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Mark Bradley: It's a shoot-out for survival as high noon hits the High Street
I KNOW what distracted evil Frank Miller just long enough for Gary Cooper's legendary Marshall Kane to shoot him – and it wasn't Grace Kelly's fingernails. Film buffs will tell you it was a nifty scratch from Amy Kane that broke Miller's concentration, but this only tells half the story.
Following extensive research, I can now explain the source of the distraction. Quite simply, the last time the villain had been in town, there were two branches of Woolworths, an MFI, a Dixons and an Athena in Hadleyville High Street.
Now, having lured Kane out into the open, all Miller had to do was pull the trigger. But looking up, all he could see were Starbucks, Subway and Greggs.
So perhaps High Noon is being re-enacted on the streets of the UK. At one end, Woolworths, alone against the odds, one bullet left in the gun. At the other end, internet shopping, niche market players, charity shops, retail parks, supermarkets – and a recession.
It's a chastening time for our high streets with margins being squeezed from every side and – like Frank Miller – reports of its demise may not be premature.
The combination of factors guiding the strategies of high street retailers is not only complex and threatening, but it seems that only now, with the present recession, are the lifeboats being deployed. Woolworths must have withstood previous recessions, given as it was founded more than 150 years ago, while MFI has sailed equally turbulent waters, only to emerge confidently as a management buy-out in late September.
So are the falls of Woolworths and MFI a symptom of a declining High Street – or can these two particular case studies be explained differently?
A little context is required. The last year has seen house prices fall steadily, leading to a drop in consumer confidence while the increasing cost of raw materials, coupled with a lack of lending from banks, has led to unprecedented levels of nervousness among the business community.
For businesses with a low entry point like Woolworths, whose products are inexpensive enough not to be shunned during a recession, this alone should not send people running for the doors. Britvic, a large soft drinks business, continues to report strengthening figures, illustrating this point.
We may be in a recession, but we have yet to take the decisive step of resisting the weekly fizzy fix.
MFI, on the other hand, offers products that are usually significant or major purchases. Any sign of trouble can be extremely damaging, since you would not order your new double divan if you thought it might not be delivered. Following the recent management buy out, the first call out to consumers was a reassuring guarantee that all orders could be fulfilled. Now each store is conducting its own closing down sale – an admittance of defeat and a tragedy for those who work there.
And yet some high streets are enjoying something of a renaissance. Take Skipton's award-winning main thoroughfare where independent stores mix with low-profile nationals, creating a popular mix of destinations that townsfolk and visitors continue to enjoy in great numbers. The Woolworths on Skipton High Street, to my eyes at least, benefits from a fortunate combination of factors. On a busy thoroughfare, offering a wide range of products, via a name most meaningful to more elderly visitors, completely in tune with its surroundings. But this is the exception not the rule.
Elsewhere, Woolworths is not a reason to go into town when most retail parks are a reason to leave the town behind. Just look at Sheffield's Meadhowhall Centre where many families will do their Christmas shopping. There's no longer a Woolies in the complex. And there's not likely to be just such a store in the future if an Abu Dhabi sovereign wealth funds buys a stake in Meadowhall.
They wouldn't be doing so unless they were confident shopping centres like Meadowhall will not only withstand the recession, but become even more profitable in the future.
Beyond the particular pressures of the recession, the imminent demise of big names like Woolworths and MFI suggests a much more common explanation: a lack of value.
Understanding what matters most to your existing customers and developing a value proposition that will entice new ones is not a modern fad, but a critical success factor in all businesses.
Value has many faces and is not just about price. Ten years ago, Pasta Hut (ne Pizza Hut) was already coming to the conclusion that its customers were more interested in the overall experience than the price or the pizza. Everyone knows what it tastes like and what it costs, but if a thrusting young manager were to remove the ice cream factory, arguing that waitresses could serve desserts more swiftly and with less mess, there would be a customer revolt. I, for one, will not forgo my topping of Smarties.
The Build-a-Bear Workshop is another organisation to demonstrate an understanding of value. Were it to invite some accountants in to audit its sales processes, they would probably argue that the moment where the young customer warms up the young teddy bear's heart in their hands (and watches as it is stitched in to the furry chest by the attentive assistant) is an expensive step that could easily be streamlined out. But it is this moment of pure emotion that provides the value that allows the business to flourish.
In my view, www.zopa.com brings together an on-line community of borrowers and lenders. It promotes itself with the encouraging declaration: "Loans from people not banks."
Anticipating our deepening mistrust of the personal financial services market, the organisation provides real value by matching people who would like to lend money for a decent return with people who are looking for loans.
The middleman – the bank – is no longer required – and while our banks are struggling Zopa is on the rise. Another example of not only surviving but flourishing in a recession, while Woolworths forgot that its Saturday girls have grown up into Sunday Times readers whose shopping habits have left the "pick and mix" behind.
Amazon itself made an important step forward several months ago when it launched its Prime service – whereby you pay an annual fee in return for paying no postage and having every order delivered within 24 hours. Given the saving one normally makes against the High Street price, removing the internet premium – the postage – represents a considerable leap in value.
The one thing that has defined Woolworths over the years – its stoical resistance to change – has ultimately become its Achilles heel, while MFI has suffered from a comparatively high entry price point in an era when even supermarkets have got into home furnishings. The recession may have been the cold that has developed into pneumonia, but the patients always did manifest a low resistance to infection.
The irony is that during a recession in the UK the first things to go are customer service, training and innovation. In a country renowned for its poor service, companies prefer to batten down the hatches when they should be demonstrating their intrinsic value to customers
In the final analysis, it's only High Noon for those High Street outlets who fail to provide customer value. The recession may exacerbate the problem, but in the end, the fatal wound is usually self-inflicted.
Mark Bradley, from Bradford, is author of Retails of the Unexpected. He is a customer services consultant.
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