Monday, 17 June 2013

From McJobs to iJobs

My attention was drawn last week to two intriguingly opposing articles. First of all, the usual gloom and doom on the high street message, this time articulated in terms of vacant properties etc, published by the Centre for Retail Research.

The direct correlation between the growth of online sales and the decline of high street sales is spelt out. The article demonstrates a reduction in the proportion of consumer spending on the High Street from 50% to 40% coinciding with a rise in consumer spending online from 0% to 12.7%.

Once again we see a key principle – online retail does NOT create extra money in consumers’ pockets, it just represents a spending shift. Figures in the UK are distorted somewhat by the existence of a large online grocery sector, unlike anywhere else in the world. But if we focus only on non-food, the picture is quite clear:

As the research goes on to state, national coverage now requires far fewer stores. A truly multichannel strategy to reach all customers via a properly blended online/offline offer does the job just as well. The key quote: “retailers with a strong web offering now need just 70 high street stores to create a national presence compared to 250 in the mid 2000's”.

And what about those retailers with the strongest web offering of all – the online pureplays? Well that’s where the other articlecomes in. It seems a pureplay isn’t really a pureplay after all, you need a showroom. If you can do like Amazon and use brick-and-mortar retailers as your showroom in a kind of parasitical price-scalping mode, then this is undoubtedly extremely efficient – you get the showroom, someone else gets all the costs of the stores. If you can’t, what can you do about it – seems like the best thing to do is… open brick-and-mortar stores. OK, maybe not traditional stores, more, well… showrooms.

In many ways we’re already familiar with the concept. What more is an Apple store really than a high street showroom? OK, you can buy the products there, but they are much more places where you can look at the product, get service on it, and get someone to explain it to you.

To do that, of course they need a different kind of staff. No longer are the staff there primarily to perform the mundane tasks of shelf-filling and cash-taking. The essential requirement for a staff member in an Apple store is to know more than the customer. And not just any customer, but a customer who has spent time researching the product already online – an expert customer.

What these two articles taken together suggest is that we can expect another strategic shift on the high street – from McJobs to iJobs...

No comments:

Post a Comment