Google “retail is dead” and you’re faced with sifting through 26,800,000 search results.
As a strategist working with retailers day-in day-out this is either a very bad thing or a very good thing, depending on which way you look at it.
It’s difficult to deny the headlines. The past twelve months have seen the controversial demise of BHS; poor profit results from John Lewis, Dixons Carphone, and Mothercare; Toys R Us axing a quarter of its UK stores; and The Economist predicting that Britain, in the wake of Brexit, is set to become the world’s third slowest growing retail market next year.
Just last week, House of Fraser had its credit rating downgraded by Moody’s once again, placing the department store chain’s financial stability alongside the states of Belarus and El Salvador. On reading news of the downgrade, one shrewd commenter at thetimes.co.uk asked “Who would invent HOF now?”. A question that cuts to the heart of the issue.
With this never ending trail of bad news it would be easy to think that retail is dead. But I believe there’s a different story to tell.
As well as the annual John Lewis blockbuster, December brings with it something else to look forward to: The Fast Track 100. A league table, published by The Sunday Times, that ranks the 100 British companies with the fastest-growing sales over the last three years.
And this year, 32 of the hundred companies were in retail.
A third of the fastest growing UK businesses are from a “dead” industry. A stat that’s especially impressive given that retail as a whole only represents about a tenth of the UK’s economic output.
The list includes a mix of online-only businesses, like Cult Beauty and End Clothing, as well as retailers with real-life shops, like Watchfinder and Skinnydip. There are brands you’ve almost certainly seen advertised, like Missguided and Victorian Plumbing, and those that might not be on your radar - like Gymshark or Wool Warehouse.
Apart from their relative youth and the fact that many remain founder-led, there is very little that ties these retailers together. They’re from a variety of industries, have wildly different audiences, and employ a range of different operating models.
So, what secret sauce have these fast-growing players used to defy the “challenging conditions” that have beset their older high-street siblings?
I think part of their success lies in being specialist.
Wedding dresses, bathrooms, niche beauty products, protein powders, men’s streetwear, yarn… the fastest growing retailers in the UK are all specialist players - focusing on an individual category or customer base.
They’re the butcher, the baker and the candlestick makers of the modern age.
In a world where every retailer has got Amazon flashing its headlights in their rear-view mirror, being a specialist unlocks a number of sustainable advantages that the giant retail generalists will have trouble competing with.
Mental Availability. Being known for something helps make a retail brand more top of mind when customers are in those buying situations. Looking for a 2nd hand Rolex? Try Watchfinder.
Authenticity. Focusing wholly on a customer or category means you can go deep on the brand experience - turning customers into true fans. Everything at Missguided from the garment labels to the ‘Unicorn Tears’ bottled water has an unmistakably authentic tone of voice.
Expertise & Service. Just like Mastermind, a specialist subject can make or break the game. Cult Beauty, the online beauty retailer, has used its industry-insider expertise to build such a trust with consumers that they’re willing to buy into beauty brands they’ve never heard of or trialled before. Something the old model of department store beauty halls never managed to crack.
Choice Reduction. For a nation of consumers who are increasingly choosing to spend their time and money on things more fulfilling than shopping, those retailers that can combat decision fatigue are onto a winner. Flat Iron knows this. With just one choice of steak on the menu, this restaurant chain has become the 23rd fastest growing business in the UK.
I’m hopeful that these brilliant brands will grow to become significant players. There may not be the consumer demand to create businesses as large as Tesco or M&S, but that’s probably a good thing.
And the exciting thing for a retail consultant is that there are plenty of “legacy” specialist retailers in the UK that are ripe for revitalisation.