The Harrod’s of the high street, the ‘Amazon Tax’, and the death of the kitchen
By Maia on Friday, August 17th, 2018
Quiqup Insight: He huffed and puffed and saved the house from blowing down
House of Fraser has made some pretty grim headlines in the last few weeks. From going into administration to potentially shutting down 59 doors, including its iconic Oxford Street flagship, House of Fraser was set to fall like a house of cards. But just a few days ago, billionaire retail mogul Mike Ashley swooped in and with £90mn, vowed to save over 80% of HoF stores across the country.
Now that Ashley’s Sports Direct firm bought the department store, he has plans to turn HoF into ‘the Harrod’s of the high street’ by bringing more luxury retail brands on board and introducing a concierge click and collect service.
A step in the right direction, no doubt, but it’s going to take a lot more than Gucci on the shelves and personalised click and collect reservations to resuscitate the brand. Department stores all over the world have been suffering at the hands of online retailers. With crippling rents, high labour costs, and rising business property taxes, large department stores hardly stand a chance.
In order for HoF to survive, it will need to revamp its online proposition and leverage its high street real estate as hyperlocal fulfilment centres. With thousands of square feet of inventory a short drive away from 90% of their customers, the key to HoF’s success will be in its ability to cut property and logistics costs and operate highly efficient urban delivery centres straight out of their high street stores. To do so, it must ditch its legacy systems and adopt new supply chain processes that allow for real-time visibility on a consolidated pool of inventory. That way, when online orders come in, they can be sourced and packaged from their high street stores and delivered to their customer in no time.
The struggle is real – and the government knows it
Local retailers are feeling the heat from Amazon and Britain wants to do something about it. Finance minister Philip Hammond announced last week that the UK wants to ensure taxation is fair for all retail companies, both traditional and online. There have been whispers in Brussels around a tax on online platform businesses based on value generated, one which the UK will happily consider.
These timely comments from Hammond came shortly after Amazon fell under intense criticism for the decline in its tax bill from £7.4mn last year to £4.8mn this year (despite an operating profit jump from £26.5mn in 2016 to £80mn in 2017).
Should this tax bill pass, both local and traditional retailers will enjoy a more level playing field in which to operate. This’ll be their chance to up the ante and get up close and personal with their customers – in-store through personalisation, online through customisation, and at home through convenient deliveries and great customer experiences.
No more cooks in the kitchen?
Last month, UBS released a report titled “Is the Kitchen Dead?” The study examines a world where fewer people are getting their hands dirty in the kitchen and more are ordering food delivery to their homes. Subsequently, the food delivery market is predicted to grow from $35bn today to $365bn by 2030.
With dark kitchens, kitchen automation, and cheaper, more convenient deliveries, the cost of having food delivered is falling by the day. With that in mind, Miele has designed a microwave oven called the Dialog that can somehow cook different things (that require different cooking methods) at the same time.
But its latest trick is the most interesting. Miele has now launched MChef, a last mile delivery meal kit service that sends restaurant quality meals already plated, to your door. All you have to do is stick it in the Dialog and it does the rest – no fuss, no mess. So the question remains, is the kitchen in fact dead and will delivery replace cooking? We’ll just have to wait and see, but the in meantime, last mile delivery providers will happily deliver ready meals or groceries – whatever your preference may be.
Ready, Scan, Go
Sainsbury’s has joined a growing list of grocers that offer Scan and Go services. With their SmartShop app, shoppers can scan the goods they want and simply walk out of the store, paying for what they’ve scanned via Apple Pay in the app. So far, the service has been well-received – SmartShop has processed over 100,000 transactions and over 3,000 new users register every week.
When it comes to grocery, convenience is king and Sainsbury’s knows it. First, they tackled same day delivery expansion and now checkout-free shopping. We’re interested to see what they do next.
A favourite here at Quiqup, Delivering Happiness details the story of Tony Hsieh and his company Zappos, an example of how thinking long term and following your passions first can lead to not just profits, but a happy life for you, your employees, and customers. A leader in customer service excellence, this book by Hsieh is a must read for anyone operating in the service industry, especially in deliveries. Enjoy!