For anyone following the issues facing high street brands, it feels like weekly shock and awe as big names start announcing profit warnings and store closures – Carpet Right, B&Q, Moss Bros, New Look, Toys R Us – the list keeps growing.
Recently I read the completely shocking news of the brand loved by little girls of all ages, Claire's Accessories has filed for bankruptcy protection in the US as part of a move to reduce its debt by USD1.9billion. Although Claire's Stores said its shops will remain open as it presses ahead with a financial restructure it remains in danger of closing.
Claire’s is the “go to store” for anything to do with, well, accessories – their products suit all age groups, their price point low, they have diversified their product range to include games, phone covers, ear piercings, make up – the product margin is low, the store footage small, store staffing minimal and yet it finds itself is financial trouble.
Claire’s is not an unknown small brand, they have been trading for many years (Claire’s was founded in 1961) and trades worldwide, so what is happening? What is effectively taking down huge dinosaur brands resulting in emptying high streets and large losses of jobs? And what can every Company learn from these failings?Companies need to innovate and keep a watchful eye on their customer/client trends. In the case of the high street brands, customers appear to prefer visiting a destination mall where all their shopping needs are found under an environmentally controlled roof rather then walk from shop to shop down a wet and damp high street.
How we shop has also changed, we don’t need to leave our houses anymore to buy the latest Nike’s or DVD, we can shop from our armchairs at home with same day delivery – often at a cheaper price than visiting the stores.
At the end of 2016 it was reported that Amazon's U.S. online sales growth was more than everyone else's combined. Forbes reported that Amazon saw its retails sales increase by 16% as Customers are turning to the simplicity of ordering on line – they are consistently innovating, now looking into drones delivering our orders within hours of our pressing “purchase authorisation”.
Having an online presence requires less expenditure and they can quickly react to changing trends with the swift click of a key. Costs are saved in reduced headcount, the use of AI reduces the amount of errors, having an out of town warehouse facility saves on landlord costs plus outlay (AI doesn’t need bathroom breaks or heating/cooling to operate plus they can work 24/7).
Drones will soon deliver our orders to save petrol and road taxes plus they are environmentally more friendly. You have to question the need to ever leave your house again, everything will soon be downloadable or streamable!
But why should we should we innovate?
- Our Customer expect this of us
Customers today have very little patience with products that are deemed “old”. Baby boomers often think about a product as being around for 30 years as tried and tested, whereas millennials think that these products are old and tired. If you’re not innovating, your business suffers because it’s no longer standing out.
Innovation cycles are becoming rapidly shorter, which means that Companies must be constantly on their toes, turning out new products, new services, and often new solutions because customers today don’t just want a product or a service, they want companies that solve their problems and ideally, solve the problems they didn’t know they had.
- If you don’t, then your competition will!
Companies need to keep updated on what’s changing and developing with their industry market and use this information to get a jump on their competition or their customers will go elsewhere. Companies that use and act on their insights are the competition, they leave behind those that are lulled by their historically strong financial performance.
The Companies that get left behind are the ones that believe “why fix something that’s not broken” fail to look up and see they are being caught up and eventually overtaken by their competitors - often, the leader loses and once they are over taken, either take many years to catch up or eventually close their doors.
- It makes financial sense
Times are challenging and Companies are looking at their P&L for ways to save money. Often Companies have grown too large or their internal processes are too complicated, so looking internally for cost savings is advisable. However, where mistakes are made is by not investing in the development of their brand and services.
Innovating can save a Company money, time and waste. For example, a County in the UK recently implemented an innovative approach to road repair and maintenance. Originally, road maintenance crews were required to visit individual production facilities before starting road repairs to collect fresh hot tarmac, this not only used up valuable time, but also led to wasted material because of particular temperature requirements.
Innovation sparked an idea to develop a mobile unit that mixes the key road-surface ingredients on-site, resulting in more efficiency. This method costs about the same, saves the company and crews time, and the repairs are completed sooner.
- Dramatic though it sounds, for business survival
The Harvard Business Review, recently quoted, "For companies to survive a discontinuity, they must face the rather unpalatable reality that there may have to be fundamental changes in who they are, what they do, and how they do it, as wrenching and dislocating as it may be." Basically, if they don’t change then they will not survive in today’s ever-changing environment.
Only companies that constantly challenge what they do, challenge themselves to come up with new and different ways of doing things, and also constantly improve on things that they already do will survive in this new globally competitive environment. Companies are no longer in competition with competitors in their region, the Internet has opened up the competition into a global environment. Innovating your end product and services is essential to survive in todays ever changing market.
Remember, the definition of insanity is doing the same thing over and over again and expecting different results. The only new constant is innovation.