The Electronic Retailing Association

Article: What Can TV Shopping Learn from the Survivors of the Store Retail Apocalypse? by Richard Burrell

It is no secret that mainstream store retail in the developed world is struggling to survive in a changing world. Barely a day goes by without a story about one of the big department store chains failing or desperately trying to fend off disaster by negotiating to restructure their debts and their rent roll, frequently forgetting all about the customer base in their panicked efforts to survive.

In days gone by The TV shopping fraternity used to look at store retailers struggling in a recession and nod sagely, saying that an economic slump was good news for them as people would stay home more and watch TV more. I was never too sure I really believed that line, but it was a nice one to roll out to journalists!

But this is different

Richard Burrell has deep experience in TV and digital retail in 6 markets across the world.

A member of QVC's senior management for more than 20 years prior to his retirement in 2017, Richard Burrell has deep experience in TV and digital retail in 6 markets across the world. Prior to joining QVC, Richard's career has spanned the BBC, Thames Television and various television news organisations. Originally an engineer by training, he has also served as a council member of the Digital Television Group (DTG)  Since retirement Richard has taken on the role of chairman at digital styling software company Holm (www.myholm.com ) and is also involved in occasional consultancy projects.

Big company closures

This time there is no world recession to blame and the news media also carry stories of TV shopping operations and other distance sellers closing. In the past month we have seen world market leader QVC close its operations in France, also its spin off BeautyiQ channel in the USA. A little later we saw the closure of HSE’s joint venture in the Gulf just a short while after it opened.

Each of those closures will have its own detail story to recount and no two cases are the same but if the world leader cannot make the business work in the 3rd largest economy in Europe there is clearly something much larger than a few local difficulties behind this trend.

Some smaller store growth

But the news is not all bad: In store retailing, it is the large established department stores which are being hit hardest. In the UK Marks and Spencer are struggling, House of Fraser has gone into administration and most recently Debenhams are now in the hands of lenders. But if we look at the next rung down the retail hierarchy there are smaller stores like Seasalt and Robert Dyas which are not only surviving but growing in this environment.

So, what’s going on here?

What can the TV Shopping industry learn from events in store retailing to help survive these rough seas? More particularly what can we learn from those surviving and even thriving in this changed world?

It is very tempting (and easy) for store operators to point to the growth of online shopping in all categories and attribute the woes of the retail store to this shift to the electronic world. Amazon makes a very convenient scapegoat! But it cannot be that simple; e-commerce has been around for years and most of the big department stores have invested heavily in websites, apps and customer logistics. Clearly there is a trend towards more customers shopping online but for any store company who has kept up with the electronic world over the past 20 years, and most have, this should not be an existential threat.

The TV Shopping industry has been affected in a similar way by the growth of e-commerce but it would be a very negligent management who had not invested in web commerce alongside their TV presence and, unlike the store operators, the TV shopping companies operate nearly all of their business in the electronic domain and are used to a world where video and product picture creation are a necessary part of life.

Time to adapt

TV Shopping has the added problems presented by the fragmentation of TV distribution in the digital world which will become an existential threat if they do not learn to adapt. However, for their core customer demographic of older, low to middle income women, the change is relatively slow and steady so there is time to adapt and we cannot attribute blame for the current problems in this direction.

What is it that the smaller retail operators are doing which allows them to thrive in the modern world while their larger cousins struggle?

To answer this question, we need to look right into the heart of the retail business model at the relationship between the retailer and the customer.

There has been a lot of hype and conference speaking in the last two years on the subject of “Customer Experience”, and while some of it is self-serving clatter, at its core this relationship is where the problem has developed as the result of a range of influences.

TV shopping companies, E-commerce operators and department stores alike have long told us how “customer focussed” their businesses are. While some of this could better be labelled “transaction focussed” there is a lot of truth in what they say. Individual companies like QVC and HSE24 have developed excellent skills across the globe at converting a single first contact with the customer into a lifetime repeat purchasing relationship. Over many years UK Store operator, The John Lewis Partnership has used its “Never knowingly undersold” promise to develop a similar relationship of trust. There are other similar examples from across the world.

But while the world of the retailer has changed radically over recent years so has the nature and experience of the customer. There have been many influences at work but at the heart of it is the customer’s adoption of the internet and their developing confidence and trust in what they learn online compared to that late 1990’s and early 2000’s.

Any company who works on the basis that their website is just a cash register for the store or the TV channel; or that social media is for kids, has lost the plot! The result is a much better informed, confident customer complete with online attitude and Facebook persona.

Then there is the boom in smart phones and tablets which have become pretty much ubiquitous in the developed world in the last few years across most demographics. Surveys conducted in recent years suggest that watching TV has become a 2-screen activity for most of us with the smart tablet or phone readily available, and frequently used, as an adjunct to TV viewing. The effect of this perpetual digital companion has been often underestimated and it is here that the lessons can be learned.

Not only is the customer arriving at the store or in front of the screen much better informed as to what is available, their expectations have risen significantly, and they have a wealth of information and alternative suppliers literally at their fingertips. In addition to this they expect their retailer to react in real time and to welcome their input as a part of a community.

At the same time retailers have been investing in technology and cutting staff in order to reduce costs and protect margins in the face of an increasingly difficult business environment, inadvertently starting a race for the bottom in the relationship with the newly digitally savvy customer who has plenty of easily accessible alternatives. The days when it was OK to patronise the customer or treat them like a “punter” with a “one size fits all offer” are long gone.

Retailers both physical and electronic must react to this change in the customer by meeting those rising expectations and giving the customer good reasons to continue visiting and buying from the store.

As a Royal Mail advertising campaign for mailshots once telling explained: “99% of dissatisfied customers just walk away, you will never hear them going”.

This is exactly what the successful smaller store retailers have been doing and they have been reaping the benefits in terms of developing long term customer relationships in which they can understand the changing behaviour and desires of their customers.

Never has it been truer that in business if you are not moving forward you are going backwards! It is time to grasp the complexities of the new environment with both hands and invest in the future, or fall in line behind the likes of House of Fraser and contemplate what might have been.