Right to reply: Habitat’s woes show high street needs to go back to basics

It has been a devastating week for the retail sector, with many household names falling victim to the pressures of crumbling consumer confidence and shrinking household budgets. With fashion retailer Jane Norman announcing that it is going into administration, the takeover of Habitat by the Home Retail Group and Homeform also confirming that it was going into administration – the future looks bleak for retailers. Jeremy Michael, managing director, SMG UK, takes a closer look…

“The confirmed takeover of Habitat by the Home Retail Group is a strong decision, despite the negative news agenda, and we can’t see this as the end of the high street, but an evolution of existing circumstances. We can see that household budgets are being squeezed, consumers are less willing to spend money on the big ticket items and the high street is littered with sales and closing down signs.”
Commenting on the recent PricewaterhouseCoopers research released this week, which revealed that 70% of high street stores have resorted to early summer sales to boost spending, Michael continues.
“Putting on a sale in the hope of encouraging spending is not enough as retailers need to focus on the customer experience and levels of service in the store. The sale season means that stores focus on keeping busy, filling the store and serving anyone and everyone.”
However, with little focus on the customer experience, if this is the first time a customer enters the store, this could be their last, as the customer experience will have the biggest impact on whether they return or not – regardless of how cheap the product is. Restaurants and retailers using discounts and special offers, sometimes dilute the value of the brand and have no tangible financial impact, as they are willing to do whatever it takes to get the customers in and not enough to make sure they return.
Many forward thinking retailers and service providers (including Burger King, Pets at Home, TGI Friday’s and Superdrug to name a few) are going back to basics and getting to grips with what the customer wants in order to help understand what drives sales and levels of return and recommendation, which is becoming more and more important in this volatile climate.
The high street is not all doom and gloom as there are certain brands, such as John Lewis, that focus on quality of product and service and have not resorted to ‘one hit wonder’ discount tactics and are still producing fantastic profits. With customers returning to the heart of the high streets survival and the focus of retailers’ recovery there is an opportunity for the high street to battle on and conquer consumer fears.
By Jeremy Michael
Managing Director
SMG UK
www.smg.com