Retail Brands Need to Think Less Like a Retailer and More Like a Service Brand

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It seems a weekly occurrence at the moment, another iconic high street brand ‘being beaten on the ropes’ by the heavyweight online retailers. From Toys ‘R’ Us to BHS to House of Fraser and now Debenhams, the likes of Amazon, Google and ASOS are picking them off one by one.

So is this just the beginning of the end for High Street retailers or a final wake up call for them to think and behave differently?

There is hope. Waterstone’s is a brilliant example of a retail turn-around success story.  So perhaps (and pardon the pun) they should be taking a leaf out of their book?

The answer, of course, is far from simple. But there is, I believe, something fundamental about how the likes of Waterstone’s and Argos (another example of a turn-around business) started to think and behave once they realized their days were numbered…Fundamentally, they started to think like SERVICE BRANDS and no longer like RETAIL BRANDS and that brings a totally different set of rules for both the brand and the business.

Let me explain…

RETAIL businesses find ways to cost effectively manufacture or source products to stock in their retail outlets and sell to their customers for as much profit as possible. They are focused on creating brand saliency and differentiation from ‘other retailers’ as well as running price promotions to drive footfall and purchase behaviour. And yet the brands that are killing the icons of the high street have built their entire businesses thinking like service brands first and retailers second.

Amazon are in the business of attracting and serving customers by doing a few things really well: access to the widest range of products; click of a button buying; brilliant delivery.

Yes they sell products but their entire business is service first, sale second.

The same is true of ASOS – brilliant at combining key ingredients of service to facilitate the sale of a product.

And for Waterstone’s, a High Street brand that by all accounts should be dead in the water, slayed by the mighty Amazon, they used this exact approach as the starting point for their turnaround.

They stopped thinking like a book retailer brand and started thinking like a book service brand.

James Daunt, a self-proclaimed amateur in the big world of retailing but an expert in the world of personal book service having run small local book shops, recognised that for Waterstone’s to survive and thrive, they needed a radical rethink.  They had to realise that they were no longer in the book retail business but rather in the service of facilitating the discovery of books for book lovers.

And the changes have paid dividends to both its brand perception and sales. Its turnaround year in 2016 saw pre tax profits of £9.8m following a £4.5m loss the previous year.

So what does this mean for other High Street brands?

The first thing to realise is that most high street retailers no longer have a service proposition. When the High Street was strong, the overwhelming service provided was access to products at good prices from a range of credible brands. A tough truth, but that fundamental service proposition is now dead.  And the likes of House of Fraser and Dixons Carphone and myriad other high street brands are struggling to define a new set of service propositions that are unique to them and not over-reliant on the generic truth of the sector.

The good news however, is that there is a proven approach to becoming a compelling professional service brand. From car insurance companies to personal banking and from online retailers to professional services firms, the formula is the same. And contrary to popular belief, it’s not about being the BEST at one thing (relative to your competitors) but rather being GOOD at three things in combination.

It’s no coincidence that John Lewis is ‘Never Knowingly Undersold’ on price, quality and service. Not the BEST at service (your local clothes shop will probably be better), or on price (you can find it somewhere on the internet cheaper), or quality (their range of laminated desk furniture is testament to that) but by being GOOD at all 3 in combination and under one umbrella brand promise – they’re almost unbeatable.

Try the same exercise for yourself. Waterstone’s, for example, is no longer trying to be the best at one thing (the biggest bookshop on the high street) but is happy being good at; personal service and advice from staff who love books; providing a place to dwell and discover new content; offering a thoughtfully curated collection of books.

A triumvirate of ‘good’ that is giving Amazon a run for its money

Now look at the high street retailers that are in trouble. Are they clear about their three core service propositions? Possibly.  Are they failing to communicate to the consumer what they are? Definitely.

There is hope for the high street – it just needs to think and behave differently.


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