street retailers as much as they are defined by their differences.
This suggests that the value of rear-view mirror thinking is quite rapidly being eroded by the massive changes washing across the sector. As Mary argued and we agreed, we are in a state of conceptual flux – what ‘space’, the ‘high street’ and even ‘shopping’ means are transforming. Moira added that for high street businesses to survive, they must have millennial minded individuals on their boards and throughout the organisation to help form deep emotional connections with the customers of the future.
Of course, we all left with as many questions as answers. The vibrancy of the discussion is a reflection of the importance of the debate and I look forward to it continuing across our industry. However, what we can all agree on, as memorably put by one attendee, is that for retail, “we are not going into the next chapter, we are going into the next book.”