Show Me 1: The Changing Face of Retail

THE CHANGING FACE OF RETAIL

The pace of change has brought unprecedented challenges for retailers in recent years and shows no signs of slowing down. In a multi-channel world of smart technologies, a fast and furious pace of life and increasing levels of competition, retailers and brands have to be smarter than ever to maintain relevance.

Despite the doom-mongering, stores are succeeding; according to Econsultancy, in-store sales still account for 84% of total retail sales and of the remaining 16% attributed to online transactions, 66% are made following a visit to a physical store (Boston Retail Partners).

Retailers are rising to the challenge of the demand to shop anytime, anywhere. They are having to respond increasingly to inflated expectations surrounding customer service, fragmented shopper journeys and displaced points of purchase.

Many brands are breaking down traditional sales models; Tesla, for example, has eschewed sales-led ‘big box’ dealerships for brand-building experiences in shopping centres. Sneakerboy has created stock -free experience stores in Melbourne, providing in-store trial and online ordering.

More than ever we are seeing online retailers experiment with new commercial models, utilising bricks and mortar stores that combine the best of physical and digital retail, to cater for evolving customer demands. Amazon’s most recent venture into grocery, for example, sees the launch of check out free convenience stores ‘Amazon Go’ that responds to the needs of the ultimate time-pressed convenience shopper. We expect to see more cashless stores over the coming years as retailers battle for consumer loyalty whilst tapping into the growing trend of simplification.

Many retailers are forging stronger connections with customers by creating and curating experiences, moving beyond the straight forward display and sale of products to becoming central community hubs; spaces for entertainment, exploration and discovery.

Others are focusing on what we call ‘real-time retail’.

Taking a leaf from the online book and reflecting non -linear paths to purchase, they’re creating dynamic experiences that respond to individual customer demands through flexible formats, instant access to services and information, enabling seamless collection of data and connectivity.

The result is that of hyper-personalised environments that respond to factors such as time of day, day of week, weather and specific customer feedback.

Smart technology is being used to create smarter stores and increase engagement with consumers. Applying their ability to recognise individual customers and personalise the experience, providing rewards and discounts and reducing friction along the path to purchase. Far from diminishing the role of the physical store in acquiring, guiding and maintaining a relationship between customers and brands, we see technology bringing even more opportunities to connect brands with their consumers and facilitate purchase.

These are exciting times for retailers, with the opportunity to win and retain more customers that seek experiences that cater to their unique needs. Far from becoming redundant, physical stores will remain of central importance in delivering a brand promise and ultimately immersing shoppers in their brand world.

£52

Bn.

Although online sales grew in the UK to over £52bn in 2015, this is still only 16% of all retail (Econsultancy)

A /

Sneakerboy store does not stock items to purchase on-site. Customers can see samples for fitting with staff present to advise, but purchases are made via store iPads or mobile apps for home delivery.

The digital check outs store customers’ details such as size and purchase history to provide individually tailored content and recommendations.

Cents 36

Digital influences 36 cents of every dollar spent in physical stores (Delloite)

86%

Of global customers currently shop across at least two channels (PwC)

Californian carmaker Tesla Motors is eschewing traditional out-of-town showrooms in favour of urban brand hubs in high traffic locations such as shopping malls. The aim is to introduce the unfamiliar brand to shoppers who aren’t necessarily in the market for a new car. Touchscreens allow exploration and the staff are recruited to engage the visitor and not incentivised to use high-pressure sales tactics.

Even online retailers are disrupting new e-commerce models with bricks-andmortar stores that combine the best of physical and digital retail to cater for evolving customer demands.

66%

Of all online transactions occur after shoppers have visited a physical store (Boston Retail Partners)

TAKE AWAYS

Amazon opened its first bricks-and-mortar store last November in Seattle. Books VP Jennifer Cast said that the bookstore would be ‘a physical extension of Amazon.com’, designed to ‘integrate the benefits of offline and online book shopping’. The 5000-book inventory is based on online consumer reviews, ratings, sales and pre-orders. In the December 2016 the online retailer then branched out into grocery convenience with ‘Amazon Go’, designed to eliminate waiting times with the invention of a check-out free shopping experience which, according to their FAQ page, utilises “computer vision, sensor fusion, and deep learning” to recognise Amazon customers and charge the basket value directly to their accounts.

Today’s shopper expects to shop anywhere, at any time.

The path to purchase has become fragmented, with the lines continually blurring between traditional retail and e-tail.

Physical retail is polarising towards hyper convenience on the one hand and experience-led leisure shopping on the other.