Michael Baxter says micro fulfilment centres and robots can breathe a new glorious life into the High Street, turning the problem of returns from online retail into a new opportunity.
I don’t know what it’s like where you live, but where I am, the local High Street is a disappointing shadow of what it used to be. Once fine shops are now empty shells. Restaurants, cafes and coffee shops have partially filled the spaces, but stopping for a coffee or a meal whilst out shopping is not so much fun when there isn’t much shopping to be done. So, can the High Street be saved? I think it can, and the answer lies with robots, micro fulfilment centres and creating serendipity.
Everybody knows why the High Street is in crisis. The internet has hollowed it out. E-commerce is a great disruptor. But there is a snag. The disruptor is struggling too. Maybe the disruptor is even being disrupted. In the UK, for example, the two most famous online retailers, ASOS and Boohoo, have seen share prices crash. In 2022, it is not unusual for a company to see sharp falls in their shares. But for ASOS and Boohoo, it has been something else. ASOS shares have lost around 75 per cent of their value since the beginning of the year. Boohoo didn’t fare much better. Compare that with a more traditional retailer, shares in Next, a well-known British fashion retailer with a strong High Street presence and online sales, have fallen but by nowhere near as much.
It is part of a wider trend. As a recent report on Bloomberg said, shares in online retailers like Amazon, Shopify and Wayfair have seen shares fall by a much higher percentage than the S&P 500.
There is more than one reason why online retailers have had a hard 2022; in part, it seems that Covid did not accelerate the shift online as much as previously expected. As the pandemic eased, online retail has partially shifted back to pre-Covid habits. But there is another problem, and this problem takes us to the core of this article and why robots and micro-fulfilment centres are creating this new opportunity.
The problem is returns. Boohoo, for example, recently blamed a higher level of customer returns as a partial explanation for disappointing profit projections. But it is hardly surprising. According to National Retail Federation and Appriss Retail, US retailers expect total returns in 2021 to have increased by 16.6 per cent over the year before, hitting US$761bn.
The trend is up. UPS coined the phrase National Returns Day to describe the day in early January when it returns the most packages. According to Statista, the number of packages returned in the US during the week, including National Returns Day, increased from one million in 2016 to 1.75 million in 2021.