Hey guys! I hope 2019 is treating you nicely so far! This week’s post is about the future of retail and fashion industries. In previous posts, I’ve discussed the damage that has been done due to the digital culture. Now let’s take a look at what the foreseeable future for this industry looks like.
Most people would say delivery has been the best thing that has happened. The typical delivery journey time is 3-5 days. Most retailers offer next day delivery. It has been life-changing for all of us lastminute.com people. However, it’s not quick enough for today’s consumers. Times are changing, people are becoming more demanding. What do we do? TURN TO TECHNOLOGY FOR THE ANSWER.
As we are becoming more impatient, companies have found new ways to meet our consumerist needs. Jeff Bezos, the founder of Amazon has launched a mission to start completing two-hour drone delivery in the near future. I mean how amazing would that be? But it will take a while for us to get used to drones flying around. Amazon is a precedent for all online retailers if Amazon is doing it, everyone is going to be doing it.
Consumers prefer a personalised experience nowadays. This is evident due to seeing big brands; Pretty Little Thing, ASOS, Amazon and Netflix dominating the internet. They incorporate personalisation into their company and it’s clearly working for them. So why is it an attractive factor?
Well, it targets people into attracting them to buying more items relevant to their search engine. It’s cleverly done, however it doesn’t help as we are pressured into spending more money. Have you ever gone on a website and somewhere on the page it says ‘Customers who also bought this item also bought’? That is personalisation there. Most E-commerce companies used this, as it makes online shopping a special and appealing experience. From the very minute of creating your account, your own personalised and unique experience begins. Brand’s send emails on offers and deals on items you have viewed, cookies appear on your computer advertising items you have viewed and sending texts about sales. Basically, they’re making our life harder by attracting us to spend money. I guess we only have our selves to blame.
In the future, many retail experts predict retailers using personalisation to help save them from disappearing from the UK high streets. IKEA has started the digital transformation by launching an app that uses VR technology to visualise furniture in the ideal space shot. This has been game-changing for IKEA as it has attracted more customers due to their digital innovative and favourable pricing of products. Maybe fashion retailers will create a VR app, showing customers with the clothes on?
The Challenges facing UK retail:
The UK Retail has numerous obstacles to overcome in the near future. There are six factors that are creating challenges;
Firstly, Wages, back in April 2016 the National Living Wage (NLW) raised hourly rates to at least £7.83 for workers aged 25 and over. This is a significant sum for retail companies because employees make up 46% of operating costs. Another factor that will be troublesome is Brexit. It will put retailers under a lot of pressure, which will result in costing the retail industry £7.8bn in tariffs. Consumer spending will also have an impact on the retail industry, January 2018 sales showed the weakest growth since 2013. According to a report published by Natwest and Retail Economic’s indicated that one in three consumers fearing in the rising shop prices due to Brexit.
Online sales is also another challenge that retailers face. Not like you haven’t heard that one before? It is reported in a study conducted by Office for National Statistics that online shopping is accountable for 17% of the retail sales in the UK. It is expected to grow in the upcoming years. Competition is another big factor standing in the way of retailers, companies such as Amazon has been labeled Britain’s fifth biggest retailer according to GlobalData. Every £100 spent in the UK, £4 is going into Amazon’s pocket.
Lastly, High Street brands are blaming business rates, which leave them at a disadvantage. Every shop that uses a property has to pay business rates, which is the tax on a property used for business purposes. Warehouses, pubs, offices, and shops all have to pay a business rate which can be expensive. They are calculated based on the property’s ‘rateable value’. This means a value ascribed to a domestic or commercial building based on its size, location, and other factors used to determine the rates payable by its owner. In an article written by RetailGazette, it was reported that House Of Fraser’s store in Westfield shopping center in Hammersmith had to pay a hefty sum. The retailer had to pay £2.37 million for business rates. OUCH!
The future doesn’t look too bright for retailers, but maybe it can all change? Do you want a digital world or will you miss Brick and Mortar? I hope you enjoyed today’s post, I’ll be back next Thursday another post, but it will be a little different…
Alan Hawkins (CEO of the British Independent Retailers Association.