The House of Fraser crisis shows why online migration is a must for retailers and brands. We take a look at what’s happening within the UK retail landscape, and ask what could House of Fraser have done differently?
According to the Centre for Retail Research, “the growth in online sales will result in the closure of 20% of all UK retail stores by the end of 2018.”
That’s a punchy stat, but the facts are there to see on our high streets.
There is House of Fraser, failing in their rescue talks with numerous companies and credit rating agency Moody’s saying that the store is in “technical default”. John Lewis recently issued a profits warning for H1 2018, and Toys ‘R’ Us and Maplin went into administration.
But whilst some claim that “the high street is dying”, there are bright spots for UK retailers. With fewer consumers hitting the high street, it’s becoming increasingly necessary, and profitable, for retailers to grab their attention online.
Online retail is driving growth for the industry
In the space of 10 years, the online share of the retail market has more than doubled, from just 7.7% to 17.8% this year, according to the Centre for Retail Research. Now, almost 1 in 6 retail products are sold online, and this number is continuing to grow.
The diverging trends of retail footfall and online retail activity also show the compounding problems for high street stores. The level of retail footfall has consistently dropped month after month, whereas the number of consumers visiting brands via the web is only increasing.
Yet whilst the decline of the high street in the short term may mean tougher trading environments, the persistent growth of online channels should act as a boon to retailers and brands who embrace the shift in consumer spending culture.
Brands need to take a similar logic they employ in their bricks and mortar sites, to their websites, analysing what products sell in what locations, and tailoring their campaigns accordingly.
So, what could House of Fraser have done differently?
The retailer could have assessed their online customer landscape, and strategically planned their offline-to-online migration.
For example, out of the cities with planned store closures, House of Fraser attracted a higher share of online visitors from London (10.1%), Birmingham (3.7%) and Edinburgh (2.2%). But in terms of conversion (i.e. visits that lead to a purchase), Edinburgh (5.9%) and Birmingham (5.7%) were amongst the lowest.
To migrate consumers online in these cities, House of Fraser could have:
- 1. Analysed the types of brands online shoppers in Edinburgh and Birmingham are most interested in, and then introduced a wider selection from those brands into their online stores.
- 2. Similarly, they could have looked at the product interests by city. Search analytics can show what items consumers are looking for, and this information can help create localised product and promotional activity.
- 3. With access to the right data, they could also have filtered out different segments of their consumers, the platforms they come from, as well as their product and brand interests.
Whilst we take a hypothetical glance at House of Fraser, the same actions could apply to all retailers.
With current trading conditions, retailers need to identify the right brands and products for consumers and tailor this into their online offering by location. Migrating consumers online is now a must.
Read our full UK Fashion Report to find out the fashion players driving online growth, the challenges brands are facing, and tactics in overcoming them.