Business Technology

Born in the clouds: Why household names like M&S are retreating from bricks and mortar

6 min read

05 June 2018

The UK has produced some of the world's most iconic retail brands, and none arguably more so than Marks and Spencer. Many were surprised when it made the decision to close 100 stores by 2022, accelerating a reorganisation that it says is "vital" for its future.

M&S isn’t alone, as this year we’ve seen Toys ‘R’ Us, Mothercare and Dixons Carphone scale back or remove any high street presence for a variety of reasons. But why is it that even household names are retreating from bricks and mortar?

The hard truth is that for many businesses that have experienced success on the high street, times and habits have changed. Companies simply no longer need numerous stores. The retail industry has always been at the forefront of innovation and the push into mobile, online, same day delivery and more has changed the the way consumers interact with retailers.

We saw it seven years ago with the introduction of mobile e-commerce. Digitally native brands such as ASOS and Amazon boomed, whereas traditional high street stores, despite having an online presence, were forced to create another perceived barrier for customers coming in-store.

And not all have been able to catch up or respond. New brands born in the cloud are still competing with traditional high street store counterparts, regardless of history and heritage. JustEat for example, now has an annual turnover that surpasses most historic UK retailers, which says a lot about the shopping habits of consumers.

There are of course many factors in play, but it is no secret that being agile and adapting to technological innovations has become paramount for survival in the retail industry.

There are many channels, which is why, much like the “move to mobile” era, we’re seeing an uprise in voice-activated ecommerce – the latest front end innovation. The use of Siri, Cortana, Alexa and other personal assistants is an example of how quickly consumer browsing and shopping trends change, and brands that are adapting to these changes stay ahead of competitors.

It’s worth adding though that a multinational like M&S will not have taken the decision to close stores lightly. It will have been well planned and considered, as it is preparing for what could be a completely different world. By 2022 we’ll likely be post-Brexit, surrounded by even more sales channels, products and buying habits.

Countless data sets and forecasts will have been considered as the business sets itself up for the long-term,. That in itself raises an interesting point. Some brands choose to focus on the future, making plans in advance, while others have a short-term vision. The reality is that you need to do both. Businesses need to be agile enough in the short-term, while still making informed decisions to grow for years to come.

At the heart of both approaches, is data. Data has always been vital to understanding the short-term and long-term ambitions of a business, and a key differentiator between competing brands is often the speed in which the data is delivered and interpreted.

Transactions, effectivity, average purchase value and other key metrics should be monitored and catered for in real-time, as decisions based on monthly results are too slow and immediately out of date.

Real-time insight is crucial for brands to stay responsive to trends. By becoming an early adopter of new technology for example, businesses are more likely to see an increase in engagement from both loyal and new customers in the short-term, but with data it can all be measured and evaluated to decide what the long-term strategy is built around.

Data analytics in retail is by no means new, but what is changing is the way in which data sources can be combined and visualised. By tracking everything from social media spend through to staff turnover, businesses are able to spot patterns and areas to save money – even be alerted when patterns are starting to emerge.

So brands, particularly those with a large high street presence, should now be creating a platform whereby data from all divisions and departments is fed, analysed and learnt from. By integrating sources, such as SalesForce, Google Analytics and website data, you are making your systems smarter, as the process of artificial intelligence has more to learn from and in turn the patterns that emerge from the data are more informed.

Once the foundations are set, it’s only the businesses who act on the data that will see the rewards. With the retail industry as large and as competitive as it is, the days of business decisions formed through gut instinct are gone. Data-led decisions will help companies avoid areas of lost revenue, and also help keep them ready in a market that faces constant change.

Ian Tickle is the senior VP and general manager for EMEA at Domo