Retail brands need to think less like a retailer and more like a service brand

5185 3457 Never Quiet - Atomic London

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 the likes of Amazon, Google and ASOS are picking them off one by one. Despite still being valued by many people in the UK, these high street stable-mates struggle to make their propositions compelling or their business models work at scale anymore.

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?

Well there is hope. Waterstone’s for example, should by all accounts be dead and yet is a brilliant example of a retail turn-around success story. Maybe they should take a leaf out of their book if you pardon the pun?

So what’s the answer? Well of course it’s not simple and I wouldn’t suggest that problems built up over decades of trading can be solved in one article by a creative agency CEO. 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 differently 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 to live by 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 to sell to their customers for as much profit as possible. The brands and their marketing communications 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 these icons of the high street have built their entire businesses thinking like service brands first and retailers second.

You see despite the its huge retailing success, Amazon wasn’t ever really set up as an online retail business; they are in the business of attracting and serving customers by doing a few things really well:

-Providing access to the widest possible range of products (many of which they don’t even hold in their own inventory)

-Buyable at the click of a button (literally)

-Delivered with bulletproof reliability, at almost no cost.

Yes they sell products but their entire business is centered on service first, sale second. It’s why Amazon now attracts customers in such quantities that they are one of the biggest media owners in the world and now able to offer you a TV service (Amazon Prime), a book reading service (Kindle) and a service to order more stuff from Amazon (Alexa).

The same is true of ASOS. Again brilliant at combining 3 ingredients of service to facilitate the sale of a product:

-Giving customers mobile first access to the widest possible range of clothing.

-At almost unbelievable prices with remarkable levels of additional rewards.

-Delivered and returned in a blink of an eye for almost nothing.

ASOS don’t curate or sell better products than any other retailer but do they do provide a superior service to most other bricks and mortar retailers and indeed most online competitors.

And for Waterstone’s, a High Street brand that by all accounts should be dead, killed by Amazon in the first round of the online retail featherweight title fight, they used this exact approach as the start point for their turnaround. They stopped thinking like a book retailer brand and started thinking about being a book service brand.

As soon as Amazon gave people access to the largest inventory of books online at unbeatable discount prices, Waterstone’s retailer days were numbered. They could no longer compete as a ‘supplier’ of books on the high street. But what saved Waterstone’s eventually was their CEO, 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 for most of his career.

He recognised that for Waterstone’s to survive and thrive, they had to realise that they were no longer really in the book retail business. In fact they were in the service of feeding the enthusiasm and facilitating the discovery of books, for book lovers.

With that in mind he made big changes to the whole company from how they dressed and utilised their store space, the type of staff they hired and how they were trained, and how they communicated this new proposition to the public. They went from hiring staff that were efficient ‘till operators’ to those with a passion for books. Staff who were happy to spend time with customers helping them to discover new authors. They encouraged people to come in, leaf through books in bright reading areas and dwell in the café. Their tie up with local book sellers was a genius move to help people experience the one to one service of a local bookshop yet have access the full inventory of Waterstone’s stock whenever they were ready to buy. In essence they stopped worrying about being a book retailer and started think about being a book service brand. And it’s paid massive 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 that mean for other High Street brands?

Well the first thing is to realise that most high street retailers no longer have a service proposition. When the High Street was strong, the overwhelming service provided to customers by all high street retailers was access to products at good prices from a range of credible brands. But now that fundamental service proposition is dead. Online retail in its most basic form has now trumped that generic service proposition.

So, the likes of House of Fraser or Dixons Carphone and all the other brands that are struggling first and foremost need to define a new set of service propositions, which are unique to them and not over-reliant on the generic truth of the sector.

The good news is that there is a science and 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.

Contrary to popular belief, it’s NOT about trying to be the BEST AT ONE THING relative to your competitors. Being an excellent and profitable company is about being GOOD at 3 things in combination.

It’s no coincidence that John Lewis is ‘Never Knowingly Undersold’ on price, quality and service. John Lewis are 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 over-arching 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 now very happy being really good at;

-Personal service and advice from staff who love books

-A place to dwell, read books and discover new content

-And a curated collection of books that book lovers find most appealing.

3 things in combination that for a large segment of the book buying public is very compelling and something Amazon cannot and do not want to compete on.

Now look at the high street retailers that are in trouble. Debenhams, Toys R Us, House of Fraser. Do they have their 3 core service propositions clear in their minds? Maybe they do but consumers don’t understand what it is otherwise more of them would be shopping there.


Jon Goulding is CEO of independent creative agency, Atomic London

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