Wednesday, September 18, 2019

Experiential retail can make the High Street top of the shops

Louise Smith
Louise Smith

Independent shops must give customers a reason to leave their homes and visit the High Street if they are to compete with online sellers, an accountant specialising in retail has advised.

Experience-based shopping such as in-store demos, pop-up events and VIP evenings, can draw shoppers back into beleaguered town centres and give bricks and mortar stores the upper hand over their virtual counterparts, Louise Smith believes.

“Small shops can actually use their size to their advantage, as they are often more nimble and able to adapt to change quickly in ways that chains cannot,” said Mrs Smith, a senior audit and accounts manager at Aberdeen-based independent accountancy firm Hall Morrice.

“With as many as 17,500 retail jobs in the UK expected to be lost this year – and major retailers like New Look and Debenhams having to close stores on the back of poor sales – some traders may look at the High Street as being a lost cause.  

“But if independents can start to focus on experiential shopping, where their customers can benefit from experiences only by visiting the store, then they are in a position to fight back.

“Experiential shopping doesn’t take a huge amount of investment or resource. For example, a deli could ask a supplier to carry out an in-store cookery demonstration and sampling. A fashion retailer might want to invite one of their brands to stage a VIP shopping event, with a mini-fashion show, styling advice and discounts.

“I’ve even heard of a book store in Bath that offers a reading spa – where customers can sit in a makeshift library and discuss books with staff to get their own personalised reading list – and a travel agent in Blantyre which has a mock-up of the plush Emirates Lounge at Glasgow Airport for customers booking a special occasion holiday.

“It’s really a case of going back to basics and offering a personal and individual service – the type of experiences shoppers can’t get if they are sitting at home on their laptop or PC. Retailers need to sell the experience of shopping as much as the product.”

Mrs Smith works with numerous retail outlets and said that online sales are not the only stumbling block to their survival. Business rates are often cited as a reason why local shops are not as successful as they could be, while many households are also hammering down on discretionary spending due to wages rising at a slower rate than inflation.

She urged small retailers to invest time and effort into giving their finances and operations a health check to ensure they not only survive but thrive.

“Overheads in retail are significant and my advice would be to ensure you are operating as tax efficiently as possible and taking advantage of every form of relief and assistance available.

“For example, some of my clients see around half of their operating costs go towards wages. Few shop owners realise that retail is one of the sectors covered by the Modern Apprenticeship scheme which, in addition to covering the cost of training and qualifications, can offer incentives to employers to recruit young people.

“One of the other benefits of taking on an apprentice is that offering a young person a long-term future is likely to keep them engaged with you as an employer, reducing future recruitment costs.”

But, above all else, she said that retailers must always remember the most basic of all business rules – cash is king. “Customers want to see a good turnover of new stock if they are to keep coming back and, more than that, excess inventory is a drain on cashflow.

“If your stock is not moving, then your capital – money that could be used on other areas of the business – is tied up on your shelves. Getting your inventory levels right is absolutely critical, and financial modelling can help identify the consequences of overstocking.

“I’d advise any retailer with excess stock to harness the power of experiential shopping: have a flash sale – an evening shopping event to get rid of the old stock to make way for new.”

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