Retail crisis – the elephant in the room?

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As the CEO of a business that specialises in helping people facing redundancy, I’ve been taking a close interest in the unfolding retail crisis. Just today we’ve seen House of Fraser announce the potential closure of 31 stores with the loss of up to 6,000 jobs. And that was followed by news that Poundworld may fall into administration – putting another 5,300 workers at potential risk.

Two more different retail businesses it is hard to imagine. One dealing in branded and designer goods in big department stores. The other appealing to shoppers on a tight budget. Yet both are facing uncertain futures. here are many articles out there trying to explain what is happening in retail like this one from the BBC describing “Six Reasons behind the High Street Crisis”

What isn’t mentioned in that list is the fact that commercial property prices in the UK are far too high to be sustainable. It costs so much per square foot that there’s probably no way a traditional retailer can compete long term with an internet only rival. What businesses like Amazon, Not On The High Street and many others have proved decisively is you don’t need shops to be a success. And they can use the overhead savings to offer keener prices.

Dig deeper into all these retail stories and CVAs come up time and again. With landlords often being asked to take a big hit. Not just immediately – the chance is the units will become vacant and stay vacant. Almost every High Street I walk down has surplus space aplenty.

Against this background I am not surprised that it isn’t just retailers who are questioning why they need property at all. At Chiumento we made that call 5-6 years ago. We realised we could let go of all our offices and deliver a better service. It took us until last August to close our last building but now we wouldn’t go back.

In the last week I’ve talked to three other professional services/consulting businesses looking to go down the same path. They’ve reached many of the same conclusions. Clients expect you to go to them. Users want services delivered in locations convenient to them not the supplier. And more and more people are happy to use technology – be that meetings via video conference or e-learning rather than classroom events.

But, and it is a very big but, going virtual is about far more than technology. It is about fundamentally changing the way a business works. It is more about culture, communication and leadership than broadband connections, hardware and software. People make it work or fail. Be that leaders who can “let go” and focus on outcomes not supervising activities or followers who take ownership and care about quality and customer service in a working environment without the structure and organisation of a traditional office.

Flexible working is in huge demand – and homeworking is a big element in that. Apparently millenials want career flexibility more than any other group. Increasingly a failure to offer flexible working will negatively impact your ability to hire top talent. So, demand for office space, like demand for retail space is likely to fall in the long term.

I suspect many of the people leaving these retail giants will need to take a new career direction. Their next job likely won’t be in another shop – even if it is in retail. Helping people deal with changes of career direction is one of the main features of outplacement. I wonder how many of those affected by this latest crisis will actually get it?

‘Retail Crisis – the elephant in the room…’ was written by Ian Gooden, CEO Chiumento Ltd. If you like what you’ve read why not follow us on LinkedIn and Twitter and read all our future careers advice and musings on the world of work.

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