Mark Kirschner explains why retailers must be empowered to sell both on and offline.
Recently, Guy Grainger, head of retail at commercial property agent Jones Lang Lasalle, predicted that online retailers Amazon and Asos would have high street premises by 2020. Speaking at the Investment Property Forum (IPF) the property agent said that this move from online to high street could have a huge effect on the high street. While of course this would be beneficial for a retail property agent, we think this prediction deserves some attention.
The fortunes of Britain’s high streets have not been far from our minds since the recession first hit the UK in 2008 and we began to see this affect bricks-and-mortar retailers up and down the country. Just as the UK economy has gone up and down in recent years, the high street has had similarly mixed fortunes, with everything from squeezed disposable income, to extra bank holidays, and even extremely warm (or wet) weather being held responsible for the state of the high street. Its plight is so well documented and followed that the British high street now even has a celebrity representative in the form of Mary Portas.
Customers want to shop on and offline
The decline of the high street is often linked to the increase in online sales, driven by the likes of Amazon and Asos. However, this is oversimplifying the issue, and does not take into account the fact that today’s shoppers engage with a wide variety of channels when coming to a decision about what to buy and where to buy it. It’s important that retailers realise the potential to link the online and offline experience to reach these consumers – wherever and however they are shopping. The on and offline worlds need to be pulled together into a coherent retail strategy by merchants if they are to maximise their bottom line, but how to do this effectively can be understandably daunting for businesses, not least for small-to-medium sized retailers. To avoid cannibalising the high-street we believe a new system must emerge, one that rewards the merchant for both their offline and online ecosystems.
Retailers are already fusing their digital and bricks-and-mortar offerings in many innovative and successful ways, suggesting that it’s not as simple as online versus offline. Most of these fusions hinge on mobile and tablet devices, as these offer a link between the digital and offline worlds. People rarely leave the house without a mobile or smartphone, so they remain connected when shopping on the high street. Some interesting examples include mobile vouchers, location-based services such as the VoucherCloud app or the barcode scanning services provided by ShopSavvy helps users find the best deal (whether it’s offered on of offline). All of these services point to the fact that commerce works best when customers can choose to buy online or in-store. So Grainger’s prediction that online retailers may begin to move to the high street, even with its higher overheads and recently volatile performance, does not seem so far-fetched.
Empowering retailers
On top of these technological innovations, and of course, the never ending competition on price, customer service is becoming increasingly important to customers. Retailers are having to work harder than ever for sales, and this is where improved customer service can help businesses to differentiate themselves. Shopping online can be a bit of a vending machine style experience - you see, you buy, you receive. At Rakuten, we prefer to provide the opposite experience: ‘Omotenashi’, meaning bringing a Japanese service mindset to the UK retail environment.
On this changing high street, implementation of a well thought-out multichannel platform will lead to a rise in sales, as well as new customers, increased brand loyalty and a better customer experience. The best way for high street retailers to initiate such an approach lies in partnering with a company that understands both the offline and online worlds. Online marketplaces are popular as they provide consumers with a much greater array of products than can be found on the websites of individual merchants. But more than this, these marketplaces are also extremely important for retailers who want to sell online but do not have the resources. Whether this is because they are a small business or start up, or if they are based abroad and want to retail internationally, online marketplaces provide them with an avenue to customers.
With all this in mind, although the idea of an online giant such as Asos on the high street may seem odd today, but it may not be as farfetched as it first seems. Similarly, we would encourage bricks-and-mortar retailers, even if they are small, to think about selling online to take advantage of the multichannel environment.
Mark Kirschner is Vice CMO of Rakuten.
