Guest Post: Reed and Bhs are inevitable collateral damage in today’s omni-channel sales and marketing world

Another guest post from Christopher Moseley, (details below)

Reed and Bhs are inevitable collateral damage in today’s omni-channel sales and marketing world

It’s not hard not to get a little bit nostalgic about the death throes of well-known British High Street brands. Woollies was the first big name in living memory to get killed off in the Great War of the Internet versus the High Street; Austin Reed and Bhs are the very latest casualties.

Philip Green’s soon to face a grilling from a Commons committee, and no doubt the sense of outrage and accusations of asset stripping will heighten the tensions and anger associated with job losses and the of dying British High Street brands. As to Austin Reed, it’s hard to see a well-heeled target figure stepping forward to face similar political brickbats: it just kind of, well, died away.

Asset stripping aside it’s hard to see how tired old brands like Bhs might have survived in a world where choice is a touch screen away. The venerable British High Street, and the myriad shops which struggle to stay solvent within the confines of her bricks and mortar structure, still has a white knight in the form of Mary Portas, but it’s clear that the writing is on the, er, shop window … it reads, ‘Closing Down’.

Twenty or so years ago if I had wanted to buy a set of headphones I would have strolled to my nearest retailers to make my purchase.  In the 2010s, close as I am to my local high street, I can simply go online. It’s the only viable decision – there’s simply a much bigger choice, and greater availability.

And with a smartphone in hand, or a laptop or tablet at my side, I’m able to quickly locate a wealth of information about my desired product before being given a list of potential suppliers – often ranked by reliability and item price.

Why would I ‘go’ bricks and mortar, when with a simple click my goods can be delivered to my house the very next day?

Why break into a bipedal sweat when one can surf?

Omni-channel selling provides consumers with numerous channels through which they can interact with and purchase from retail businesses. There’s all the attendant information about products, the means to interact with technical experts, and a giddy range of devices: smartphones, desktops, notebooks to browse on.

The 24-7 shopping experience

The obvious advantage of Internet shopping is that is that one can shop well after the High Street curfew of 5:30pm. We can all shop to heart’s content, on the couch, in the bath, or in a tent on Ben Nevis. Businesses that can’t cater for the around-the-clock punters face obliteration. Why walk?

The future’s bespoke, more interesting and built for humans

Around 16 years ago, when the first corrosive impact of the Internet was being felt in the High Street, I once tried to stage a media stunt. I proposed a debate between several well-known exponents of retail, pitted against some toughies (clients actually) who worked in e-commerce. If memory serves I’d wanted to co-opt a Selfridges or Harrods window to conduct the debate. It would have been fab I think.

It never happened – I guess the issue wasn’t quite sufficiently in the public eye back in ’00.

It’s a different story today. We’re right in the middle of a bloodbath and it’s hard to see a future for the great British High Street, other than, perhaps, this is an opportunity to return to something rather old-fashioned, something much more traditional.

If there is a future for the High Street, it won’t be a continuation of today’s confection of identikit chain stores, but rather much akin to the boutique butcher, baker and candlestick maker of yesteryear. Throw in some vibrant street markets, some residential housing, and one has something like the world of the Edwardian era.

So, the mantra of the High Street in the 2020s might just be, ‘Let’s party like it’s 1899 …’

Chris Moseley

Head of Public Relations, Merchant Marketing Group

Email. chris@merchantmarketinggroup.com

Tel +44 238022 5478

In a networked age, nice guys win

A wide variety of marketing tools have been developed to fool customers into buying products that are more expensive than they need. A huge volume of psychology research has created departments of precision marketing staff whose main skill is tricking customers. Coupled with accounting trickery, pricing, packaging and phantom special offer tricks are often used to disguise price hikes or pretend something is a bargain when it simply isn’t.

This is not clever. It is dumb. It reaps an apparent short term gain at the expense of overall customer spending and customer loyalty. If you want proof, Tesco is proof. Even the dumbest Tesco customers eventually noticed that the company had changed from one that was looking after their interests and giving excellent service and excellent prices to one that seemed to be trying hard to trick and fleece them at every opportunity. Since marketers share ideas, the other big supermarkets used many of the same practices, with the same result. When new entrants arrived that didn’t try to trick people, customers walked and profits dived.

Using the very latest psychology and neuroscience is not the problem. Nor is honing marketing and sales tools to the Nth degree. It is using those top level skills while forgetting the basics that is bad, or worse still, using them quite deliberately to abuse customers.

Customers like to feel they are getting genuinely good products at genuinely good prices. If they are used to that in a shop, they come to feel safe there and more willing to spend. They don’t feel on their guard all the time, feeling they have to do hard sums to work out which one is the least rip-off, and buying only what they need, saving the rest for elsewhere. When they feel safe, they spend more, they buy things they might not otherwise have bought, and they’ll come back again and again, so your profits will be sustainable. They take far more notice of your marketing too. They won’t look at something and then go and shop around for it online. They come to trust you, and they’ll do more business with you. That is so simple and obvious it doesn’t need years of training to learn. Being simple doesn’t mean it is untrue. Basics are easy, but still important.

Good marketing lets customers know about your product and its relative merits. It can even be honest about its limitations. Good marketing is that which customers would seek out themselves if you didn’t deliver it to them already. Bad marketing is trying to fool someone into buying something they otherwise wouldn’t. You can fool someone once, maybe twice, but in the end it is you who loses a good customer. Social media exposes trickery quickly and effectively and tricksters lose. In the networked age, nice guys win.

If you use sophisticated marketing to fool customers, the fool is you. If you want a friend, be a friend.

The future of Tesco – a recovery strategy

Tesco’s share price has fallen dramatically after yet another profit warning. A once thriving supermarket chain finds itself in real trouble. Tesco blames the discount supermarkets, but although that is an easy excuse and some of the other chains are also suffering, it is too simplistic an analysis and merely distracts attention from Tesco’s own blame for the profit drop. The reason some others are suffering too is that similar problems also apply to them, the big chains copy each other a great deal. They take similar approaches and suffer the same consequences.

The root of the problem

Overall basket price is a big factor in customers migrating to the new discounters, but failure of trust is an even bigger one. A customer who is worried by prices still knows they have to eat and accepts having to pay, but is particularly worried about being overcharged, so trust becomes more important. It isn’t just the absolute shopping budget they care about. Feeling confident that they are getting the best value for what they have is equally important. Having to be constantly on their guard to avoid store tricks while doing what is already a boring chore is a sure way of making them want to shop elsewhere, and that is exactly why Tesco is suffering now.

Death by accountant and marketer

Accountants are critical to a successful company. If they are good, the company can flourish. If they are bad, it can die. The worst employee a company can have is an accountant who thinks they are cleverer than their customers. If they work with an equivalent self-regarding boss from marketing, they can destroy a company. Tesco sells a lot of products and its accountants and marketers have developed a large number of tricks to get customers to pay more than they should. It is easy to trick customers occasionally, and easy to think up new ways of doing so, but it isn’t clever. Eventually the customer notices. The practice of trying to trick customers to spend over the odds destroys trust and customer loyalty. When another supplier arrives that doesn’t abuse the customer in the same way, people vote with their feet, as we are now seeing.

I discussed death by marketing in a blog 9 months ago: https://timeguide.wordpress.com/2013/11/29/fake-sales-death-by-marketing/. If Tesco had read it and acted on it, perhaps the share price wouldn’t just have dropped.

I don’t need to list all the tricks here, you know them all too well, so just a few headline ones – reducing sizes while keeping the price the same, fake 50% off offers by charging double for a period, selling larger boxes at higher price per unit weight and so on. These are all technically legal, but any idiot can do that, and only an idiot would. A trivial short term gain may be had from a customer not concentrating enough, but the customer soon loses trust in the company. While it is inconvenient or more expensive overall to shop elsewhere they might still keep coming, but all the unnecessary effort they have to expend every time they go to avoid being fleeced all adds up. In the end, they walk. Nobody wants to be the poor sucker who paid £10 for a £5 bottle of win just so that others can be conned by a half price offer.

Trust has most definitely been squandered by repeated bad experiences of being fleeced. Frequently bad signage and misleading labelling don’t help. Some of that seems to be quite deliberate confusion marketing too, another fundamentally bad idea that only looks clever to the dumbest or marketers or store managers. Add to that rubbish customer service that seeks to defend the store against refunds and just argues that the customer is in the wrong and it’s a sure recipe for failure. The adverts may try to portray Tesco as the shopper’s best friend, desperate to give them the best possible value and service, but the reality experienced by the shopper is often the opposite. Many customers think of Tesco as the enemy rather than a friend. The share price drop is the direct result.

Solving this isn’t rocket science and it is astonishing just how reluctant previous managers have been to abandon so obviously flawed practice. The new boss needs to avoid these obvious mistakes. Treating customers as fools to be fleeced at every opportunity will not restore profits or the share price but will instead ensure continued collapse of loyalty.

The first foundation stone for a recovery is to stop trying to fool customers. The above points firmly to that. If you want that as ancient wisdom: “Once bitten, twice shy”. All the fake half-price and special offers have to go, and all the confusion marketing and confusion pricing. I know that accountants and marketers want to show off to their peers how smart they are, but really, fooling customers is NOT smart. The smartest way to show off to customers is by getting them really good deals occasionally, genuine special purchases.

Secondly, there can be no profit without customers. The customer is not the enemy and certainly not prey. The second foundation stone is to start treating the customer as a friend, as a potentially loyal source of future profit who just wants good value and good service. If the ethos is right, that customers should be looked after, then Tesco will recover. That the marketing says so but the reality is the opposite is a key clue to finding out where the problems really are. All the areas where customers are seen as the enemy need to be eradicated from corporate thinking. The new CEO should look down that avenue and kick the butts that need kicked.

Customer services should also go back to the old wisdom that the customer is always right. That was understood by retailers for centuries. Why has Tesco forgotten it? It needs to learn it afresh.

Thirdly, customers want consistently fair markups. They don’t want to get bread cheap and pay double for fruit and veg to make up the profits. They’d rather have purchase price + x%. Profit isn’t a dirty word and customers don’t expect shops to be charities. Markup is both expected and accepted. They just want a fair deal.

These foundations can create a solid platform for recovery. More bricks are needed on top of course, but that will come down to company flair. Tesco is huge and has enough market clout to get excellent special buys on occasion. It can offer some things the discounters can’t. It can add value in a myriad ways without adding to cost. Survival ultimately isn’t about price wars, but about looking after your customers.

My 6S guide to retailing is my view for high street retailing from 18 months ago, and is only partly appropriate to superstores, but a company the size of Tesco should know better that me anyway:

The future of high street survival: the 6S guide

Tesco was once a great company. You could be sure of getting good quality at a good price and you didn’t have to be on your guard the whole time. On that strategy, it grew from a tiny company into a huge one. All it needs to do to recover is to remember its old values and apply them again. Those are the very same techniques the new discounters are using. They treat customers as friends, they try to get them the best deals, they offer good service, and they don’t try to fleece them. Tesco can even charge a little more than the discounters and survive, because price isn’t the only factor in play – the environment, types of display, range and quality of produce all count too. But it needs to go back to its original ethos. Genuinely.

If Tesco wants to survive, it can’t carry on treating customers as dumb prey. The trust has run dry.

 

Out of town centres are the most viable future for physical shops

So the government’s ‘retail guru’ Mary Portas has said that some high streets are doomed and should be turned over to other uses. I don’t share the government’s high regard for her but I do agree that it is time to reconsider the structure and location of retailing.

As usual, I’ll highlight the problem first, then suggest the solution.

I live on the edge of Ipswich. The area is a nice place to live but I rarely go into town. To be absolutely honest, I try hard NOT to go into town. I am sure they don’t want me there anyway, since they try hard to deter me from going in.

In the last year, I’ve been to radio studio three times, the cinema once (that involved over 20 mins looking for a car parking space nearby, eventually parking much further away and walking), and shopping once, dragged kicking and screaming, having to wade through a lake in a waiting-for-brown-field-development car park on our side of town that we used to avoid the trauma of traffic congestion. The planners were presented with a once-in-a-generation opportunity to fix a lot of the congestion when they started redevelopment of the docks, but instead actually worsened the traffic routing and created even more congestion.  I don’t know why they did that, but they did. You could say that Ipswich had been a one-horse town, but the planners shot the horse. Ipswich could have been a great deal better with just a bit of thought. Having said that, there are far worse places, far worse. I’m probably just a troglodyte that owns a shaver.

Like many other towns, a lot of the shops are closing. The issues are familiar all over the country. Congestion, lack of parking and high parking fees compete with easy home delivery from online purchases. Congestion is not the same as throughput, and even though it seems busy, town centre businesses obviously aren’t getting enough business or they wouldn’t be closing. 

I’ve written on the future of high street retailing before:

The future of high street survival: the 6S guide

Future high street retailing

Online shopping offers formidable competition, and in those previous blogs I looked at what can be done to compete . This time, I want to concentrate on the location of shops.

Sometimes I just want to get out of the house and go shopping. If I don’t have anything particularly in mind, I go to Woodbridge and Felixstowe, mainly because they are just as fast to get to as Ipswich, but prettier, it is far easier to park there, and parking doesn’t cost a fortune. If the trip is purely functional, I will often end up at a retail park. They are easy to get to, I can park close to the shop I want, and it is free.

There has been huge resistance to out of town shopping centres over the last decade or two because they obviously take customers away from town centres, and involve driving so were considered environmentally unfriendly. Let’s look at both of those in the light of the new reality.

Big retail parks are mostly full of enormous warehouse stores that offer a purely functional destination. Some are selling stuff that is best suited to online purchasing and the less competitive ones are likely to die or shrink. As they free up the big warehouses, these could be attractively redesigned to house many shops that once lived in town centres. So when someone goes to their local retail park to look at furniture or DIY kit, they might well spend an extra while wandering through some interesting small shops.  The big stores would act as a functional magnet, and the small shops would add interest and serendipity, making a boring functional trip into an enjoyable experience that could fund a flourishing retail community. Provided the rents and rates are OK, and that parking is free and abundant, this could work well as a model for high street condensation and relocation. It could even rejuvenate physical retailing, especially small businesses.

As for environmental impact, being stuck in a traffic jam is far more polluting than driving along unimpeded. Out of town centres can be placed to work well with the local human geography and roads so that traffic can flow smoothly and make less pollution. Parking must be adequate to cope with latent demand or that will drive potential customers onto the net, or force them to drive round and round car parks looking for places, polluting as they go. People who live in town centres generally have ready access to public transport and it is just as easy to aim routes at out of town centres as it is to town centres. If the old high streets are re-purposed, then retail business would just be moved to more viable locations where they could flourish.

If we move shopping out of town, almost everyone benefits. People living out of town would not have to go into town to shop, and congestion there would probably fall so that it would be less traumatic when they do have to go in for other reasons. People living in towns would still have public transport access to shops, just in different locations. The few who live within easy walking distance of town shopping centres would suffer having to go further to shops, but they will suffer their loss anyway if they don’t move.

For people out of town, well designed out-of-town shopping centres offer the potential of reinvention and to rekindle the joy of shopping. For townies, the alternative to shops that are a bit further away might be to have no shops at all. That’s probably the new reality and we either embrace it or suffer it. Government and planners should recognise that and make policy accordingly.

 

Sainsbury’s marketing have lost the plot

This one is more of a rant against poor marketing, and isn’t about the future.

I won’t mention names, but I know a few marketing chiefs who think their staff are largely a waste of space. I don’t have any experience of working with Sainsbury’s marketing though so only have experience as a customer as evidence one way or another.

I am sure someone thinks their new campaign is fantastic. Lets run a TV campaign telling everyone that if they could have got stuff cheaper elsewhere, we will give them a voucher for the difference. It worked well for John Lewis didn’t it?

Well, yes it did, but John Lewis did it right. You did it the opposite of right.

So, if we’d shopped in one of their competitors, we would have paid less.  But they are kindly ‘making it this easy to claim the difference back’. So, if we are still dumb enough to go back to Sainsbury’s soon, knowing we had been overcharged, and remember to take this voucher with us, we can ask for a refund of the overcharge, but only as a discount of our next purchases, which presumably, being a similar basket, will also be overcharged, so we’ll get another voucher and be locked in forever into a cycle of being overcharged and having to juggle vouchers and keep shopping there to get a fair deal. But it is only £1.31, (it was only a small top-up shop of around £20) so we’ll cut our losses and shop in Tesco’s again, where according to Sainsbury’s, we’ll presumably save even more than that every time, since we normally pay rather more than £20.

Not quite John Lewis is it? They are ‘never knowingly undersold’. If they find a competitor would have charged less, they will charge you that or less, at least that’s what I have always assumed. Not give you a voucher that you have to take back and get a discount of another overcharged shopping trip.

Sainsbury’s, you are not being clever, locking people happily into forever shopping there. First, you are telling them you overcharged and then secondly, instead of just deducting it at the checkout at the time which would be easy and fair, you are making people additionally jump through hoops before you’ll give them a fair deal, while telling them where they can get one right away. Not clever. Not at all clever.

 

The future of high street survival: the 6S guide

I do occasionally write a blog relevant to the news of the day rather than just what takes my fancy. The news today, apart from Tesco horse burgers, is the closure of another national retail chain, HMV. I learned on the news that HMV stands for ‘His Master’s Voice’. Never knew that, I thought it was a 90s chain. ‘His master’s voice’ is immediately recognisable as an ancient and trusted brand. HMV has a nice up to date logo  though so maybe their marketing department though that is more important to appeal to a generation that has mostly never bought a CD. HMV also didn’t bother to explain the difference to shoppers between what you get when you buy a CD v what you get when you download, i.e proper ownership and rights v part and temporary ownership and severely restricted rights. Still, too late for them to ask me my views. They’re dead.

Some high street shops make excellent use of the synergy between a physical outlet and web presence. As we progress into the age of augmented reality, that will become ever more important. People will expect to be able to buy via either route but still use the facilities offered by the shop. AR also adds huge potential to add virtual architecture, décor  themes and gaming. Reserving online for high street collection, or buying for home delivery while in the shop are well established; less so is using 3d printing to accessorise outfits, or laser scanning body shape so that you can use stores as try-on outlets. These are starting to generate presence and will grow in importance. And some shops are getting extra income by acting as drop off centres for other companies, so that people can collect things on their way home from work, a big thing for the many households where nobody is at home during the day to receive goods.

Socialising is best done face to face, and shopping is a social experience too. Coffee shops and restaurants have been familiar in shops for decades now, but shops could make far more advantage of social networking to offer meeting and hanging out facilities for people using social networks and who share something in common related to the theme of the shop. Clothes shops could offer fashion related events, gadget shops demos of up and coming products, and so on. Establishing shops as something more than just places to buy increases their relevance and brand loyalty, hence survival chances. So, synergy, socialising. I feel a ‘6S guide to high street survival’ coming on.

Next S:  service. This should be obvious, and most shops do appreciate the importance of differentiating on service quality. While it used to be a concern that people would use the shop for service and then buy online, having good web presence and competitiveness anyway makes this less problematic. There is nothing wrong with having some premium services and charging for them in addition to free basic service. Some premium services could even be provided for competitor web sites with no high street presence, making a potential income stream even when people do use competitors. Opticians doing prescriptions for online glasses sellers, or clothes shops providing paid measuring services are good examples where this already occurs. Seeing competitors as potential market opportunities rather than just as threats is key.

Suck and see. OK, a bit contrived to get the S this time, but shops are starting to do it. The Apple Store is a good example, where you try it out in the shop but the purchase is essentially an online one. Clothes shops can let you try a garment on and then order it in your size for home delivery, using rapid customisation manufacturing and delivery systems.

Surprise is another one. It is easy to shop online when you know what you want. If you don’t, shops can offer that mixture of expected and unexpected to make you want to visit. Call it serendipity if you prefer.

The 6th S is for Special. This could be customisation or personalisation of products for customers, or it could be an extended relationship with customers in terms of pampering of regular customers, after-sales services, advice, affiliate programs, belonging to social groups… People want to feel special.

There you have it. Service, surprise, suck-and-see, socialisation, synergy and special. The 6S guide to high street survival. 🙂