Northumberland Street, Newcastle
Retail, like other sectors, has been deeply affected by the internet. We spoke to Newcastle University Business School’s Dr Eleftherios Alamanos about some of these changes.
Brexit, so far, does not seem to have affected the British devotion to shopping. But it is a changing environment and the pace of change seems to have accelerated over the past three years. Online shopping not only makes life easier for many people, it is particularly attractive for some. Dr Eleftherios Alamanos, of Newcastle University Business School, points out: “Obviously there are specific groups of people who struggle with instore shopping, maybe because they have mobility issues, and for them online shopping is really important for being able to complete day-to-day activities. The channels a person is going to use depends on the personal circumstances.’’
However, anyone who has struggled through the crowds of shoppers in Newcastle, Sunderland or Middlesbrough in the weeks before Christmas knows that the high street is far from dead. One reason for this, according to Dr Alamanos, is the old adage: `People like doing business with people’. He says: “The personal interaction element is really important. Studies have shown that shopping in general is strongly linked with people’s individual wellbeing. People want interaction, so instore shopping is still very important and it’s still a big thing.
“If you consider the recent major development we’ve seen in Eldon Square in Newcastle where the restaurants and cafes are booming. The social element is important, so while online shopping is growing, instore operations are still very important too and people still go out to interact with retail staff.’’ He adds: “If you look at Fenwicks in Newcastle, for example, this business doesn’t operate online and yet they are probably the biggest player in Newcastle in terms of retailing.’’
That is not to deny the onward march of online. According to the Office for National Statistics, average weekly spending online in March 2016 was £859.6m, an increase of 8.9% compared with March 2015 and the amount spent online accounted for 13.2% of all retail spending, excluding automotive fuel, compared with 12.1% in March 2015.
“Everyone knows that online shopping is constantly growing, the issue that all retailers have to deal with is how you avoid the conflict between the channels,’’ says Dr Alamanos.
A few years ago it looked as if this conflict was going to be irreconcilable and would cost the high street dear. This followed the growing trend of `free riding’, whereby shoppers would browse instore, examine goods and try clothes on for size and then go home and order online at a better price.
“Initially the solution that the retailers came up with was to try to offer something different, to differentiate the offer instore and online,’’ says Dr Alamanos. “To some extent this worked, however, the issue with that was the inconsistent brand experience.’’
Another approach was the multi-channel solution whereby a particular retailer sells online and instore with the online operation being independent of the instore business. “So, even within the same company you were competing with each other for the same customers,’’ he says. “The retailers are now trying to address the issue with the concept of an omni-channel strategy, bringing all the channels together in order to provide a consistent experience of a brand to the customer and cater for all their needs.’’
An early form of this was the development of click-and-collect, whereby goods are ordered online and collected instore, and it has become a powerful tool in the omni-channel armoury, as has `buy online and return instore’. These have the advantage of getting customers into an outlet and creating opportunities to sell to them.
“In other countries major brands report that 40% of their customers who walked in to collect a particular order also bought something instore,’’ says Dr Alamanos.
Omni-channel now includes the use of technology enabling, for example, browsing online while instore
to examine the inventory and gain more information on a product. Apart from omni-channel, the traditional high street is fighting back. Black Friday seems to have taken the place of January Sales and to have captured the public attention.
“I think that Black Friday is growing and every year it’s bigger,’’ he says. “In the States Black Friday is really Friday morning but here in Newcastle, for example, you can see that it was not a Black Friday – it was a Black weekend.’’ And this, coupled with the introduction of free parking and late night shopping, seems to be injecting plenty of fresh life into the region’s retail sector.