High street wars: it’s shopping, but not as we know it

With their market share being devoured by independent stores and online retailers, we look at how larger high street chains are fighting back.

If you’re looking to get your hands on a Frappuccino® in Brighton you may be hard pressed. 

That’s because Starbucks’ domination of the local coffee shop scene has been halted by Brighton’s very own independent chain – Small Batch Coffee.

With seven outlets in the city, the company has been hailed as a local success story (Starbucks, for the record, has three), but it’s not the only small vendor making waves.

Around the UK, independent and artisanal shops, cafés, grocers and restaurants are making a comeback as consumers opt for the intimacy and novelty factor of independent firms over established high street brands. 

According to the High Street Tracker,  the number of small retailers has grown by 110% over the past five years.

With the growing popularity of online shopping also putting the squeeze on the larger chains, retailers are having to up their game and find new ways to compete for our hard-earned cash.

Here are some of the ways they’re doing it:

Price ‘em low

The past few years have seen an explosion in low-cost retailers who have taken the battle to the UK’s traditional high street chains.

None more so than Primark. While the likes of BHS and Gap have ceded market share to online retailers such as Amazon and ASOS, the Dublin-based budget fashion chain has undergone an aggressive expansion over the last decade. 

In 2005 the firm acquired bankrupt high street chain Littlewoods for £409m and opened its first international store in 2008. Primark now has stores in 11 countries, posting revenues of £5.3bn last year, interestingly the same amount earned by Amazon UK.

Rock-bottom prices have done the trick, made possible by low overheads and large numbers of stores creating economies of scale.

Several retailers have enjoyed success with this tactic. Poundland saw its revenues surpass £1bn for the first time in 2015 while rival Poundworld opened 38 stores in the same year as profits doubled. 

Meanwhile, budget grocery chains Aldi and Lidl have continued to squeeze the market share of the UK’s ‘big four’ supermarkets. Both companies delivered double-digit growth in sales in the first quarter of 2016 as Tesco, Sainsbury’s, Asda and Morrisons all reported slight declines in revenue.  

Look, don’t buy

Taking a very different approach, other retailers are gradually doing away with physical stores altogether as they prioritise growth via their online sales platforms.  

Take Apple. The tech giant knows that while customers enjoy the experience of browsing in shops and getting a feel for the products, they also like to make their final purchasing decisions at home, from the comfort of their MacBook or iphone. 

It’s why there are only 39 Apple stores in the UK and just 460 worldwide – a tiny number for a company that earned $234bn in sales last year. In contrast, Apple’s e-commerce platform is thriving, with the company recently overtaking Staples as the world’s second largest online retailer, behind Amazon. 

By 2020 Deloitte predicts that the vast majority of stores left on the high street will be ‘showrooms’ for the purpose of displaying products. 

New tactics

Other business are finding innovative ways to entice people into their stores and get them spending.

Marks and Spencer is one of them. The department store ran into difficulties a few years ago after seeing its clothing range increasingly priced out of the market by cheaper alternatives.

The company has since invested heavily in marketing its food and drink business, essentially rebranding itself as a high-end grocer that happens to sell clothes.

The tactic has paid off as heavy footfall from the lunchtime sandwich trade has helped to boost clothing purchases.  

For other companies it’s all about leveraging technology in order to manipulate consumer behaviour. Luxury fashion brands such as Gucci have introduced eye-tracking systems in their stores to gather data on what shoppers are interested in. Screens then flash offers and products designed to appeal to particular customers. 

As the battle for consumers’ attention intensifies, expect retailers to come up with new and imaginative ways to boost their bottom lines. However, for the likes of Small Batch Coffee small may still be the best way to go.