It’s been all over the news and the tabloids the last few years. We’ve seen countless big names go under due to the nature of their retail business. Debenhams, Topshop, Peacocks – they’ve all gone into administration within the last year or so, and have been taken over by bigger online sellers within the same industry. ASOS’s coup on Topshop/Topman was one of the biggest business stories of the year, and the online retailer’s presence has only grown from then onwards.
As a business, you might be thinking “why would I ever open a physical shop in this day and age?” and in all honesty, you’d be completely justified in saying so. The High Street has recently been labelled as outdated and inferior. Why would you ever go and try something on in person when you can often order it, get it the next day, and send it back the day after if it doesn’t fit? Why make the effort to spend your day in the city centre, browsing for your perfect outfit when you can literally search for it and order it with a few clicks? Doesn’t make sense at all, does it?
This is the issue that a lot of the major retailers are facing recently. There are some inescapable problems when it comes to opening and maintaining a store, more than ever recently. Hopefully this article will help you if you are considering opening a physical store for your brand.
This is the big one. The reason why so many of these old-school giants in the retail world are falling down the ladder. They can’t keep up. E-Commerce has boomed unthinkably over the last 5-10 years because it’s what people want: it’s easy. Ordering online seems to get easier and easier, and that’s ideal for a consumer. We as people are, by nature, lazy, so having the ability to order clothes, shoes and absolutely anything else from the comfort of our own homes is something we simply can’t refuse.
The main market that this particularly applies to is, as mentioned previously, clothing. Orders and returns are so simple these days that the need for trying clothes on in the store is, quite frankly, redundant.
The combination of eCommerce and fulfilment centres are becoming more and more prominent, to the point where a lot of businesses now opt for these 2 ways of selling and shipping because they have much less to do. They save time and money, allowing the business to focus more on their own growth rather than having to pack boxes and process orders. It’s costly, but once it’s up and running, fulfilment is a huge opportunity for any business involved.
Now, this is certainly not something that could have been prevented, nor could it have been prevented, however you cannot ignore the damage that has been done to countless industries during the COVID-19 pandemic. Shops were completely closed for 3 whole months, and then a further 4 in January-April 2021. There is no doubt that you will have heard of the damage this did to people’s lives and wellbeing, as many businesses had their income completely cut off during this time. Yes, there were schemes such as furlough that were put in place, however this just made sure the businesses stayed open, meanwhile all the online retailers were making quadruple what they would normally due to deliveries being the only way to do things.
Again, it’s not the fault of anyone, but you can’t deny that these physical, in-person retailers were put on the back foot by the pandemic as a whole. It looks like we have seen the worst of COVID-19 already, and the vaccine rollout is helping tremendously with getting the High Street back up and running again, but the damage has been done now. The recovery period is going to be strenuous and difficult for all involved. The eCommerce companies have the ball in their court, and they will continue to dominate the future of the retail industry.
If you’re anything like me, you probably like to keep yourself informed of the state of the markets that affect you. One of these markets, one that is very much increasing, is that of property, a massive cost for a lot of businesses. A small office may cost you around £400/month on the current market. Not too bad, right? You’d only need to make around £5000/year to cover this cost.
However, the real costs come when you want to move into a physical store. Statistics show that in 2020, high street rent in Manchester would cost a business £220 per square foot of space per year. Now, £220 may not sound an awful lot at face value, but let me put this into perspective for you.
Great Northern Warehouse in Manchester currently has a 2,003 square foot property available for rent. So, as we know, rent is charged based on each square foot. That means that annually, this property would cost a whopping £440,600 to rent.
That’s quite a lot of money compared to the £400/month office, isn’t it?
This is too large a cost for a lot of companies wanting to start up, grow or even survive. A shiny and professional headquarters is deeply desirable, but those kinds of rent prices are completely financially unviable, even for the most established brands out there. It’s not a risk that most can afford to take.
To sum this all up, the chain High Street is a dwindling industry, rife with uncertainty. So many companies are falling victim to their inability to adapt, and the numbers are looking to increase. The safer, and more popular option these days are digital. That’s where it’s at. I hope this article helps to put it all into perspective for you and your business.
From The Team @ Cloud9 x