What role does the bricks-and-mortar shop still play, in a retail sector seemingly enslaved to expectant, impatient consumers who can buy any product online and have it delivered to their doorstep within a couple of days?
Winding back five years, you might have been pessimistic enough to suggest that the High Street was doomed. But today’s retail landscape hasn’t evolved in the way many expected. Instead, the dynamics have changed, as omnichannel has risen to the fore.
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A number of key behavioural factors have put the bricks-and-mortar store back in vogue. The cultural phenomenon of click-and-collect shopping has placed new emphasis on how retail space can be utilised. Earlier this year, 54% of European consumers said they prefer click-and-collect over other options when purchasing online.
Added to this is our reliance on mobile phones to form part of the shopping experience. Showrooming – the method in which shoppers found items they liked in store only to find a cheaper price online on their phones – was often considered an adversarial trend. Yet retailers countered with ‘webrooming’, and as a result consumers have actively sought cheaper prices for items in-store by researching online.
Social media has also helped. 93% of Pinterest users use the platform to research shopping purchases, whilst 87% have bought an item because of Pinterest. 91% of retail brands use two or more social channels, actively encouraging shoppers into specific stores based on location parameters and promotions. Location-based marketing has meant retailers have been able to target shoppers with deals via hyperlocal advertising and even beacons and NFC technology, in-store.
Whilst seemingly a disparate collection of channels, all of the above examples have one thing in common – together they form an omnichannel approach to retail that still centres around the traditional store.
“It’s important to note that today there are few pure ‘bricks-and-mortar’ store experiences anymore,” says Jason Stanard, a partner for Retail Reply.
“It’s always been critical in retail to put yourself in the customer’s shoes. By doing that, it’s clear that the overwhelming majority of shopping experiences include at least one digital element – the phone in your pocket. Consumers carry with them everywhere a powerful digital tool for product comparison; price-checking; promotion and loyalty management; and product reviewing.
“Even if a retailer doesn’t have a digital screen in-store, it’s still part of an omnichannel shopping experience – so in that sense, the pure bricks-and -mortar shopper is rapidly disappearing.”
Despite the progress technology has allowed, pureplay e- or mcommerce just isn’t convenient enough for the majority of shoppers, and so bricks-and-mortar stores are proving an attraction for brands you wouldn’t necessarily associate with physical locations.
In March 2015, Google opened a showcase shop on Tottenham Court Road in London. It followed the 2014 announcement by Amazon that it had opened a shop on a mid-state US university campus. 2016 has already seen Dyson unveil a ‘testing store’, called Dyson Demo. Each brand may have different reasons for trialling new physical spaces, but each is in agreement that there is a need to provide more of a physical façade, to accompany the digital shopfront.
“Innovative retailers are taking time to consider what form physical stores should actually take in 2016, and it’s very interesting to see brands increasingly blurring the lines between the physical and the digital store,” says Kevin Connor, director of product strategy, Retail Pro International.
Innovative retailers are taking time to consider what form physical stores should actually take in 2016.
“As an example, for Adidas, athletic shoes are the mainstay of its $16.3 billion business. A couple of years ago, the German-based company realised that while it was impossible for any of its retailers to carry a full selection of Adidas shoes, it was losing sales simply because shoppers were unaware of all the offerings available.”
The solution may not have been to open up Adidas shops to counter this concern, but instead the footwear giant invested in ‘endless aisles’ in established retail outlets – an interactive video wall that gave customers access to products not in store and an opportunity to reserve and buy online.
Connor adds: “The wall has been responsible for increases in footwear sales of more than 40% in every instance so far. The reason for the success is straight-forward: the technology allowed customers to use retailer-provided inventory information to enable self-guided personalised suggestions. They can see images of the shoes from different angles, learn their features, select sizes and colours, and check inventory, so they feel confident about purchasing the shoes. That’s all done at the digital display.”
Boots UK also hit the news this year, revealing that it would be using Sales Assist - an IBM MobileFirst for iOS app. The app, installed on iPads across its stores, leans on product databases on its ecommerce site, boots.com, to help employees to access online inventory and locate products for shoppers. It also uses analytics so employees can also make personal recommendations to customers based on popular searches, as well as up-to-date offers.
So in order for a retailer to incorporate its physical stores into a wider omnichannel strategy, what are the fundamental requirements? The obvious answer is to ensure that there isn’t a disparity between online and in-store experience.
A recent survey from Periscope By McKinsey found that US and UK consumers predominantly saw the best retailers as those that offered the opportunity to “select items online and be directed to them in the store" (49% US & UK). 55% also stated it was vital that they were able to “instantly order items that are out of stock in the store via phone for home delivery".
Another aspect of omnichannel retail is building trust. Despite the benefits that tools such as location marketing and hyperlocal advertising might bring, Periscope By McKinsey’s survey found that 60% UK and 62% US respondents currently do not want their online and offline information to be connected to optimise the shopping experience.
Connor states there are four key principles of omnichannel retail:
- Data convergence: Data received from customers must be effectively consolidated. This means putting data from every customer, on every platform, in every store, into a single repository
- Omnichannel selling: Sales strategies should be built around this data. A customer should be able to seamlessly purchase an item if they have found it to be out of stock in a brick-and-mortar store
- Flexible fulfillment: Retailers should operate intelligently and adopt a think-on-your-feet approach to fulfilment. Smooth running of the supply chain, a readily-available ‘click & collect’ experience, and greater efficiency when shipping all contribute towards this
- Personalised customer experience: Recognising that each customer is different can be incredibly advantageous to retailers. Learning a customer’s likes and dislikes allows a more holistic shopping experience and increases retention. As long as they’ve opted into specific marketing types.
Stanard also adds that retailers should ask themselves the following critical strategic questions:
- DNA. What is at the core of what you do well? Across-the-board execution is king – but don’t let that obscure the fact that you do some things better than others. What are they?
- The customers. What do your customers truly value, and how well do you meet their needs and desires today?
- What’s possible? What are your options to drive growth, in particular through harnessing rapidly changing digital opportunities?
- The vision. Do your leadership and colleagues share a clear vision for how the business will grow - building on DNA, meeting customer desires, and making the most of what’s possible?
- The roadmap. Do you have a clear map from where you are today to move into a position of executing the vision?
“The key to developing a successful omnichannel business is to take a customer-centric approach. This is often talked about, but not properly acted upon,” Stanard concludes. “It is crucial to start from a deep understanding of customer needs – which means more than just asking them, it means properly investigating; and being brutally frank with yourself about where you’re letting them down.
“From there, the deep understanding can guide the development of both the digital competencies as well as the bricks-and-mortar aspect of stores. In many cases, this means doing less digital development, but doing it well.”