Paul Langston, Consulting Partner, Location Strategy
Despite some major headlines in recent months that have cited the Internet as a factor behind store consolidations, retail stores are not going out of fashion! Yes, some retailers are struggling, but others are still very much on the growth trail, even when they have high and growing levels of online sales.
Yes, online sales can have a major impact on store viability.
We’ve seen in our work with a number of clients that this relationship can be positive, and that a store presence can improve online sales. This is especially the case for retailers with a strong brand, clear online proposition and supporting links between their on and off-line offers.
We have seen some big-name casualties where the Internet was a major factor. But, in my view, the impact of the Internet can be a convenient excuse, when in reality there are other pressures bearing down on retailers’ expensive store networks.
For many retailers the threat from the Internet and new technologies is no worse than the many other retail dynamics that are impacting on every store – ranging from shifting store pitch to changes in the national economy.
So that retailers are not caught out by these shifts, I believe that ongoing Network Management is essential to ensuring the long-term viability of all store networks. This involves; regularly monitoring the unique factors at play on each store, alongside traditional metrics like profit and like-for-likes. Only by understanding the Store Potential, Network Interaction, Store Position and level of Online Interaction
acting on each individual store can retailers make truly informed decisions about their estate.
There is no shame in closing stores in a managed way in response to these shifting dynamics, and an ongoing pruning of the estate is an essential part of maintaining a healthy and vibrant store network.
