room44 innovates

Retail space is display space. Not selling space.

It’s three years since British Home Stores went into administration. Three years, and so many signals that UK retail is not in a happy place, yet successive retail failures quickly followed. The demise of Toys ‘R’ Us and Maplins added to the signs that all was not well, but the reassuring voices of other major high-street names told us not to worry – they were on the case.

Long-standing brands are continuing to fall away, more quietly perhaps, but the rate of attrition is now established. This week, we learnt that Mothercare’s stores will follow Thomas Cook’s by soon vacating all their premises.

At the current rate, the UK is losing 110 retail stores per week from the ‘most popular town centres’, according to PwC. Sixteen a day. If you haven’t noticed yet, you’re either in a big city, or maybe you never had them in the first place.

Retail space is display space. Not selling space.

Shoppers are spoilt for choice when it comes to getting what they want at the cheapest-on-display price. Mothercare may have done a great job at displaying brands for parents -to-be to try, but why would they buy there?

The press accused Mothercare of being ‘expensive and grotty’ this week: neither of these things happens overnight. ‘Grotty’ happens when there isn’t enough money to refurbish, and ‘expensive’ happens when the competition has undercut you for so long that you need to sweat the maximum cash out of every sale.

Thomas Cook, apparently, hadn’t noticed that people don’t buy holidays from a brochure anymore. Maybe they’d never heard of Ceefax, let alone the internet. Mothercare didn’t understand its customers’ digital tendencies – or it chose to ignore them.

So, in the company of Jack Wills, Staples and Bonmarché, we’re likely to see another gap in the UK retail landscape this year.

Who loses?

You and me. I needed to buy a printer last week and I tried to do it by going to a store. It didn’t happen.

John Lewis was, frankly, atrocious. If customer service and a two-year guarantee are now their only USPs, I don’t see them surviving. Curry’s/PCWorld couldn’t sell me what I wanted and there just weren’t any alternatives. My town (@miltonkeynes) sits at the heart of the UK’s technology ‘Growth Arc’ and it seems more than a little ironic that basic products and services for the growing ‘technology’ population aren’t on sale.

As much as I hated to do it, necessity and convenience drove me to Amazon and my new printer arrived inside 48 hours.

Will this continue?

Should we expect more of the same? Should we get used to hearing ‘not another one’ when a high-street brand vanishes? Hell, yeah.

In the last month, we’ve met around eight SME businesses that won’t be in business in three years’ time. The signals of change are loud and clear, but the need to stay loyal to a founder’s vision has over-taken the acknowledgement of the blindingly obvious.

There’s even a networking business that has suspended one of its groups through a lack of interest. If ever there was a sign that grass-roots start-ups are pulling in their horns, this is it.

What are we doing about it?

It’s all very well sitting here and bleating about how bad things are, and how Amazon is taking over the world, but what is room44 doing about it?

Two things

Firstly, we’re diversifying and investing in a new activity stream. We’ve been writing about environmental matters for a long time and we’ve decided that we should do a bit more than talk the talk. We’re about to walk the walk as well (more about this later).

Secondly, we’ve built a product that will help companies, like yours, plan to outlast your competition and thrive in a tough market. It’s called 10, 20-30. Together we will build product launches to take you through the next decade and provide you with the tools to launch at least one per year, so you stay relevant in a changing market.

Because we take seriously our capacity to deliver quality, it’s only available to a limited number of clients. Take a look at the 10, 20-30 proposition here and get in touch if you’d like to know more.

Thanks for reading and, if we don’t speak, good luck.

Future thinking. Future-proofing. It’s what we do.

There’s a feeling among company managers that external perspectives can’t add much to business strategy. It’s an opinion we hear fairly often and yet, McKinsey seems to be doing OK. Is this because buyers of management consultancy just want to buy in resource to get a job done, or because an external perspective adds value?

Let’s look at a case study.

In the UK, Europe and the USA, the car market is changing. Not so much that existing suppliers to car brands can’t survive, but enough to suggest that, in many cases, their days are numbered.

This diagram paints the picture.

innovation process,

The bottom triangle shows where established business is today. The top one shows how insurgent and disruptive business sees its opportunity.

With legislation telling us that the only cars available in twenty years will be full electric, where do you think your business sits in the diagram above?

Let’s look a bit closer at this market.

In 2018, the EU car market grew by 0.5% – good news. Nothing to worry about there. Plug this number into your financial plan and it’s going to be a good year. Launch a new car every five years, let the supply chain develop components to meet the need. Everybody wins.

Oh, but wait, Uber has signalled that consumers don’t need to own a car to navigate a city. In London alone, that’s over 10 million people who rarely need to buy into this sector.

How about driving autonomy? Not going to happen?

Tesla disagrees. Toyota has invested $500 million in Uber self-driving technology projects. Google has invested over $1billion already. Since 2015, Dyson has been pumping $2.5billion a year into electric vehicles with some self-driving ability, and its recently announced move to Singapore puts the company close to the fastest-growing electric vehicle (EV) market – China. Coincidence?

One of the issues that EVs must resolve is range. Range correlates to weight, so EVs are built to be light. Cars designed for short trips come in under 450KGs, compared to over a metric tonne for cars made of metal. Where the language of car makers used to be of smelting, tensile strengths, rolling, beating, pressing and casting, now we hear of moulding, laminating, bonding, extruding and injecting.

There are other factors to consider in the car market. Hydrogen could utilise the infrastructure of filling stations the world over, if safe movement of the fuel can be assured. Environmentally, hydrogen has its fans and does present a viable alternative to electricity, avoiding the need for the creation of a charging system for EVs.

Supply chains change.

If you are part of the supply chain to the automotive market, or active in the maintenance of cars as they exist today, you can be certain that your world is changing. You just may not have seen it yet.

So, does an external perspective look like it could be valuable? Whether you make toothpaste (plastic packaging), potato crisps (metallised lamination and gas flushing), processed meat (veganism), or fashion (slow fashion, circular economy), things are changing for you.

Buying in an objective view of your market opens the door to fresh ideas. There is value in re-examining data that you’ve discounted, and in bringing your consumer’s perspective into your reckoning.

This link will download our free guide, ‘Seeing it differently.’ room44 specialises in delivering value from Design Thinking – the act of building a strategy from your customer’s perspective. A strategy that meets a need today and anticipates what you must do to stay relevant as your market changes around you.

[button link=”” type=”big” newwindow=”yes”] Download our free guide to SEEING IT DIFFERENTLY.[/button]

Future thinking. Future-proofing. It’s what we do.

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