The recent spate of high profile insolvencies involving well-known high street names has brought problems in the retail sector into sharp focus. The list of casualties is growing steadily and some may question whether high street shops as we know them can survive in the long term.
That is, of course, an overly-simplistic view of the retail sector: whilst some brands are seeing a downturn in trade which is threatening their ability to continue, others are thriving.
So why is there such a big variation between the winners and losers on the high street?
The answer to that question lies at the heart of marketing theory: that for any business to succeed, it must offer the right product, at the right price, in the right place and effectively promoted. This is the familiar ‘Four Ps’ marketing theory that generations of marketing and business studies students have nodded at for years in lecture theatres across the world.
So why are so many retailers facing problems now, in 2013? The straightforward answer is that the internet has opened up new opportunities and new challenges. The ease with which a potential purchaser can carry out research on the internet is putting pressure on the prices that high street stores can command for commodity items. Where there is no difference between products other than the price, why shouldn’t consumers choose the cheapest supplier, no matter whether that supplier is based nearby, the other end of the country or the other side of the planet?
Assuming that price competitiveness is ultimately a self-defeating exercise, retailers who want to survive will need to revisit their marketing plans to ensure that they are hitting at least some, if not all, of the four Ps (or some other marketing device that fits their particular niche). Some retailers are competing on service and the product knowledge of their staff to add value to their offer, to appeal to those customers who want reassurance that a product will fulfil its purpose. Other retailers are offering a different buying experience to cajole customers through the doors, by capitalising on good locations, quirky settings and hard-to-find products that are not easily price-compared. Specialisation in a particular niche can also be a good way of differentiating your offer, as long as the niche isn’t too narrow.
Some retail businesses will struggle to adapt their business model to cope with the new consumer landscape. Debts that have already built up will cause problems for many retailers, stifling creativity and muting the owners’ enthusiasm for a new challenge. But adapt they must if they wish to survive.
If your retail business is struggling under unaffordable debt – but you know that the business could be viable if it is restructured or re-launched – call us today for a free, no obligation discussion about the range of options that are available to rescue struggling companies.
Call Paul Moorhead today on 01709 331300. We can help.