Barely a day goes by without a well-known high street name’s collapse as retailers battle spiralling costs and the seismic structural changes caused by technology. Yet the rise of online retail does not spell the death knell of traditional sales.
High street retail isn't dying - it just needs to evolve
While ecommerce grows by 14-15% annually across Europe and the US, offline retail remains flat, with annual growth of around 1%. Indeed, futurists report that by 2025, 75% of sales will still occur in physical stores.
My view is that that online and offline will continue to co-exist with people moving seamlessly between the two. Those best able to master this hybrid retail environment will be the ones that respond best to a different trend – the increasing polarisation of shopping behaviours to two extremes.
Convenience and experience
The first is the rise of the ‘immediate shopper’. In today’s modern, highly-connected world we feel busier than ever and ‘always on’. The mushrooming – and fragmentation – of media and information sources has compounded the number of choices we need to make.
On average, an adult now makes an astonishing 35,000 decisions a day. We live in the moment and, as shoppers, dash for convenience. In the UK, ‘for tonight’ shopper missions rose 6%. Add to the mix, conversational commerce is making never-leave-home shopping mainstream. The shopping trip has moved to immediate gratification.
At the same time, however, we have also seen the emergence of a second group: the ‘experiential shopper’.
Now, more than ever, people crave unique, curated and immersive experiences - everywhere. Some 45% of consumers globally are willing to pay more for a better retail experience and retailers report over 14% better conversion when experiences are offered. People now hanker after emotional storytelling, sensory immersion and human connections.
What innovations meet those trends?
Retailers should take heart from the smart ideas to win immediate and experiential shoppers now being pioneered by a growing number of retail brands.
Sure to appeal to immediate shoppers is check-out free tech, which is coming up fast. Startup AiFi has launched a ‘scalable’ version of checkout-free store technology, beginning trials with a major grocery retailer this year in a 50,000 square ft store. This is far larger than Amazon Go’s 1,800 sq ft prototype set to roll out to six further sites.
Effortless ordering is gearing up, too. Fast, low-friction commerce has morphed into assistant-enabled utility. Alexa users who install Starbucks' mobile app can order preferred products at their favourite location by simply saying, ‘Alexa, order my Starbucks’. Ride-hailing companies Uber and Lyft encourage customers to order a driver through Alexa, with the device's location as the default pick-up address.
Meanwhile, pre-emptive shopping is being used to target customers who want to automate mundane shopping tasks and be kept in the loop on offers. Tesco has launched a channel giving access to a menu of downloadable code commands that trigger a specific action if a corresponding event occurs. For example: ‘if the weather gets warmer than 28 degrees Celsius, then add burgers to my basket’, or ‘if the price for toothpaste drops, send me an email’. The aim is to ultimately automate low-level general tasks, freeing up time.
A return to craft and authenticity is winning, too. Customisation doesn’t have to be high-tech and brands are showing off the craftsmanship behind their goods with a focus on bespoke, in-store production. When Coach opened its new NY flagship, it included an area for made-to-order handbags, including a workshop with full-time craftsman visibly working, doing repairs and personalizing items.
Staff-powered personalisation with wearables, is another growth area. According to PwC Total Retail 2017, the golden element of the in-store shopping experience is customer service: assistants with deep product and range knowledge, and, the ability to check stock and ranges online and in-store. Denim brand True Religion has armed teams with Apple watches connecting staff to consumer info (name, style preferences, purchase history, wish-listed items) as well as real-time inventory data. They can create orders direct from the watch and transmit images of the product onto a 42" screen in-store. Sheer genius.
With an expanding armoury of innovation, a growing number of brands and retailers are happily engaging with very different, and polarising, trends of human shopping behaviour. Rather than fear for the future, they are confronting it and by doing so using it to power innovation. Today, then, is above all an exciting time to be in the retail business.
Tom Moore is head of retail & shopper at Geometry UK.