Posted on Tuesday 12 March 2013 by Ulster Business

Retail

By Stephen McVey

The decline of HMV, the last of the superstore music chains, has been described as the beginning of the end of an era.

It followed hard on the heels of other big name casualties including Comet, Jessops, Blockbuster and JJB, all apparent victims of internet retailers muscling in on their business.

There is now a debate as to whether any of the big retailers can maintain a high street presence and adapt to the biggest shift in consumer behaviour in a generation.

With almost a quarter of shops in Belfast vacant, it appears that online shopping is going head to head with high street consumption – introducing the very real possibility that many retailers are only a mouse click away from being dropped out of the rat race.

Aodhán Connolly, Director of the Northern Ireland Retail Consortium (NIRC) believes the current trends will continue to develop.

"One thing that is clear is that the recession has hit large retailers as much as it has hit small retailers," he said. "There is a need for retailers to evolve because of the changing consumer behaviour and to be honest this change is the fastest that we have seen in any of our lifetimes and it will continue to change."

Mary McCall, the Managing Director of Treat Ticket, a UK wide group buying website headquartered in Newtownabbey, believes failure to stand out accounted for some recent failures.

"There was nothing unique about what HMV were doing," she said. "They were selling CDs, DVDs, posters and gadgets. I can pick these things up in Tesco when I'm doing the grocery shopping. There was no other real reason for me to go in and visit. They weren't the cheapest, they weren't the shiniest. What was it that was unique about HMV?"

An explanation of why some businesses failed to adapt is offered by Philip Graves, a consumer behaviour consultant and author of 'Consumer.ology: The Truth about Consumers and the Psychology of Shopping'.

"Businesses run essentially on numbers. Five to ten years ago, when people were looking at the value of their business as a physical presence, they compared that to the cost to develop a website. If your history is in the high street, it would take extraordinary vision to look at it and say 'actually I'm going to put a whole lot of energy to commensurate online with our existing operations'," he said.

"You've also got the problem that initially the website was seen as an IT function. So it was managed within that department as they were the ones who really understood it early on. But of course it should all essentially be a part of the same marketing operation," he said.

LEARNING CURVE

Mary McCall highlights how the digital revolution has been a steep learning curve for everyone.

"Lots of us have landed in this environment where transactions, shopping and communications are done online. We've had to learn how to do that because we are used to doing it in a traditional way. However there is a whole generation of people who are digital natives. Who do everything this way and have grown up with it. If we are going to be leading organisations, we've got to learn how to communicate with people in a way that's appropriate for our target audience," she said.

She believes that a focus on the social experience of shopping is the right way to go.

"I think a lot of stores are going to end up being a bit like the Apple store and the eBay store, where it is all about the experience. For me it's like St. George's market. Why do we go to St. George's market? We don't go to shop necessarily, you go to experience the atmosphere, but when I get in there, it's so compelling that I find myself purchasing products," said Mary.

Social Development Minister Nelson McCausland has recently published a report on the role of his department in supporting Northern Ireland's town and city centres.

The Minister said: "The nature of retail has changed in recent years and the long term challenge is how we move from retail lead towns and cities, to developing their value as multifunctional social centres that vitalise our high streets not just in daylight hours, but also to maximise our evening economy.

The report highlights the sense of deep frustration felt by those struggling to survive and thrive in today's difficult trading conditions and says there are "complex issues" that the department needs to help address.

Aodhán Connolly is hoping for continued government support for initiatives such as business improvement districts (BIDs).

"What is clear is that we need our towns to have that diverse retail mix. We need to make sure that our high streets are not just retail areas but retail destinations," he said.

"There has to be a stand taken and an investment by local government and by businesses. Things like BIDS work so well because it's everyone working together and building on the flavour of the town that is already there. Say for example in Newry, you could build on the historical canal connection."
Property expert Conor Devine, Principal at GDP Partnership, believes businesses should be given more assistance by the government, particularly where rates are concerned.

"In Northern Ireland we need a complete review and overhaul of how we calculate our rates and create a system that is fair for all and also produces enough spend to cover costs. It's shameful that the business community has had to endure these extremely high and unfair costs in the worst recession in generations," he said.

"Stormont needs to get a handle on the rating problem and very quickly. Rates is one piece of legislation that local government can actually change, yet they choose to ignore this, hoping the problem will sort itself out."

KINGS OF CONVENIENCE

Philip Graves has identified the convenience of online shopping as one of the key reasons why big retailers are struggling to maintain a physical presence.

"What the internet does is appeal to a part of our psychology, which is very deep rooted and orientated in most of our behaviour and that is – we are primarily motivated by what is easy," he explains.

"We are prepared to trade off instant gratification; we are prepared to trade off the kinaesthetic interaction we have with the product. We are prepared to forego all of that for something that is made significantly easier. It is why we download and listen to tracks on a MP3 player and not on CD. The quality is not as good but we can get more music, more quickly and it is easier to deal with it."

Graves adds: "When you look at aspects of physical shopping from a psychological perspective, it is both inefficient and ultimately quite unrewarding. If you get disappointed because you can't find what you want, those sorts of things stack up in your mind at an unconscious level and you become frustrated. That is not something that the online environment is encumbered by, because you have got everything there and you can find it quite easily."

Mary McCall believes her deal-focused business can provide support to businesses that are coming to terms with these shifts in consumer behaviour.

"Our work is involved in helping businesses understand that they should view the internet as their friend and not their enemy. We are a promotional platform that local businesses can use to access an active mass digital and mobile consumer base that they wouldn't otherwise be able to communicate with. Social Media still only allows you to communicate with your own audience in a passive rather than active way. The key is to combine active purchasing with social media and a 'real' respect for and commitment to consumers and business partners alike."

EVOLVE TO SURVIVE

Looking to the future, Mary believes the high street will survive through evolution.

"The reality is there is still a place for the high street. There absolutely is, but how it's going to change is going to be really, really interesting. The long and the short of it is there is going to be some goods and services that can't be dispatched or sold over the web. People are always going to want products that are perishable. For anyone to say the high street is dead – that's nonsense. The high street is not going to die. It's just going to change," she said.

Philip Graves explains that, despite so many changes within consumer behaviour, individual customer needs remain the same.

"Customers haven't changed," he said. "I think that's a really important point because what they value are still the same things they have always valued. It's just that the internet has provided a route of access that is better, in a lot of cases, than the high street.

"What businesses need to do is genuinely understand what drives consumer behaviour. The fact that on one hand they really like easy options, the easier you can make something the better, on the other hand we have got complex desires that we satisfy through consumption. It is important to note there are times when these desires can be better satisfied through a bigger experience than the internet is currently capable of offering."

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