Boots pharmacy chain has become the latest retail brand to consider potential UK store closures, following swiftly on the heels of Gap’s plan to close 230 outlets worldwide to “revitalise” its brand.
These announcements appear to illustrate the fine line between ambitious growth and over-reaching.
Too far, too fast in the past?
It could be argued that one of the biggest factors in recent shrinkage in the high street retail sector is the previous tendency to open too many outlets. Many of the recent companies going under or cutting back have certainly been ready to admit they have supported badly performing stores for too long. It is why fashion retailers like New Look and restaurant chains including Prezzo and Jamie’s Italian have carved away the “deadwood” to stay afloat.
During the good years, many retailers cashed in, including opening multiple stores in the same cities and towns. Interestingly, something that is still happening with some fast food and coffee chains.
However, for many retail companies, the policy did not pay off. As overhead costs and debt burdens rose, shop sales failed to keep pace. Especially in competition with online shopping.
The retailers surviving the squeeze tend to be the ones adapting quickly and focusing their business on where the healthier profit margins are.
How does this affect future expansion?
Going forwards and learning from this, how do successful retailers achieve business growth and open new stores confidently?
Much of it rests on a far higher level of caution, of course. Fortunately, new data collection and predictive analysis abilities make it easier to check the viability of each potential outlet.
It is also interesting to see how pop-up stores have become more common, and apparently find pockets of retail success. This offers high street names food for thought, in creating a new type of business model, on that is versatile enough to experiment with.
The aim is for companies to seize opportunities quickly – but still in a measured way – but also to “bail out” if the sales targets aren’t met within a clear timeframe. Flexible leasing terms are being sought. Supply chain management and staffing levels are being developed to be more agile and easy to amend. The adapt or die emphasis is bringing new technology in stores, to build sales in less square footage.
Growth, and entrepreneurial spirit
Clearly, it helps if your products are on trend. An example of this is Ecigwizard, the UK’s largest online and high street retailer of electronic cigarettes and e-liquids. It has unveiled a plan to open 30 new retail units in 2019 (it already has 42).
However, some long-standing brands are still expanding too, including the Co-op which is looking for 100 new locations this year, in its fourth year of steady expansion.
Perhaps the key lies in the fact that the companies who are growing, are the ones offering high levels of customer ease, speed and convenience, within a flexible business model.
How does this impact on retail recruitment? Companies need to find executives with proven industry insights and data management prowess, to pin down where the assured profit lies. They also need to attract a good dose of entrepreneurial creativity and the type of resilience that enables hard decisions to made much faster.
That’s the way to build expansion plans based on stores that “count” rather than simply growing the store count.