As the nation hangs out the bunting and prepares for street parties to celebrate the Queen’s Diamond Jubilee, Rebecca Thomson looks at the transformation of retail during her reign.
It’s difficult to reconcile the retail landscape of 2012 with that of the 1950s. Today, it’s all about the Chinese middle classes, mobile technology and the decline of the high street.
In 1952, it was about domestic growth and small specialist shops – for such a comparatively short space of time, the transformation has been remarkable.
But while the industry has shifted massively, many of retail’s principles remain the same. At its heart, retailing is concerned with the same challenges, and businesses that do it well today often have similar qualities to the successful ones of 60 years ago. As Dixons founder Lord Kalms says: “The world changes but retailing itself doesn’t change. It’s about attention to detail and remembering the customer.”
Former Kingfisher chief executive Geoff Mulcahy agrees the basic skills are the same. “The people who succeed in retailing are those who have the best offer at the best prices and the best services,” he says. “That hasn’t changed, but retail continually innovates.”
In the 1980s, the pace of change really picked up. Not only did computers start to infiltrate every part of the industry, but shopping habits changed irrevocably as grocers ramped up the roll-out of superstores, developed their non-food lines and helped to lead the march away from the high street to out-of-town shopping centres.
Former Next boss George Davies says it was the lack of town-centre parking that prompted consumers’ migration out of town. “Pretty much everything I’ve done has been because of the car,” he says. “It influenced my vision.”
Another major shift in the 1980s was women starting to enter the workplace in more significant numbers and gaining the associated economic power. “The reason out-of-town shopping grew was because women could put the kids in the back of the car and park easily,” says Davies. “I thought there was a massive opportunity there.”
Lord Kalms agrees that women’s changing role in society had a fundamental impact on retail and that women are now powerful consumers. “In the 1950s, most of our customers were men and nearly 100% of the staff. Now half our customers are women and half of our managers are as well,” he says.
The late 1980s and 1990s were also a pivotal time for the grocers. Not only was the first Tesco Extra store opened in 1997, but the Clubcard was introduced in 1995, heralding a new era of data-driven retailing.
The success Tesco generated through the loyalty scheme, which allowed it to see in detail what customers were buying, spawned numerous imitators.
Changing the game
The web was steadily developing too, ready for its heyday post-2000. In the 2000s, game-changing retail innovations and online start-ups that were to change the face of retail came thick and fast. Launches including social media website Facebook and Apple’s iPhone were fundamental in shaping new patterns of consumer behaviour – changes that retailers had to work hard to take advantage of.
At the same time, pure-play e-tailers such as Amazon and Asos expanded and started to play a key role the retail industry, with the web enabling them to generate significant growth quickly. Asos founder Nick Robertson says the big advantage of web retailing is the lack of restriction on the amount of inventory you can carry, meaning e-tailers can offer a huge range of product to consumers.
But what really made Asos fly as a business was the phenomenal growth of social media, adds Robertson.
“The velocity of social media has transformed us,” he says. “We don’t have to spend traditional marketing money, and it has enabled us to get significant market share in places such as Australia where we weren’t known.”
Social media also helped the brand develop more quickly. “I’m proud that we’ve created a brand in what was perceived in the UK as quite a busy space,” says Robertson. “You can be more creative on the web. We’ve always been content rich, bridging the gap between media and retail. It wasn’t just about being online, it was about what was happening online that enabled us to grow.”
Expect the unexpected
One fundamental lesson to be learnt from the past 60 years of retail is that retailers should take nothing for granted and always expect surprises – the businesses that failed were those that thought things would never change.
Robertson says: “The two things people said about fashion retail was, that shopping is a social experience and that trying clothes on is essential. We have established neither of those things are true – people did them because that was the circumstance they were in.”
It might be a more difficult industry to enter than it used to be – Kalms, Davies and Robertson all say competition is fiercer than ever – but macro developments and technological change always provide opportunities. “There are always gaps in the market,” says Mulcahy. “Quite often they are in the most unlikely of places.”
The coming 60 years will no doubt be as dramatic as the last for retail industry and, as ever, it will be the most adaptable and forward-thinking businesses who will survive to see the next chapter.