Guest Post by Pontus Noren, director and co-founder, Cloudreach.
Since Woolworths stores disappeared from the physical high streets and main street in January 2009, the bricks and mortar retailers have been falling apart. More than 27,000 people were out of work when its 800 stores closed, consigning a century of trading to the history books. An alarming amount of traditional big names have sunk since: already this year we have seen Jessops, HMV and Blockbuster Video enter administration or bankruptcy.
It is upsetting to see these names disappear from view, but do not believe the headlines. The high street is not dying, it is changing.
Most recently, Blockbuster Video encountered trouble because people were ditching the traditional movie rental model in exchange for internet streaming services. Blockbuster’s model involved leaving the comfort of your sofa, walking to a video rental store, then scouring the shelves for something you wanted to watch. You’d even face a fine if it was not returned on time. In contrast, the likes of LOVEFiLM and NETFLIX charge a monthly subscription fee and allow members to browse extensive video libraries online before streaming an unlimited amount of content.
Being successful in business is all about changing the game – overlooking what is out there and offering something new. This shift in the key players of the movie rental market has been facilitated by cloud computing technology. The emergence of cloud makes it much easier for businesses to grow rapidly, as you only pay for the server space you use with the likes of Amazon Web Services.
That ability to quickly scale up and down contrasts the traditional IT model, where businesses purchase physical servers and maintain them in-house.
When technology changes, it can have a radical effect on an industry, altering the way in which things are delivered and consumed. However, the level of spend in the economy stays the same so although these shops are closing, the economy shouldn’t suffer at all. The general public will always have a certain amount of money to spend – they just spend it in different ways depending on trends and what’s available, for example spending three pounds on a coffee from Costa rather than a DVD from HMV. That has been reflected in the phoenix Woolworths business. Shop Direct acquired the brand, and its new Woolworths website now offers half a million products. This new trading status reflects the change that has taken place: where people once browsed shelves of goods in shops, they now browse the web for a bargain. People are voting with their virtual feet and it is obvious that everything is heading online.
Not only is online more convenient, and often cheaper, but people can also have richer interactions with brands online, and can benefit from items tailored to their individual specifications – something that it is difficult for high street retailers to do well. The term Web 3.0 is being coined at the moment – with streaming and personalisation coming to the fore more so than ever before.
Web 3.0 and cloud have the potential to form a strong partnership. This force has already transformed the greetings card industry, with the likes of Funky Pigeon and Moonpig using the power of cloud to produce and deliver completely personalised greetings cards. Traditional market leader Clintons Cards closed half of its stores after entering administration in December, having taken a big hit from the success of its online competitors. Online retailing has advanced from being able to offer cheaper products to ones that are also completely tailored to customers’ wishes.
The bricks and mortar high street of the future will be filled with outlets, boutiques, restaurants and coffee shops, which all inspire physical interactions – service-based offerings will be prevalent. However, the most successful businesses will have a solid online strategy supported by cloud technology to deliver a personalised, richer experience for the customer and scalable operations to meet demand. For example, retailers should look at the likes of grab-and-go food outlet Eat, which plans store portfolio growth using cloud.
The cloud changes everything. Retailers must make the most of the tools and technologies at their disposal or they risk falling behind their competitors – or worse, risk being the next big name to hit the headlines for the wrong reasons.
Pontus Noren is director and co-founder, Cloudreach.