Offline Attraction: the High Street’s going bust and e-commerce is not profitable – so what next?

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Offline Attraction: the High Street’s going bust and e-commerce is not profitable – so what next?

Go to an e-commerce event, of which there are many in every corner of the globe, and the room will be packed with a new breed of DTC companies – vertically integrated brands which are seemingly taking over the world.

Armed with a range of the latest digital weaponry, read technologies, which enable viral, virtual retail, these brands are claiming to be super-service led, with fulfilment to suit every mood. They are creating big buzz, packed full of services and saturating the online buyer’s appetite with a range of return options which would make the most astute management consultant salivate.

At the opposite end of the spectrum, we’re seeing the biggest number of high street closures for many years, with an offline retail space that is constrained by a model it has operated in for years, with increasingly limited flexibility for manoeuvre, despite having the rug being pulled from underneath its feet. We’re hearing words like ‘Apocalypse, Armageddon or End of the Road ‘– all pretty terminal.
In a UK market which is over-retailed, it’s pretty hard to max out when you can’t easily take your ‘bricks-and-mortar’, at least in its present shape, global. So a high street in terminal decline being eaten by an e-commerce monster?

Not many e-commerce platforms make money

The inconvenient facts in this whole story are that very few e-commerce platforms make money and even in the best performing markets pure-play online is around 10% of retail (in America).
The disruptive aspect of e-commerce is unquestionable. Totally new business models are revolutionizing the way we buy. The customer centricity that mobile brings with it, is unleashing a whirlwind of transformation for retailers who are vying to remain relevant. Experience is the name of the game and if you don’t create great shopping journeys you won’t be around for very long.

Yet despite all this digital, e-commerce, I will say again, is not a big profit driver, for most. In a world where choice, convenience and returns are increasingly dominant and where a world of personalization is becoming increasingly bland, those profits risk sailing away into the future even more than today. So what will become of the physical store?

Shop Take 2 – The retailer’s secret weapon

Well it might just be that the store is the key to a change in fortune for the retail sector, or at least it seems that Amazon thinks so. Imagine the store is center stage and online channels play a crucial role in a fully networked retail ecosystem. What would you sooner do, go to a concert, a show or a race or rather watch it online? So, if the retailer creates a great experience in its shop, isn’t that the place to be?

It is well known that consumers who shop online and in-store are the most valuable customers for any retailer. DTC brands see stores as a sales platform, a customer acquisition channel and for some products a vital means of creating superlative brand experience and service. A point of delivery. The success of stores extends beyond sales that occur within the old big box itself. For instance, some online brands confirm that opening a physical store can see a boost in sales of over 30% in the location where they opened the store.

Yes, the high street needs a shake-up but, it is a crucial part of tomorrow’s consumer commerce ecosystem. Great concerts, shows and races sell out in hours, even minutes and people just love going to them. You would never consider closing the theatre, concert hall or race track.

Wake up High Street – we need a call to arms. It’s time for all those digital hands to get on deck and work out the choreography for a renaissance of the Great Big Shop or should we call it Consumer Commerce Theatre – brands, services and great experience – delivered.

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