Daily Archives

One Article

Posted by Tom Cheesewright on

The Future of Retail: What the High Street Has to Fear from Social Selling

The high street casualties to date have largely been killed off by eCommerce. How could HMV with 4300 staff and all the costs associated with shops and distribution, compete with iTunes? iTunes has 15 staff in Europe, delivers digitally and yet turns over significantly more than HMV did when it went under.

eCommerce is clearly lethal to some businesses. But technology has presented the high street with another threat: the social seller. People who adopt retail as a way of life, selling things they know and love, and use the internet to amplify what used to be a purely offline, geographically-limited model.

Let me give you an example.

Karen Makin had a real grounding in high street retail. Like many successful people I’ve met, she started on the management training programme at M&S. She learned the ropes before moving into management at age 22. At a brand new Savastore she became duty manager then assistant store manager, controlling 800 staff.

In the 80s Karen took advantage of the boom with a jump into estate agency, before meeting her husband, moving to Bolton and settling down to raise two kids. She was out of retail for 14 years. Until recently.

With another recession slowing down her husband’s architecture business, Karen decided to get back into retail. She didn’t want to be back on the shop floor so she needed something a bit different.

A friend introduced her to a wholesale supplier of jewellery and accessories, and offered to front her the capital to buy some stock. Her friend was selling the stock through house parties, organising events at people’s homes. Initially sceptical, Karen was sold after the first event when it became clear that these weren’t awkward old Tupperware parties: people really appreciated having the goods (at a reasonable price) brought to them.

Karen started operating on the same model, under the name Antonia’s Recession Busting Glitz & Glamour. She used her contacts through school and gym to organise parties. And 20 years ago this is where the story would end: a small, simple lifestyle business that involved endless (face to face) networking, constantly looking for new relationships with potential party hosts.

But where Karen’s business really took off, and where technology adds the element of scale, was when she got a Facebook page.

Karen confesses that she was not technology literate. It was not so much that she was scared of technology, she just didn’t see the point of the computer. Over time though she was introduced by her husband and kids to email and Facebook and liked that she could keep in touch with people remotely. Then one day someone suggested a Facebook page for her business and her son helped her to set it up.

“That’s when it went crazy,” says Karen.

Karen’s still running the events but now people find her online. She ships around the UK. She uses the Mac in her kitchen and her mobile to respond to people. “Last night I sold three scarves, while sat in front of the TV,” says Karen.

Social Selling: Love the Product, Low Capital Investment, Round the Clock Engagement

Let’s recap here. Karen invested nothing in a website or eCommerce presence. She does not have a website other than her Facebook page. Her total capital investment, including stock and display hardware was less than £2k — much of it from her angel friend who got her into the business in the first place. That capital has been repaid in just 9 months. Karen is buying from a wholesaler rather than direct. Yet she can comfortably undercut the high street AND offer customers the benefit of bringing the stock to them at home or in the office. Whereas in the past her business would have been geographically limited, now she can sell across the UK and she’s looking to expand into Ireland.

This is still a microbusiness and probably always will be. But the threat to the high street is not Karen expanding to become the next Debenhams. It is the prospect of 10,000, 100,000 or even 1 million Karens.

In a recent piece I did for the Institute of Chartered Accountants on the future of work, I came to the conclusion that many more of us will be self-employed in the future. Most self-employed people that I know do more than one thing. I’d expect that a fair few of us will be retailers — as many are today via eBay, Etsy and more. We all have our specialisms that we could turn into shops — many of us selling things that we really enjoy working with, as Karen does with accessories.

Working like this has its challenges, as Karen acknowledges: it’s hard to switch off sometimes when your work is connected to your social profile and always accessible online. But it also has great upsides in its flexibility.

People have always run microbusinesses like this from home, be they self-started or franchise. But the ubiquity of the Internet and social networking particularly has created the opportunity for these microbusinesses to operate more efficiently and scale to a much greater audience very rapidly.

Look out high street: it may not be eCommerce that kills you, it could be your customers.

Tom Cheesewright