THE BLOG

The Future of Retail is Human

07/06/2016 10:59

The downfalls of BHS and Austin Reed are only the latest chapters in the story of the changing world of retail, and we can be sure Winston Churchill's favourite tailor won't be the last established retailer to go under. But as retail's golden age slips from view in the rear-view mirror, is there a brighter future ahead?

Last week's developments could lead to the closure of 280 stores and the loss of over 9,000 jobs. Reed and BHS now sit neatly on the scrap heap beside Woolworths, Comet and the other big British brands of yesteryear. UK high streets lose yet more tenants, and question marks are raised over the ability of the retail industry to sustain the high levels of employment it has held on to following the financial crash.

Undercut by Asos and Amazon, and outfoxed on the high street, Austin Reed and BHS failed to take heed of the warning signs. While other retailers were choosing to invest in their workforces and distribution networks, the two failed retailers stood still. In both cases leaders were too slow to adapt to a rapidly changing retail landscape.

As retail guru Dan Murphy told a Fabian Society hearing last week, "it's never been tougher out there" for established British retailers. Customers are demanding goods and services quicker and cheaper with no compromise on quality. Agile online platforms are swerving the high cost bases underpinning bricks and mortar stores. The introduction of the National Living Wage moves us away from an era of plentiful supply of cheap labour, as technology becomes more affordable. The changing landscape demands a change of thinking.

This necessity of change is recognised by a small number of established retailers who are investing and innovating to succeed in the future retail industry. IKEA have devolved decision making to local stores and within those stores staff have been empowered at junior levels to take initiative. EE have introduced new flexibility for their staff, giving them more control over their hours and their job roles. Both employers have decided to pay all of their staff at least the Living Wage. Both are expanding their bricks and mortar offers. Morale is on the up, and with it, customer service levels and sales are too.

Both of these retailers have borrowed elements from Zeynep Ton's 'Good Jobs Strategy', the text which is fast becoming the bible for forward thinking employers in traditionally low-paying, low productivity industries. The MIT Professor's book, the product of years of research into business practice, shows it is possible to thrive in retail by paying higher wages and empowering staff. And in a rebuke to those for whom the relationship between jobs and pay is nothing more than an equation, Ton shows that better jobs does not necessarily mean fewer jobs. In fact, the retailers showing the strongest growth tend to overstaff and operate with slack.

Sometimes the pessimism about the future of employment feels too hard to dismiss. It almost seems easier to look for new sources of income beyond work, like the increasingly popular idea of the Universal Basic Income. But this post-work pessimism ignores the new shoots of innovation from Britain's better employers. Ton and her new disciples in British retail are painting a brighter, more optimistic picture of the future of work.

The journey towards this higher paying, higher productivity, more human future won't be easy and Austin Reed and BHS won't be the last victims. But from the ashes of the high street, we're seeing new businesses like Etsy create communities that stretch beyond postcodes and even borders. From the turmoil in food retail, we're seeing grocers like Aldi and Lidl show that it is possible to combine low prices and higher wages. As the fashion for top down hierarchies recedes, Richer Sounds and the John Lewis Partnership are showing it's the empowerment of staff rather than the command and control of management that allows companies to meet growing customer demand. If for one minute we stop lamenting the decline of Britain's golden age of retail, we might start noticing a new, more human outline of the future.

BHS and Austin Reed had opportunities to move closer to this more human vision by investing in their workforce and in their company. But they were hamstrung with debt as they tried to repeat the tricks of yesteryear - low pay, strict hierarchies, top down control. These were yesterday's strategies and now these companies are yesterday's news.

In a world where we're surrounded by self-service scanners, faceless online ordering, and standardised service, the human touch has become a valuable commodity in British retail. Service with a smile has never been more profitable, nor more necessary.

Cameron Tait is head of the Changing Work Centre and a senior research fellow at the Fabian Society

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