Retailers need to be adaptable

Retailers must develop different skills to flourish in the new normal, says David Wild.

A recent trip to the cinema set me thinking about the nature of change in the retail industry.

The Artist is the story of a silent movie star sidelined by the arrival of the ‘talkies’. Could this story be a metaphor for the current state of retailing? A shift in technology that causes a transformational change – isn’t that what the web has precipitated?

Web-enabled shopping is now the reality, with customers selecting and purchasing goods online without a store visit. Or they make informed decisions about where to shop based on their research.

When in-store they use the internet to compare prices and get further product information. Many also use social media to make comments or seek recommendations on purchases.

This transformation is changing the role of stores. Since customers can buy online they need a good reason to leave home these days. Those retailers that can’t provide that reason will lose out. A report by Javelin Group calculated that these trends will lead to a 31% reduction in the number of town centre shops by 2020.

Clearly our industry has to adapt – and quickly. The fortunes of George Valentin, the star character in The Artist, were only restored when he discovered a talent for dancing.

It may be extending the metaphor too far to say that we need to learn to dance but the central truth is the same – the advent of web shopping means we can’t carry on as before. We have to develop different skills to offer customers what they now need.

At Halfords we are working on a seamless multichannel experience where online and stores work together to complement and improve the offer.

In fact 87% of Halfords online orders are now collected in-store. Collection is especially relevant with our range of products, which lend themselves to additional advice and service.

For instance most customers prefer to see a cycle before they confirm their purchase and then have it built before pick-up. It’s also more convenient to have a colleague explain how to operate your new audio unit and fit it to your car, so you can drive away with it installed and working. Added service is a key way that we can differentiate our offer from pure-plays.

In car maintenance, diversifying into service has also become an important income stream. Close to 30% of the bulbs, wiper blades and batteries we sell we now fit as well, for a small charge. Our move into the auto servicing sector through a chain of Autocentres, offering MOTs, car servicing and repairs was a logical development of our fitting offer.

The economic situation has also fuelled a heightened quest for value. The web means there is complete price transparency and customers can easily find the best offer. There’s no hiding place, and less loyalty. So product pricing is very important to win sales.

Our response has been to take more control over sourcing and our supply chain. We design and source our own or exclusive brands directly from manufacturers in the most competitive regions of the world. This way we can control costs and provide higher spec products at good prices – so better value than equivalent branded products.

Retailing has always been about understanding the customer. We need to understand that the way they shop has changed and adapt our businesses quickly. This is our industry’s ‘talkies moment’. Retailing is not going to return to how it used to be. Happy dance classes.