On the day that yet another major UK high street retailer goes bust, it seems apt to look again at the place aspect of the marketing mix. Many successful companies grew due to their strong channel presence – on the high street or more recently out of town shopping centres. In B2B it could be through a large sales team or a strong distribution network offering skilled advice and support to serve their target customers. So how should companies adapt their channel strategy to a changing environment ?
I grew up living in the multicultural and vibrant city of Leicester, home over the years to the wonderful David and Richard Attenborough, but also Showaddywaddy and Daniel Lambert. Thankfully it is now more famous for the discovery of DNA profiling and the recent success of its football team, even if its rugby team has fared better over years. But Leicester was also the birthplace of Thomas Cook , the travel agency that closed its doors under the weight of debt and increasing competition from web based rivals. Over the last decade it seems that the rate of closure of once stable and profitable business is increasing dramatically.
Where does Place fit in the modern world ?
Place used to be thought of as the physical presence of a company, where orders were placed, good were sold and money changed hands. But the internet messed up these rules so how does the modern world impact on this ? For a start your place strategy should deliver on your overall business need, not the contrary. Does your sales channel serve your historical customers, or will it serve your future ones ?
Physical stores are seeing a resurgence with independent and often local businesses serving a niche, plus high end luxury brands. But this appeals to a limited demographic with high spending power and particular interests.
Online presence in B2C is pretty much essential and is becoming increasingly so in B2B. Buyers want to shop when they want, wherever and they want to benefit price wise form the lower costs of trading and the increased competition for the retailer.
Where products are either totally commodotized or are virtual or service led then physical presence makes no sense. The purchase of computer software for example has changed from a physical purchase to a download and subscription from an app store.
But is the web to blame for the demise of the High Street ?
It’s very easy to blame the rise in the web for the glut of empty shops and failed businesses, but remember that online trading is only a channel decision. If the business models of new entrants are wildly different to the older players this is a choice we make.
I would propose that in fact a static vision of the customer base is the reason for these spectacular crashes. After all if our buying habits change faster than the the sellers business model then the result is inevitable.
Mass marketed package holidays and the way they were purchased changed little since the mid sixties when my parents first flew abroad to spend a week in exotic Lloret de Mar for their honeymoon. And I remember every year the huge pile of glossy holiday brochures that would be stacked on the coffee table and worked through diligently by my mother in the first few weeks after the Christmas break, looking for that perfect fortnight for the family. All we had to do was arrive at the airport 2 hours before the flight ( or 6 hours if my Dad got his way) and all would be sorted for us.
The customers changed, the suppliers didn't.
And then something changed. People got brave and dared to venture to exotic places ( sometimes even out of Europe!) with a desire to explore countries, not be bussed to an imposing high rise hotel with westernised cuisine. I remember people thinking I was mad booking a return flight to Athens with nothing more than my backpack, a tent and a paperback guide to Greek Island Hopping. Ferry tickets were bought as and when needed. The names of the best places to stay on each island were passed from traveller to traveller during the boat trips. When you got bored you moved on. No more 14 nights staring at the same view, eating the same food and spending your nights at the same terrible hotel disco. And the traditional suppliers couldn’t keep up.
The new winners match their offer to the new customer values
So the new needs became clear – customers want flexibility to search out new ideas, they want honest reviews from people like them, and they want to research and browse where and when they like. Whilst the physical shops don’t preclude this, they can’t beat the internet specialists in speed, comfort and very often price.
And these new entrants became winners because they offered something new. AirBnB matches home owners looking for some extra income to travellers wanting to avoid the banality of chain hotels. Low cost airlines offer a basic service to get you to your destination ( despite disproving the idea that getting there is half the fun ) and leaving you more of your cash to spend when you do arrive. Online recommendation sites with easy booking options will make or break a tourist business faster than you can say “fake review“.
So where next for your place strategy ?
In conclusion, despite the many high profile closures in the retail sector over the last few years, this is more likely a result of failure to adapt to customers changing habits and values. These days your channel strategy needs to match with the customers need, rather than hoping that customers will come to your existing sales network. And whilst the digital world continues to grow at an amazing pace there is still a place for highly differentiated specialists and high service level businesses to operate from physical stores. The problem is where you are neither and you are lost in the grey zone of dullness that so many high street chains have become today. And neither physical nor online presence will save you from a bleak future.
Agree or disagree? Leave your comments for discussion.