2012 was a year when the bad news just kept coming. High Street names like Comet, Blacks Leisure, Game Group, Peacocks, Clinton Cards, Thorntons and JJB Sports all suffered serious, sometimes terminal trading difficulties. In November the British Retail Consortium (BRC) announced that more than one in 10 (11.3 per cent) of shops in UK town centres were vacant, a figure that hit 20 per cent in Northern Ireland and 15 per cent in Wales, northern England and Yorkshire.

“There’s no question conditions are still very difficult, particularly for non-food retail and big ticket items,” says Richard Dodd, spokesperson at the British Retail Consortium. “Consumers’ budgets are under pressure from a range of rising costs. People are worried about their jobs and the wider economy and are holding back on spending. The summer was really disappointing. Wet weather affected June and July and the Olympics boost failed to materialise. There was a bounceback in September, but much of that disappeared again in October.”

Sarah Kellett, consumer industries consultant at Fujitsu, thinks 2012 was the year when the sector finally faced economic reality. “People previously thought the downturn was a bit of a glitch; finally they have started to think this is the new normal,” she says.

What lessons can the sector learn from those retailers which appear to be adapting effectively to the new normal? “If you’re food or you’re luxury you’re OK,” notes Huw Thomas, managing director at Paul Mason Consulting. “Then you’ve got the discounters, Poundland, Primark, doing well. Luxury’s great, food’s great, discount’s doing really well.”

Jon Rudoe, Sainsbury’s director of online, puts his company’s good year down to investing in the right things. “Our online grocery business is growing at nearly 20 per cent each year and we regularly have over 165,000 orders a week,” he explains. “The key to success in multi-channel retailing is the same as in bricks and mortar: great products, excellent service and a commitment to always improve.”

“Retailers with a very clear proposition have been OK,” says Neil Saunders, managing director at retail analyst Conlumino. “The difficulties have come where retailers haven’t been clear about their proposition. Tesco has become a little bit confused about what it is. That shows in the stores and marketing. The same applies to M&S: there’s confusion about who the customer is. Look at players with clear propositions: likes Primark, clear about the type of stores it occupies and the type of consumers it serves. Waitrose has got a clear purpose, you have new lines, new things for people to try. They’ve had a very good year.”

Growth in online channels also remains buoyant. The Economist Intelligence Unit has forecast that online shopping will account for at least a third of UK retail by 2022. The BRC estimates that Click and Collect will account for a third of non-food purchases by 2020.

As ever, one of the big obstacles to success in multi-channel is a lack of integration between channels. Many retailers are unable to achieve a single view of the customer or a single view of stock, often because of legacy IT systems. But there has been some progress in getting closer to a single view of the customer. Staff in B&Q are able to pull up product information on tablets in-store, then allow customers to order online, or to reserve an item in another store; and are also able to access customer information. A number of other retailers have put tablets into the hands of their staff as a customer service tool, sometimes with the ability to take payments.
Fujitsu’s Kellett believes product range and availability; and the speed and ease of receiving and returning merchandise drive multi-channel success. She extols the virtues of the Shutl delivery service which offers consumers in most UK cities the chance to have goods delivered within 90 minutes. Such services are ever more important differentiators in a world full of online competitors.

There have been improvements in collaboration between retailers and suppliers over the past 12 months, but perhaps the most impressive advances in this area relate to more fundamental processes. Kellett admires the business model of Inditex, the company behind Zara, which can get clothing from design stage to store in just 14 days; and efficient supply chains such as that at H&M, which can do it in a similarly impressive three weeks.

The aim in a multi-channel world must be to make the whole business genuinely customer-centric, argues Michael Ross, director and co-founder of e-commerce solution provider eCommera. “Do the basics well, because that’s what drives customer retention,” he says. “John Lewis, ASOS and Amazon are good at getting stock in, at getting the prices right, at getting products to customers when they say they will.”

One talking point for many retailers during 2012 was the cost/benefit ratio associated with implementing in-store WiFi, for the use of customers as well as staff. The fact that 42 per cent of smartphone users compare prices on their phones in -store, with 13 per cent then buying elsewhere (according to 2012 research conducted for Tradedoubler by Forrester) illustrates the risks and opportunities. Maplin launched its free in-store WiFi service with The Cloud in August. It allows customers to read product reviews online and discuss purchases via social networks. Maplin wants to develop more personalised services via tailored promotions on the branded landing page.

2012 has also seen some more progress, in contactless mobile payment solutions for consumer devices. In September Orange and Barclaycard announced plans for an Android smartphone compatible with Barclaycard’s Quick Tap service. And in November, RBS and NatWest launched TouchPay, a mobile contactless payment service for iPhones, powered by NFC technology. Both services allow shoppers to complete transactions worth £20 or less without needing to enter their PIN. Consumers also enjoy using mobile devices to access social networks while out and about. Social media can be linked to more complex online shopping experiences, such as virtual changing room technologies that allow consumers to try on clothes in cyberspace. They can then ask friends via social media whether they should make the purchase.

But what’s going to happen to the High Street? Currently this is the subject of a series of initiatives designed to stimulate a revival, including programmes led by Mary Portas and the Distressed Retail Property Taskforce. Part of the problem is that many retailers simply can’t afford to keep all their stores. One of the few which remains upbeat about the High Street is Sainsbury’s. “Currently over half of our stores are on High Streets and in town centres,” adds Sainsbury’s Rudoe. “We have pledged to keep growing our convenience business to create 10,000 new jobs in the next three years. This will involve around 300 new convenience stores, the overwhelming majority of which will be in town centres on High Streets.”

Is it also possible that retailers are making a mistake when they close some High Street stores? David McCorquodale, UK head of retail at KPMG, cites the example of his 15-year-old daughter, who gets sent the Jack Wills catalogue, finds something she likes, then, on her way into town on the bus uses her smartphone to see if the item she likes is in the store. If it is she conducts a Click and Collect transaction. “Is that a catalogue sale? An online sale?” McCorquodale asks. “That’s a real multi-channel offering and the retailer needs all three channels in that example.”

One way retailers can get more people in-store is to invest in technology, suggests Conlumino’s Saunders. “If you don’t, you’re not standing still, you’re moving backwards,” he says. “The consumer is a lot more demanding and there’s more competition. Retailers have got to make these investments, however painful it may be, because if they don’t they will end up with a business that isn’t growing.” The outlook for 2013 is pretty bleak, but Saunders thinks technology could be retail’s saving grace. “We’re still going to see casualties,” he adds, “But there are a lot of innovations in retail technology which are exciting consumers. Retailers have got to focus on developing the multi-channel proposition.” Only by doing so, he suggests, will they have any chance of enjoying, rather than just enduring, 2013.

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