Posted by Jason Ouston
I did some research into the figures in the retail sector between High Street and online sales over the festive period. Through analysing these numbers there is a very clear indication as to how fashion businesses are performing in what is the busiest time of the year with record profits and in some cases record loses.
So, who thinks they don't need to be online?
"Next" one of the largest ecommerce brands across fashion and household sales in the UK provide a perfect example as to how the web is effecting the success (or failure) of retail organisations. E-commerce is a word that is banded around with no real care but it should be the first agenda point in every retail companies plans for 2012. While shareholders of many retail firms were nervously awaiting Christmas trading updates, investors in fashion and furniture retailer "Next" enjoyed another market beating sales performance. Although high street store sales struggled in the period between August 1st and December 24th 2011, dropping 2.7 per cent year-on-year, strong online and mail-order trading over the five months helped overall retail sales rise 3.1 per cent - a pretty clear indication of the power of a strong online presence. Through investment in technology Next managed to turn a failing business recording losses year on year into profit, entirely through e-tail not re-tail.
What about companies that aren't?
The power and accessibility that ecommerce brings to the consumer has had a notable and (very) negative effect on our high streets.
Only yesterday Clothing chain Peacocks, announced that it would enter administration if a rescue plan to save the business does not materialise in the next few days. In addition administrators for footwear retail group Barratts Priceless has announced a number of imminent store closures across the company's portfolio. Five Barratts and thirteen Priceless Shoes outlets ceased trading on December 23rd 2011 leading to the loss of 127 jobs, while 43 of the staff members at the retailer's head office have also been made redundant. As harsh as it may sound this, in my opinion, was inevitable; how these companies expected to compete against online equivalents I don't know.
The power of technology has got to a point where Jobs are being cut within High Street retail but continuing to grow within technology. Although this is a sad (and hard) time for High street retailers that have been on the public's radar for years and years it serves as a powerful message to those in this space. There is no brand that is "untouchable" or (and it feels relevant to think about the Titanic at this point) there is no ship that "cannot sink". The disappointment and outrage at the closure of Woolworths is now no more than a distant memory. As more innovative online retail businesses open up they will (quite rightly) take the place of high street outlets, offering fast, reliable and easy to use services. The online business model is such that on top of the obvious ease of use/shopping from home factors the new online retail businesses are, more often than not, offering a higher quality product at a reduced price (it's not complicated really!)
The way forward....
Online fashion e-tailors are emerging on a Daily basis, however the most successful and household names within this sector, such as ASOS.com or Net-a-porter.com have no high street presence what so ever, yet they are two of the most renowned names within fashion achieving record profits year on year.
So what, should there be no high street outlets at all? For me the answer to this question lies in the history of the business. I can see no reason at all for a new retail organisation to open a physical store, excluding some sections of retail like luxury jewellery. If, however, we are talking about a powerful high street brand like Next or John Lewis, it is key to have a strong physical presence on the high street as they have to retail their loyal customer base, but I would argue that without strong investment in the stores online presence it won't be long before they are heading down the same path as Woolworths.
For the big high street retail outlets I would argue that the majority of their sales moving forward will come from online buyers and it is only through heavy investment in technology that they will be able to provide the user with a clean, easy to use and reliable website that keeps them coming back time and time again.
For me the days of retail are over, it is e-tail from here on in...
