Panic over London as Primark announces a dip in performance (FT). Evidence of consumer confidence drastically sliding and as Larry Elliot puts it: you know you are in trouble when people are thinking again about buying a £2 vest.
A phrase in this video of Martin Sorrell struck me as the classic mindset trap that we are in. The idea of ‘riding out’ seems to be the go-to mantra of last resort for business leaders. What a complete waste of time. If that is all the person/company/brand that wants my money has got in their locker then I’m not handing over a penny.
Nowhere is this mantra more exposed than on the high street. Of course overleveraged consumers aren’t going to be buying anything. This time there isn’t going to be a rescue from cheaper lending, more plastic or property bubbles. Everything is maxed out, including UKplc (as Danny Alexander and the tiresome government have a habit of reminding us).
‘Where’s the growth strategy?’ Richard Lambert, former CEO of the CBI asked the government by way of a parting shot. He might want to ask his members for whom ‘riding it out’ seems to be all they’ve got. Both sides are waiting for the other to come up with a plan – meanwhile descending into anaphylactic shock when the Primark barometer dips.
Ever smaller margins, £2 vests, angry disoriented shopppers. The high street, ground down by big retail, has become a painful part of life. How tragic for the centers of our cities, the last places where we come out in large numbers and physically take part in life (and the economy). As things stand, it’s clear that for a county like the UK that the high street as we know it will never be the same again. Riding it out isn’t an option. Retail needs a big reset.
What’s needed
We need high streets to compete on experiences not pitiful margins. Oxford street needs to become a mass collaboration hub. Managers need to take an away day out to a Games Workshop to play Warhammer. Property developers need to think about making spaces that aren’t just eco efficient hangars but that are made to encourage interaction, engagement and learning.
Big retail needs to understand that me-too environmental creds, watertight sourcing and a few jobs + tax doesn’t make them a good corporate citizen – that is (not even) the minimum requirement for existence!
If big retail wants to become an active participant in the future (and survive) it needs to shift away from the ‘ride it out’ mindset (proven to be bust) and think about making a difference to peoples lives. Engaging with customers needs to be built around learning and experience. Rented space needs to become a destination in its own right where people visit to find the tools they need to live a more rewarding life. Transforming assets of brand, floorspace and marketing budgets away from a £2 vest transaction into helping people live well is the only way out of this.
You can find out more about some of these ideas in these posts below. Resetting retail: Saving our cities is a project that we are doing this year mapping out what this change could come to look like. Get in touch if you want to get involved or find out more.
Economist keeps going down the