This week the high street has seen another casualty – HMV. Last week we saw Jessops go out of business and before Christmas, Comet closed down. HMV hasn’t technically gone yet – it’s in administration, which means it’s in the last chance saloon and may never come out! And if it doesn’t, there won’t be a national music retailer left.
No doubt this will spur yet more column inches to be written about the woes of the high street. Some will use it as evidence for a really dire economy and some will tell us the high street needs to compete better with online. But what is really going on?
Let’s be practical – What lessons can be learnt from the latest casualty, HMV?
- Be ready for disruption. Never underestimate the future impact of a seemingly small change today on your long term survival. HMV was guilty of not looking far enough ahead and responding strategically to market changes. Over a decade ago they were slow to react to Amazon selling CDs online. When Apple introduced the iPod and iTunes, they didn’t respond swiftly enough (although the whole music industry was slow). In short, it was evolution rather than revolution.
- Be prepared to change your business model. HMV should have fundamentally changed it’s business model twice in the last 13 years – once to embrace online CD sales and second to embrace downloads. The book industry is an interesting example here: book retailers are now selling e-readers and some get a cut from every download onto that e-reader for its life. They are also bundling mixed format packages – selling a cut price book with a download of the same title (How bookshops could be happy ever after, The Independent). These give the consumer what they want – a mix of formats. HMV should have offered online CD sales long before they did and could have offered downloads packaged with CDs, but never did.
My blog about ecommerce explained why need to better embrace multiple sales channels. But what specific actions are needed for high street retailing?
- Make the shop a destination. Our research shows that people still value shops for convenience, speed and a nicer environment. So stores have to create an experience and a reason for visiting. This means re-thinking what the store is about.
- Encourage convenience. Change shopping hours to meet busy lifestyles, reduce parking or offer it free of charge, create park and ride schemes or arrange specialist shopping events.
- Improve service and advice. The downfall of Comet was attributed to poor service and advice. Meanwhile PC World has really emphasised this. Service is a differentiator and creates a reason to come into the store, making it a destination. Independent retailers should have an advantage with this.
- Independent retailers need to work together on multi-channel. On their own, they will struggle to compete with nationals when it comes to multi-channel: the online presence of nationals is hard to beat and takes a lot of investment, the convenience of ‘browse and collect’ is harder to achieve, harnessing the habit of using mobiles to price check very difficult etc. Independents need to realise the scale of changes coming their way and work together through local co-operatives and initiatives.
- Local support. This is needed to encourage independent retailers to work together. My thoughts are that the local Chamber of Commerce has a role in encouraging co-operation.
Consumers still love the high street – don’t let the latest casualty make you believe otherwise - convenience and a nicer environment are why they love it. If the future is truly multi-channel then the high street has a big role to play. But that role is changing and retailers need to respond.