Why I think creating virtual high streets only further damages the real high street… #indieretail

Later today I am speaking to radio 4 about the new “virtual high street” schemes that are popping up. I’m also filming for a feature that goes out on Sky TV News. I’m the one who has to say why I think these schemes, hailed by some as the saviour for the high street, are not a “golden bullet” and in fact could actually do harm to retailers’ brand reputation with the local customer base.

Virtual High Streets are yet another group taking a bite out of retailers’ margins

We all know the high street issues – low footfall (parking, weather, out of town, online, economic reasons), high rent and rates, pressure on other costs (utilities, salaries), lack of credit for seasonal buys, reducing margins due to increased shipping and raw materials costs… it’s not a great situation and independent retailers, all retailers in fact, seem to be working harder for less.

So my first issue with any virtual high street operator calling themselves the saviours of local independent retailers is the fact they charge 14% commission on sales… For some that makes it almost pointless selling the item in the first place.

But there are a list of other issues that I have which are far more of a concern and could massively erode the retailers’ ability to deliver on their customers’ service expectations or to meet their brand promises.

Why virtual high streets can damage your brand, impacting negatively on customer experience

I have a list… and in no particular order…

  1. Delivery is next day or click and collect, in some cases it’s only available for restricted hours and in 2-hour windows, for some there the cancellation terms are 3 days.
    1. This isn’t really “instant gratification”, it doesn’t actually compete with the out of town retailers, supermarkets or online giants and it also imposes restrictions that if the retailer operated their own delivery they could better… For example SHUTL offer local-courier delivery services to any size of retailer, delivery can be as swift as in 15 minutes, but on average is 70 minutes, or, when you want it. No 2 hour windows, not next day… so certainly if you thought this was a good proposition because of the delivery, think again!
  2. The refund process has not considered the customer experience at all – let’s face it, as a customer (in a multi-channel world) regardless of how I buy from a brand I expect that brand to be able to look after me, to handle my complaints, to provide me with a refund or exchange (if I am reasonably due one!) With the virtual high street a customer can’t get a refund at the store, it has to be processed online – there is a reason for that – the store didn’t “own the customer” (I’ll come onto that) and therefore the refund has to be processed by the “aggregator”. And what about exchanges? Partial refunds?
    1. Customer experience is “but I bought this from you!” and yet transactionally that gets complicated. It is far better for a retailer to own the customer relationship and be in control of the process, ensuring that the brand experience at every touch point is how they want it to be…
  3. The retailer doesn’t own the customer relationship, the aggregator does. They get all the data on spending habits, they take the money and pass it on. Now I’d be wary of this if I was a retailer who wanted to invest my energy in knowing my customer. I’d want to have the data about their transactions on my systems so I could analyse it myself, I’d want to operate my own loyalty scheme, aligned to what my ideal customer would best respond to.
    1. One of the most important factors of being an independent retailer is being independent, having 100% control over how your brand experience is delivered and how your customers are engaged. Selling through aggregators can damage that and it can therefore reduce the quality of the service experience that you would otherwise deliver
  4. Virtual high street operators encourage retailers to redirect their own websites to the virtual high street BUT are not helping the retailer to build their own individual brand presence. They benefit from the traffic to their site from the sum of all the retailers’ customers, making their site more valuable, more commercial, more profitable and the retailers on the site begin to lose their own, individual online identity (which I would argue they need to build!)
    1. A retailers’ own branded website is a key part of the customer journey and they need to recognise this, small and large! Customers who are able to engage with a brand through multiple channels typically spend 130% of what a customer who is only able to engage with a brand in a single channel would… But note… it’s about confidence in the brand, not about finding the brand in various other diluted forms!
  5. The virtual high street needs the retailer to log in and manually update their inventory for in stock / out of stock… now I don’t know many retailers who have time for that… But if you forget and then the virtual high street sells your products you’ll have a customer failure on your hands if you are out of stock! This will damage both the retailer and the consumer trust in the whole of the virtual high street.
    1. Again, when a retailer owns the customer journey they can ensure that both their processes and systems are aligned. A decent EPOS with an ecommerce add-on can provide a retailer with a real-time stock status, and it certainly isn’t something that only big players can afford – these days with cloud-based retail systems even a single store boutique can benefit from this quality of system and therefore support the customer experience by not failing on promises as a result of zero stock on hand from which to fulfil online orders.

What WILL save our high streets then, if it’s not “virtual high streets”?

Well it’s a lot of things and each high street has it’s own unique challenges, issues and opportunities driven by the unique mix of people who shop there, work there, socialise and live there.

Some places have developed too much space, in these areas it may be necessary to make alternative use of the property to breathe new life into what otherwise looks like a ghost town. Other places simply need to assess what the barriers are to shoppers, and remove them. Easier said than done, but councils, landlords and businesses are now recognising things need to be done differently to attract shoppers back. It could be parking, opening hours, or even that the retail offer is no longer aligned to what local people want. It is broken, so it’s time to fix it, but you can’t do that by applying a mask that looks like a successful global online retail giant and saying “look, we’re almost as good” because almost isn’t good enough!

My belief is that the high street MUST NOT become a poor imitation of Amazon. It needs to be what it is – a physical, community-based retail, service and leisure provision that is relevant and in tune with the needs and wants of the local community. People shop online and out of town for 2 main reasons – price and convenience. This kind of shopping is typically a chore, not a joy. We need to re-engage the disenchanted consumers, to remind them of the fantastic shops, restaurants, bars and places we have in towns. And guess what? Making it virtual will do the opposite! Whilst the retailers may get a few orders, especially with all the current hype, and because it is something new, if a virtual high street gives customer a reason to STAY AWAY then what about nail bars, tanning salons, hair dressers, cafes, tattoo shops – they will see footfall drop!

I hate to quote David Cameron, and it was such a corny phrase, but… “Beating heart of the community” was a good summary of what we need to rebuild our high streets back into. Love or hate the man, that statement has some resonance with me and with so very many of the local businesses I work with.

To save our towns we need to start by looking at customers. Not at businesses, not at infrastructure, but at customers. Who are they? What are their needs / wants? What would draw them back? What is keeping them away? And that’s not a one-size-fits-all approach either, this will differ in each and every community BUT when you build the picture of what the town needs to be, now and into the future, THEN you can make the right decisions to underpin the recovery. We have experienced a customer revolution, now we are going through a painful high street evolution. Let our towns shine, let them be what they are, places for people to be – to live, work, socialise, shop, party, play – because in an increasingly virtual world we need to have that real interaction with real people, it’s part of our basic human needs.

I could go on… but I think I made my point… What do you think?

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About Clare Bailey

Clare Bailey, The Retail Champion (formerly Clare Rayner), is one of the most well-known and respected retail experts in the UK. With unrivalled knowledge in retail, high streets and consumer matters, she offers unbiased, independent content – whether engaged as a professional speaker, for broadcast media, or for a written feature. Clare is a business woman, entrepreneur and founder of several small businesses. Having been born into a family of successful business owners, it was inevitable that she’d eventually jump off the corporate treadmill and step out on her own! Today her brand portfolio includes The Retail Champion, The Retail Conference, the Future High Street Summit and the Support for Independent Retail campaign. In addition, she is co-founder of Mobaro Retail UK and a non-exec director of Beed Virtual Assistant Services. Having started her career as a fast-track store management trainee for McDonalds, she went on to work with leading retailers such as M&S, Dixons and Argos. She moved swiftly into management roles before being headhunted into senior consulting roles with global software giant SAP, and international management consulting brand, Accenture. Her corporate background in senior retail, consulting and technology roles, coupled with her experience of creating and running her own business, has enabled her to be equally capable whether consulting to global brands or micro businesses. This unique blend has not only positioned her as a leading expert in all things retail, but has enabled her to add meaningful commentary and insight to the debate around the future of the high street, and, how technology is driving fundamental change in the way consumers, and businesses, interact. Clare has become an influential voice in her field, which has resulted in her becoming a regular media contributor and sought-after conference speaker. Often seen on Good Morning Britain, BBC Breakfast, Sky News, and Chanel 5 (to name a few), Clare speaks on a myriad of retail, high street and consumer issues – but is particular adept when it comes to explaining the context behind retail trading results, newly released data, and government stats, in a palatable and informative manner. In addition to broadcast and conference speaking, Clare is the proud author of two best-selling business books published by Kogan Page - The Retail Champion: 10 Steps to Retail Success, published July 2012 and How to Sell to Retail: The Secrets of Getting Your Product to Market, published February 2013. She has provided contributions to various academic texts, including Retail Marketing Management (published by Pearson). With an engaging, conversational yet informative style, Clare writes for press and content agencies, providing features, articles, blogs and opinion pieces as well as contributions to white papers and reports. However, when the situation demands a more serious style, Clare can deliver - In 2016 she wrote an extensive report for a major insurance and risk law firm, as a retail expert witness, to support a public liability suit. She found that project particularly enjoyable as it played well to her strengths – assimilating large amounts of data and information, identifying the key points and articulating that in an understandable manner. When not on TV or speaking at conferences, Clare’s “day job” sees her supporting consumer-facing businesses through her consultancy services. When asked to describe what she most loves about retail consulting it is typically the opportunity to “dig deep”, getting “under the bonnet”, in order to leverage the business data to uncover the insights that lead to “lightbulb moments”. She also loves working on business change programmes that centre on improving the processes and systems to increase profitability by supporting more rapid, better informed decision making, improving the customer experience, or simply by become more efficient and streamlined. In this respect she considers herself a “business engineer” with a brain that works like a relational database! Due to her years of experience, her logical, objective approach, her quick, rational thinking, she is known for being able to cut through complexity, seeing right through to the crux of issues, finding creative solutions that others may have overlooked. As if all that wasn’t enough, Clare is a working mum, juggling a home life in rural Lincolnshire with her partner, their 5 kids, 4 cats, and geriatric Labrador! For all enquiries, contact Clare directly on 01727 238890 or email champion@retailchampion.co.uk.
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8 Responses to Why I think creating virtual high streets only further damages the real high street… #indieretail

  1. Complete and utter sense spoken here spot on! Cannot re-iterate point 4A enough! It has to be the way forward… you MUST engage with your own clients personally and virtually! Not allow someone else to do it for you – especially at 14% of sales! @14% of retailers diminishing margins this has to be a no brainer that these virtual high street companies are the next flash in the pan…..

  2. placeshaper says:

    Virtual high streets aren’t the answer to a retail /High street revival- but they do have their place if you live in small town like Burnley (my town) with limited HIgh street stores on your doorstep. So you need both – the downside being you miss out on the customer experience with the issues you have outlined which potentially can lead to further apathy towards the high street and their brands. Embracing the virtual ‘social’ world through social media to re-engage them back to the high street. is a must for part as part of any marketing strategy.

    I’ve been a Town Centre Manager for 14 years -for me you hit the crux of the High Street issue – we need to research and understand our ‘local’ customer desires, wants & habits. This needs to include why they DON’T shop there. Create a range of consumer profiles for each & every high street & town centre – which will all be unique & then underpin recovery based on your customers to create High Streets that become that ‘third’, great good place!.Not an easy task – I did an MSc dissertation in 2010 looking at why consumers shopped at Bury Market & also why they didn’t shop there – delved into understanding consumer behaviour & brand loyalty. I used focus groups to study users & non users. It was time consuming but a valuable exercise. DCLG, ATCM, Mary Portas need to look at ways of how we can get on & do this in our town centres.It was overlooked in the Portas review too. Maybe the £10k TownTeam funding should address this. The Cornerstone comes first – get under the skin of your local community.

  3. Ian Jones says:

    I have been thinking about local delivery as a way for the high street to fight back for some time now, so I’m really pleased to hear about these initiatives. Whilst the proposed schemes sound clunky and problematic, I think there is a real opportunity in this space for retailers and customers. I accept that your criticisms are specific to the schemes recently announced, but I am convinced that the concept is the strongest new idea for the high street.

    I want to address all of your points with a view to what would be possible rather than commenting on the announced schemes.

    1/ Delivery times.

    Its going to be possible for a successful local deliver scheme to deliver twice a day with morning orders delivered early evening and evening orders delivered the next morning. I am sure that wil be possible. Local councils can be persuaded to allow the delivery vehicles to park outside shops for collection etc. Multitudes of local takeaway delivery services manage instant delivery for a £10 food order so I have to believe this is possible.

    A successful local delivery service would be very attractive to shippers like Amazon and could be a very viable business just on the delivery side.

    2/ Refund process

    I think your criticisms are specific to the pilot schemes announced, and I’d be confident that retailers would prefer to work with a local delivery model that allowed them to use their existing expertise in customer returns etc.

    3/ Relationship

    I would like to see the retailer owning the customer relationship – I think thats a much better model and I agree with your criticisms.

    There is however a great relationship that the delivery service could generate in the local community. It would be like bringing back the milkman. Regular visits from the town’s delivery service could be a real community benefit. Both the infirm and the time poor would get great benefits.

    4/ Websites

    In the early days of the web, there was a great clamour to start websites which were ‘town portals’. It was logical to think that ‘Bicester.co.uk’ for example could be a go to place for buying services located in Bicester. Well that idea was blown apart by the rise of google. You could simply type in ‘plumber bicester’ and you d get to the information just like that. Looking to the future, I think that there is a real opportunity for towns to have a commercial web portal which is based first and foremost on delivery services from local retailers. Once that is established, the town website would be a perfect vehicle for news, local tv/radio and service providers. It could essentially become a 21st century local newspaper / trading post. Need a plumber? – Go to the local website and read reviews of the towns top tradesmen. There could be a level of engagement that will far exceed what the big internet companies could achieve.

    For many local stores, the overhead of running a successful e-commerce operation is uneconomic. They just wont get a critical mass of customers. I would not expect the local butcher to have a functioning ecommerce website and multichannel delivery service. By aggregating some if the IT and all the delivery service, small shops would once again be in the running to fight back.

    5/ You rightly point out that growing services in the cloud such as Brightpearl, are making small scale multichannel a possibility. I think that this makes it more likely that a local delivery service/ town portal could work well.

    All in all , I agree that the proposed schemes sound problematic, but lets not throw the baby out with the bathwater. Why should Tescos and Amazon own the local delivery space? This is something that can be organised town by town by local entrepreneurs without any need for government bureaucracy or subsidy.

  4. If independent retailers are to survive at all, they most definitively have to listen to their customers, find out what THEY want, it’s the same with any business, but at the same time we have to be careful, as Henry Ford is quoted as saying, if we’d asked the customer what they wanted, they’d have said “faster horses”. But even that tells you the customer wanted speed. People that use high street shops aren’t there for a bargain, they are there for the experience, the interaction, the quality, this is the “brand” and it’s impossible to give them those things through a 3rd party aggregate.

    I do believe however, independent retailers do need to get online- themselves, because it is a viable business model with less overheads, and integrated with an existing stock system can be a very viable way of creating a separate revenue stream, those shopping online want something different- let’s give it to them, so that we can use the profits to continue delivering quality service in the real high street stores, which are indeed the heart of our communities!

  5. Hi there, I enjoy reading all of your article post.

    I wanted to write a little comment to support you.

  6. Chris Ogle says:

    I think we are singing from the same page Clare… and of course when you talk about the beating heart of the community, you know that is exactly what we are doing with L4G… if we can rebuild the community ‘heart’ from the ground up, then the community will in itself decide what it wants in the high street… collectively… because it is the people that will be using it… they should create it… very simple… time for an end to have people guessing what we might want… and time for us all to stop looking over our shoulder for someone else to fix it… we must stop bleating and get on with the job ourselves… the time is now!

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