By Amy Bastow, managing director StorIQ, a Cegid company
In the first six months of 2022, data from PWC found a total of 6,147 shops belonging to multiples and chains (those with five or more outlets) left UK high streets, shopping centres and retail parks. Although the accountancy firm notes the closures have slowed in recent years, a prolonged recession could mean an increase in store closures. While some might argue that going online only means cutting expensive overheads – you only have to look at online-only retail group Boohoo which saw a £117 million drop in quarterly profits last year – to know that the answer is not as simple.
Stores have a place in retail profitability, and they also provide vital services like Click and Collect and a place for consumers to connect with the brand. But let’s also not forget the social impact of a thriving high street – many retail jobs attract a disproportionate number of female workers – 64.3% according to data from The MBS Group and a large proportion of these are not in senior positions. Shutting stores means losing vital part time roles from the economy.
Physical retail can still be profitable, especially when managed efficiently, which is why store closures should be a last resort once all other avenues have been explored.
These include taking an audit of current retail operations and seeing where efficiencies and savings can be made. In our experience from working with retailers – there are often cost cuts that aren’t immediately obvious.
Chaotic communications
Retail workers are having to complete more tasks than ever before. This is due to increasing services placing more demands on their time such as click and collect and staff shortages. What is making their job harder is the fragmentation of communication channels used by retailers today to manage operations.
In conversations with retailers, so many are using a confusing combination of WhatsApp, email and text messaging to share important communications and manage store operations. Retailers should instead prioritise one channel and make sure it’s fit for a busy retail environment. Moving store operations to a central and single source of truth increases productivity by speeding up the time it takes to receive tasks and action them. It also means retail workers are freed up to help customers instead of trying to work out which platform contained an important message from Head Office. At a conservative estimate, a company with 250 stores will waste 3,700 labour hours a week if communication channels are not agile and streamlined. Receiving information from just one channel also means it’s easier for management teams to track if updates have been actioned.
Go digital
Retailers still use a considerable amount of physical documentation that could be replaced digitally – better for the environment and for budgets. Forms, checklists, policies and visual merchandising guidelines could all be replaced and contained within a digital platform. We estimate that one store could be spending as much as £200 in a year on printing. While it might not be a big problem for a small chain, bigger retailers that have 250 stores could be wasting up to £50k.
A digital retail platform could also help save money through retail visits. If retailers used a digitised system to provide an accurate view of each store’s POS, they could move a proportion of retail visits online. If stores are getting visual merchandising requirements right, they’re less likely to need a visit. Those who need more help could be prioritised. By only visiting stores that need more support, travel costs and time out of the office could be reduced.
Reducing excess technology
However, it’s also worth noting that some retailers may have overspent on technology that may not be necessary. According to software reviews website G2 there are 63 retail operations tools, 141 listings in other retail software and 69 listings in retail intelligence. Even from that small selection, potentially a retailer could have invested in multiple software solutions for different purposes and be wasting money on duplicate tools.
An audit of technology can reveal cost savings and reveal if retailers would be better served by an all-in-one solution that can cover compliance programmes, intranet, employee engagement, learning management, retail analytics and general retail operations. It’s not uncommon to see savings of between £50k -100k by streamlining technology software to the essentials.
Stop investing in vanity technology
On that same point – not all technology is created equal. In the drive for innovation, some retailers have lost sight of this and have prioritised spending on vanity technology without a strategy underpinning the investment.
In fact a report from Juniper research notes that global spending by retailers on AI services will reach $12 billion by 2023. Virtual influencers and forays into the metaverse might make for a good PR story but are these or VR mirrors actually going to have a lasting impact on the business? Instead, retailers should invest in practical solutions that improve the day to day running of retail, save costs and create a measurable impact in sales.
Future-proofing profitability
With all of the external pressures facing the High Street, it makes sense to pay closer attention to home to ensure all other cost saving revenues have been investigated and to see if there are some investments that will create financial and time savings in the future.
Retailers should only close shops once they are confident, they have explored all other avenues first.
