Analysis: Traditional stores are struggling to deal with the challenges presented by online outlets and changes in how we shop today 

The announcement that US retailer Sears Holdings has filed for bankruptcy and the recent difficulties of many other retail household names highlight an ongoing trend of failure of businesses with a physical store presence on the High Street. Once considered the "Everything" retailer, Sears was the largest retailer in the US until overtaken by Walmart in 1989. While its fate is not yet known, it is unlikely to emerge from bankruptcy.

In the UK, Marks and Spencer are closing 100 stores by 2020, Debenhams have cut hundreds of jobs, fashion retailer New Look are closing up to 60 stores, while Toys ‘R Us, Maplin and Poundworld have collapsed entirely.  We have also seen House of Fraser and Claire's Accessories experiencing troubles. Closer to home, the abrupt closure of Clery’s in 2015 led to the loss of 460 jobs and the loss of an iconic Dublin institution.

RTÉ News report from 2015 on the closure of Clery's in Dublin

This trend is mirrored across most developed retail markets and has been termed a "retail apocalypse". The retail apocalypse phenomenon has affected all formats of traditional retail as retailers struggle to confront the challenges presented by online sellers in the main. However, department stores such as Sears, Macy’s and House of Fraser are particularly severely affected as they struggle to differentiate themselves in an increasingly competitive retail environment. 

Furthermore, large department store chains are burdened by having too many stores as a result of over expansion when times were good.  An oversupply of retail space, coupled with a background of high legacy rents and overheads, means retailers who are not offering value, convenience or experience will struggle. Writing in Moneyweek, John Stepek challenges the concept of retail apocalypse and suggests that the current gloom on the high street is "a simple function of capitalism doing what it’s meant to do – winnowing out the companies that aren’t doing the job and enabling the resources to be recycled elsewhere".

From RTÉ Radio One's Morning Ireland, RTÉ London Correspondent Fiona Mitchell reports on the closure of major brands on the UK High Street

Recent surveys show that 53 percent of Irish consumers prefer shopping in-store to the virtual alternative, so why are stores failing? One key area of focus is customer service: PriceWaterhouseCooper recently found that less than half of Irish consumers are satisfied with most elements of the in-store shopping experience, highlighting an area of concern and opportunity. Retailers must have an in-depth understanding of their customers’ lifestyles and interests so they must know that spending valuable time traipsing around drab malls is no longer an option for consumers.

One reason for Sears’ demise is they stopped investing in stores, thus giving customers less reason to shop there. Millennials in particular are renowned for valuing experiences and they are not interested in simply having access to product. Retailers must ensure they have a compelling, relevant offer for their customers. Jess Christie of Matches Fashionsays that "retail needs to be surprising, inclusive and personal — it's about how it makes you feel. If customers take the time to come into your space, they're looking to connect and discover something".

From RTÉ Archives, Charlie Bird reports for RTÉ News in 1986 on how city-centre traders dealt with another potential "retail apocalypse" 

A major reason for retail failure is the significant challenge from online retailers. While this threat is undeniable, it also needs to be placed in context. Overall retail sales in Ireland in 2017 reached €40 billion, of which online sales accounted for just over 12 percent at €5 billion. Significantly for Irish retailers however, 60 percent of this went to foreign retailers. This highlights a huge opportunity for Irish retailers, but also underlines the imperative for them to radically improve their online platforms and offerings. 

Recent research by Paypal found that online spending is increasing by 20 percent annually here and is set to be worth €10 billion by 2020. A report by PwC suggests that Irish brands and retailers should also consider Amazon as an additional online channel to grow their own online offering as 67 percent of Irish consumers already shop with Amazon. Research from the UK shows that Amazon shoppers are less likely to shop elsewhere.

From RTÉ Radio One's The Business, a profile of online retail car parts and accessories company. Mick's Garage

To connect with younger consumers, Irish retailers must develop engaging and relevant social media strategies, as 94 percent of 18 to 24 year olds find their inspiration to purchase on social media. Strategies could include appointing brand ambassadors, focusing on the potential role of influencers and using live streaming from in-store events, as well as direct engagement with customers.  But this is a double-edged sword: as Robyn Turk of Fashion United points out, "one single misguided social media post can lead to public backlash".  

Forbes Magazine states that winning retailers show a deep understanding of the unique role of a physical shopping experience in a customer’s journey. Operating an omnichannel strategy (operating store-based and online channels), they know that physical drives digital and vice-versa. Retailers must have a thorough understanding of the customer journey, whether digital or physical. Customers must be able to connect with the retailer in a seamless journey across all channels.

Successful retailers adapt to changing demand and consumer trends

PwC note that while Irish consumers currently have low expectations of delivery days (largely due to ordering from foreign retailers), 77 percent of them are prepared to pay for next day delivery. Irish retailers need to be able to offer seamless, free returns to attract and keep customers returning to their online store, as the majority of consumers surveyed listed this as their preferred online service. Omnichannel retailers should also offer more click and collect options for increased convenience for the consumer.

Finally, the importance of mobile cannot be underestimated: Almost two-thirds of those surveyed by Paypal using a mobile device for shopping in the last year, which represents a growth of 61 percent of mobile spending in Ireland in 2018 to €2.8 billion. This is a clear indicator that having a mobile-friendly website is no longer an option, but rather a critical success factor for retailers.

A surf machine at the L&T shopping mall in Osnabrük, Germany

Successful retailers adapt to changing demand and consumer trends. One department store in Germany is luring shoppers back with new offline experiences like surfing! Betting everything on experience and entertainment, they have installed a surf wave pool in the basement. The initiative has been so successful they are now also installing a high-tech gym complete with altitude training and they have plans to build an open-air cinema next year. Creative, experiential, mixed-use retail models like this, supported by excellent customer knowledge and service, may provide physical store retailers with the most effective antidotes to the retail apocalypse.  


The views expressed here are those of the author and do not represent or reflect the views of RTÉ