With the major global markets all suffering in recent weeks and with many economic and business commentators predicting that the UK and other leading countries are facing the prospect of a ‘double-dip’ recession, the inevitable scrutiny of business expenditure and cost cutting measures has begun. These measures were highlighted by the TJ Hughes announcement last week that they would be closing 22 stores, creating 1061 redundancies.
Leading commentators are suggesting that the collapse of so many high street brands has been inevitable due to the current economic conditions and the change in nature of purchasing patterns by consumers. Customers are far more savvy than they have ever been, thanks mainly to the increase proximity to price and product information, along with a more heterogeneous offering of products through online channels.
Many consumers would suggest that ‘competition is good’, an argument that you will find few people arguing with. Already, we are starting to see the fall out of the last dip of the economy as major high street brands have failed to regain the market share that they were once able to boast, falling to the rise of the online retailers who are able to offer lower prices and more competitive ranges of products, without needing to carry the overheads of high street real estate.
The online channel, whilst allowing companies to reach out to a worldwide audience, also allows retails the opportunity to quantify their marketing budgets much more. Whilst marketing for traditional retail is far harder to quantify, in terms of return on investment (ROI), repeat custom, and brand awareness, marketing for eCommerce (utilising online marketing) is accountable down to the last penny thanks to tools such as PPC, SEO and Email Marketing.
That said, as I have seen from 1st hand experience, you can throw all the money that you into online marketing for eCommerce, but if the infrastructure is not there to support your business processes then the business is likely to still fail.
Over the coming months I would largely expect to see more high street retail outfits fall by the wayside, along with a handful of small to medium sized online retailers. Customers are well adept to hunting around for bargains now after the last dip. Traditional bricks and mortar based retailers are going to have to be competitive price wise, not just relying on their brand name to get by, whilst online retailers are going to have to be prepared to spend to accumulate (but with caution if their infrastructure is not well equipped)