With Change Comes Opportunity on the UK's High Streets
The transformation that the internet has had on our everyday lives over just the last decade is phenomenal. Our physical and digital lives are becoming entwined to the point where it is now becoming possible to check your smartphone to see if you’ve got milk in your fridge and for messages to pop onto your TV once the washing is done. But this isn’t just affecting individuals; many businesses are also undergoing tremendous change in order to adapt and survive in a more web-based economy. Nowhere is this shift more prominent than in the high streets of Britain, where just recently the digital ‘winds of change’ have once again shaken many of our popular high street chains.
While the impact of such change can be devastating, there are many opportunities that can arise for businesses that are able to make the necessary adaptations to have a presence that spans both the off- and online worlds. This is particularly important for small businesses that, while perhaps the most vulnerable, are also the most flexible in terms of adapting to technological changes and economic challenges.
Zurich, alongside science fiction writer Alastair Reynolds, recently carried out an independent study canvassing more than 1000 SMEs on their views and predictions for the future business landscape in 2020 and 2062. What we found is that such widespread change is certainly not over, and that while there are many risks that lie ahead, there are also opportunities.
In terms of what the high street will look like in future, over half of UK SMEs believe the high street as we currently know it will transform by 2020, being replaced by a ‘virtual high street’, hybrid business models and new potential types of high-street businesses. In addition, 70% believe traditional high street SMEs must radically change their customer experience to compete with online purchasing by 2020. Essentially, this means that small retailers must start acting now to create noticeable and user-friendly online experiences, while also ensuring that the service offered on- and offline is joined up but also different enough so people want to go into a shop.
In the medium term, having a hybrid business model will mean that small retailers can tap into online data to enhance loyalty schemes and conduct market research to keep up with larger competitors, while also transforming the online experience in-store so customers have a joined up shopping experience.
Looking further into the future, when we asked Alastair to extrapolate some technologies beyond 2020, he came up with some interesting and very credible potential developments. For example, robotics and augmented reality may open the possibility for hybrid high streets which exist in both physical and digital spaces at the same time. An SME operating without a fixed location could rent empty property on a street which it then occupies with virtual products and services. Since the shop, its contents, and its staff would be virtual, multiple occupancies could happen at the same time.
The challenge for the High Street business is not the concept itself, but the fact that it is very hard to control the complete customer experience. Parking is difficult, the checkout lines are long, it’s a long walk back to the car park, and so on. But none of these problems are insurmountable. Future adoption of driverless cars, quicker automated payments systems and delivery mechanisms could all help to ensure people still go to their local shops. Above all, however, is that fact that shopping is a communal experience – people want to meet other people and talk to experts. At the heart of any future high street and any successful business that occupies it will be an unswayable commitment to quality and customer service. If the experience is good and something special, then I believe customers will still visit a physical location either to browse, seek advice or buy.
While the shift to hybrid models built around online commerce provides many opportunities, there are subsequent risks associated with conducting all business online. Nearly a quarter of SMEs say they would be concerned about the lack of customer interaction and loss of personal relationships, and one in five is concerned about the threat of cybercrime. Regulatory risks will also continue to play a large role, with an increased use of data and cloud based systems to join up the shopping experience leaving small businesses open to data protection fines and reputational damage from any security breaches. With the online marketplace defying traditional boundaries and borders, small businesses would increasingly have a global reach trough their online presence. While, of course, this is a tremendous opportunity for quick expansion, ensuring compliance with foreign laws and business regulations, as well as marketing to new customers, are challenges that present serious business risks in the very near future.
While the UK’s high streets are undoubtedly changing, we must not automatically be fearful of such change. Throughout history, technological advancements have resulted in casualties, but have also sparked new ways of operating. The online world is no longer something we access at our desks or laptops, it’s changing everything we do – including the way we shop. Small businesses should not shy away from grasping hold of new technologies and leading the way in providing services that work both on the high street and on a website. But understanding the risks and challenges involved in this balance is the key to survival. With such tough economic conditions, it’s certainly not easy for the UK’s small businesses, but technological advancements are often best accelerated by fearless small companies who truly believe in what they do. If the UK’s high streets become a place of quality, expertise and cutting edge technology with customer service at the centre, then perhaps we should be looking at change in a more hopeful light.
Richard Coleman, Director of SME, Zurich Insurance