“Retail is not dead,” Matthew Shay, president and CEO of the National Retail Federation (US) declared recently. Conor Pope’s article in last Saturday’s Irish Times had the opposite headline and prophecy – Death of the Irish Shop. However, I see the retail market as dynamic, changing, growing and disruptive. And retail has always been a tough gig! As Mark Twain reputedly said, reports of his death are greatly exaggerated.
As we all know retail is changing fast. News of high profile retailers relocating (Walton’s Music), closing (Clery’s), and closing down (MacDonald’s bike shop) are big in the media. What they all have in common is location, location and location. City centre rents are becoming unrealistic for a lot of independent retailers, hence Walton’s relocation. Clery’s was a viable business until it was taken over and the property assets split off from the retail business. The property then became hugely valuable and the retail business no longer viable. The retail mix in Wexford Street changed from daytime (butchers, green grocers and the bike shop) to night time (clubs, bars, restaurants and coffee shops).
The growth of technology in retail, online and e-commerce has meant that the nature of competition has changed, but competition has always existed albeit in a different form. Retailers have to be agile and adapt their business models to suit the new retail landscape. As Martin Crowther succinctly put it in a letter to the Irish Times:
Shops, like banks, need to change their operating model and times to facilitate customers, not themselves. After all, they are in a service industry.
This does not necessarily mean having a full e-commerce offering but it does mean engaging with your customers online through social media and having a good website. Having an online presence reinforces brand awareness and can generate organic marketing opportunities for retail.
So how much is really spent online? If the retail market was worth €40bn in 2017 with €5bn sold online, then €35bn or 87.5% was spent in bricks and mortar shops. That’s a lot of dosh and in a growing market* there is room for new, competitive and different retail businesses.
*Last year the retail market grew 3.9% in value and 7% in volume. CSO Index of Total Retail Sales (excl. Motor Trades)
Small is beautiful. Big changes are happening in retailing. As the saying goes, the bigger they come the harder they fall. As larger retailers are challenged it can be easier for smaller retailers to innovate and disrupt, think of how much more easily a small yacht can change course compared to a large ocean liner. And if the larger retailers are in decline then this offers smaller retailers a chance to get a share of the market.
- Move away from big box retail – the demise of department stores as we know them. Large chains already in trouble in the US – Macy’s, Walmart.
- M&S, Debenhams, House of Fraser all had poor Christmas trading.
- John Lewis’ profit warning, Debenhams Ireland came out of examinership in 2016, Tesco struggling with market share.
- Irish retail scene – 83% of retail is Irish owned, of which 75% are family owned.
- Vintage/second hand shops are on trend and sell to a younger market. There are two types – vintage second hand shop selling clothes, shoes, accessories and/or furniture and the exchange shop selling branded goods. These stores appeal to consumers concerned about sustainability as well as to bargain hunters.
- Markets – The birthplace of the vintage movement! Markets have existed for much longer than the rise in vintage shops with many shops and online businesses starting life in a market. There are over 800 in Ireland and several markets have been established for many years e.g. Blackrock Market for 30 years, and the English Market in Cork since 1788. There are many styles of market – food only, markets selling an eclectic array of clothing, food, homewares and crafts, pop up food vendors, farmers markets, craft markets and Christmas markets. Markets offer a low-cost opportunity to fledgling producers and retailers to test the market for their product or offering.
- Pop up shops – these are more difficult to quantify because of their very nature. These are shops that set up for weeks or months in vacant property. They require minimal investment in shopfit and as the warehouse style is right on trend, this is a good look for a fledgling shop. Some LEO’s (Local Enterprise Offices) rent short term space on a regular basis to help start-up businesses. This is a great example of a disruptive influence on traditional retail, providing a low cost alternative to a longer term lease and encouraging new retailers to enter the market.
What this demonstrates is that small independent retail is alive and kicking in the many different forms it takes in the Irish market. So support your local shop – and not only when it’s snowing!