We’ve all heard the news, over the last five years +, the British high street has been in decline and at the same time, online shopping figures continue to grow. The popular conclusion is that the internet is killing the high street. I disagree. It’s not the internet, it’s a poor customer experience which is killing the high street.
The below chart shows insight gathered by the Institute of Customer Service in July 2018. Within retail, Amazon scores the highest - not for sales (although there may well be a chart out there which shows that too) but for customer satisfaction.
Amazon aren’t succeeding because they’re online, they’re succeeding because they deliver what customers want, when they want it and at the right price. They initially exceeded people’s expectations (things like returns and next day delivery) which has now impacted people's expectations when it comes to shopping online generally. Regardless of space (physical, digital, outer space), customer service is incredibly important when running a successful business.
“A great customer experience can deliver tremendous strategic and economic value to a business, in a way that’s difficult for competitors to replicate.”
Improved customer experience nearly always increases shareholder value.
There’s hard evidence for this; in one study that rated companies on their customer experience performance, those that rated badly also performed worse than the rest of their market in terms of shareholder value, while the top ten rated companies in the study consistently outperformed the rest of their market. Ergo, better customer service = better sales wherever your business operates from.
In 2018 we saw the doors close on a number of established high street stores. BHS was probably the biggest, followed just a few weeks later by House of Fraser which fell into administration and was acquired by Mike Ashley of Sports Direct fame.
Toys R Us is another one. As a 30 something, I am particularly concerned for poor Geoffrey. He closed his doors in April 2018, leaving us all wondering where he’d go next - maybe Longleat Safari Park took him in?
The government is considering introducing a tax on online businesses to “support the high street”. Should I be the one to tap them on the shoulder and say “All three of these retail brands offered extensive online shopping options too". In my view, a tax of this sort is ludicrous. It focuses on businesses which might actually be going out of business because they are failing to meet customer needs and not, as some people think, because of THE INTERNET stealing all their sales.
And actually, businesses choosing to embrace the new and move to a digital business model are failing too, for a number of reasons which are outlined nicely in this piece by Digital McKinsey. They say that of incumbent businesses pushing a digital approach, only 8% believe their business model will remain economically viable.
Let’s take a moment to look at a business which has no online outlet and yet, continues to grow its sales and physical presence on our high streets year on year. Points if you guessed it: Primark.
They prove that digital is not a prerequisite for success. They know who their customers are, what they want and how to deliver it to them over and over again. Sure, the queues are terrible and the clothes questionable but for their target audience, they nail it and that’s why customer experience is the secret to Primark’s success story.
House of Fraser’s website was actually fairly well designed and (again, in my opinion) objectively easy to use. So people might not have been visiting their physical stores but they could still have shopped online. The reason they didn’t? Most likely nothing to do with the website and everything to do with the overall customer experience.
Often, when a business is on a downward trend, it tries to solve the problem by implementing some form of new, shiny technology - be it a CMS, CRM or e-commerce platform. What they fail to realise is that this isn’t necessarily going to solve the problem. The first question on that boardroom table should always be “are we meeting our users (customers) needs”.
Pinning all your hopes and budget on a large strategic IT project is always a bad idea. I’ve seen it happen time and time again. By the time said large shiny project is delivered, it’s too late to realise that you’ve just replicated your current poor customer experience, or, in some instances, confused the poor folk further by whipping out their comfort blanket of familiarity and expecting them to just get on with it.
Having a digital presence is important of course, but a beautiful, usable website for a broken business model is just lipstick on a pig!
There are so many reasons why online shopping beats going to the shops, especially those big department stores. Often, a convoluted proposition and lack of vision result in a terrible in-store experience, disinterested staff on minimum wage and zombie-like shoppers getting in your way. Honestly, if everything that shop sells is available online, I can see no reason or benefit to visiting, can you?
We can’t blame the people working on the shop floor. On the whole, they just aren't empowered to truly meet customer needs. Remember though, the internet meets our needs and so our in-store experience has to go above and beyond that if it’s going to see a renaissance anytime soon.
The in-store experience needs to offer something special, memorable even. It cannot be just transactional. You’re asking people to travel on a busy weekend, in British weather. To pay extortionate parking charges or lug their purchases around on expensive and uncomfortable public transport when actually, they could just order it online?
Forget about digital transformation, what we need here is customer experience transformation. Big retail stores need to accept that no, the internet is not killing the high street. Actually, the country’s economic realities have changed, as have people’s needs and desires.
This means that most likely, the assumptions underpinning those big retail stores are no longer relevant and only by testing those assumptions and re-evaluating what customers today want and need, can their business innovate and ultimately... succeed.
Business owners must stop blaming the internet for their struggles on the high street. They need to start with the needs of their customers. They should optimise what they already have before looking to scale/automate/digitize their business.
I’d recommend running an MVP to test assumptions which may have changed over time. For radical transformation, businesses could try simulating different models under assumed names, taking advantage of the amount of retail space that’s available these days. Asking should we do this rather than can we do this is vital to ensuring your business grows the right way.
It’s through user-led transformation and not a panicked investment in technology that businesses will increase customer experience satisfaction and shareholder value. So there you have it! It’s not the internet killing the high street, it’s a lack of customer understanding, dated assumptions and no clear direction.