According to retail statistics, out of 31 failing companies so far this year, 1184 stores have been closed either due to dissolvency or restructuring, casting doubt over the jobs of at least 35,594 employees.
In our previous blog, we looked at how to protect stores from the ever-increasing influence of online shopping upon the retail industry. Today, we’re going to explore why one of the most recognisable brands on the high street has capitulated under the pressures of the modern economy; and how their mistakes correspond with the retail landscape.
What caused the Compulsory Liquidation of Thomas Cook
A household name in the travel industry, Thomas Cook, recently stole the headlines as they collapsed instantly this month after 178 years of trading, leaving over 150,000 people stranded abroad.
This is an example of the most detrimental of conclusions for any business, to dissipate so suddenly and leave such an astounding amount of customers without an alternative. The reason for the sudden collapse was due to failing to secure a £200 million investment from the company’s bankers, in the hope of keeping the business afloat over the winter period.
This misfortune, however, merely brought the inevitable to a head. In a recent article with The Express, a company rescue and insolvency specialist, Rick Smith, Director of Forbes Burton, stated:
“As consumers’ tastes change, so must business and it seems Thomas Cook has become almost too complacent on its reputation and perhaps innovation and modernisation is something that needs to be assessed here.
“It seems that Brexit and how people have been booking their holidays have had the biggest impact, which is of no surprise, given the rise of cheap flights and a trend away from the package holiday.”
How this relates to the Retail Industry
While Thomas Cook traded in the travel sector, the epicentre of their demise (according to the professional opinion above) was a classic error in the retail industry. Depending too heavily on your reputation and not keeping up with the latest trends can result in stagnation for a brand.
Our economic climate is developing faster than ever before in ways we have never experienced with the rise of technology, different approaches to marketing, and heavier focus on corporate values. With this being the case, it is essential for businesses to keep up with the changes in their market and encourage innovation.
Gone are the days where sticking to tradition – with methods which may have always seemed to work – can be relied on. In most industries, competition is fiercer than ever before; even household names have to adapt and adjust to stay ahead of upcoming businesses. No matter how reputable the brand, how high their revenue has been in the past, or how reliable their products & services are, all businesses are susceptible to falling behind.
Our advice for retailers, in addition to staying up to date with consumer habits and providing the best possible service, is to do your utmost to create a brand identity that will persuade your target market to choose you over competitors.
American software company, Salesforce, conducted a survey amongst consumers of all generations to find out what sways their buying decisions. What we found from this is that corporate values are more important than ever; here’s some results we found of interest:
80% of customers are more loyal to companies with good ethics
68% of customers won’t buy from companies with poor ethics
76% of customers want companies to advocate for equal rights
73% of customers are more loyal to companies that value equality
71% of customers expect companies to clearly state their position on equal rights
55% won’t buy from companies that don’t value equality
56% of customers actively seek to buy from philanthropic companies*
65% of customers seek to buy from environmentally sustainable companies*
74% of customers say a company’s sustainability practices matter more than they did a year ago
*particularly amongst the younger generation