For the past few years, UK retail has remained in a state of flux as its landscape continues to alter. Whilst the economic downturn has partially been responsible for such changes, the traditional retail model is undergoing a fundamental shift towards a more ‘customer centric’ model, focussed around the consumer’s multichannel shopping habits. The dynamics between the multichannel variables including online, new technologies and delivery methods will fundamentally change the role of store. This September some of the UKs largest players including M&S, John Lewis and Burberry unveiled new stores, presenting to the industry their ‘multichannel visions’. A recent tour of Burberry’s new flagship store in London displays how this vision has been interpreted by a leading luxury retailer.
On entering this landmark store, you are struck by its sheer scale at 44,000sqft, large for any single brand, especially in luxury. Despite 27,000 sq ft of this being dedicated to selling space it is noticeable that the amount of product available on the shop floor has been scaled back. Where traditionally selling space has been utilised to present breadth and width of product ranges, new selling methods such as in-store ordering and iPad terminals has rendered this less necessary. In the case of Burberry, single units of product are displayed, encouraging customers to interact with their advisors. Each assistant is equipped with an iPad to help customers locate their desired item (be it size or colour) within the store stockroom, or throughout the rest of the estate, notably online. This transaction encourages interaction between the customer, the assistants and the brand, offering a level of service which cannot be replicated online. It also gives assistants the opportunity to capture any loss sales or indeed up/ cross - sell products. In the place of product, Burberry has created beautiful merchandise displays, seating areas and customer service touch points.
The level of delivery service, notably for a luxury brand, is also impressive. Assistants are able to order products not available immediately in store on behalf of the customer directly through the iPad. Customers can then choose to have their products sent to their home or available for collection in store within 24 hours, including products ordered from the website. All of these options are of course given free of charge, sacrificing some of their margin in return for customer satisfaction. This type of multichannel practice is starting to challenge the old logistics structure as well as stockholding requirements, a topic that demands a separate discussion.
In addition, the level of new technology aimed at uniting their online world with their physical store is unprecedented. They are using around 100 digital screens and 160 iPad terminals to display campaigns and product content much of which is linked to their online site. In the central atrium Burberry has erected Europe’s largest in-store screen, streaming video content and their live fashion shows from around the world. In the private clients area they are also experimenting with the ‘virtual mirror’. Described as ‘work in progress’, it is an example of how augmented technology is being applied. Certain products have an RFID tag attached to them so as you try them on, their product information appears on the mirror. This is very much a ‘digital’ store.
What Burberry has shown is how the store can be leveraged within a multichannel proposition. If executed well the customer should be provided with a seamless experience across online and in store, with each channel supporting the other. The store within the multichannel world becomes more than a place to sell goods. Instead it’s where the customer comes to engage with the brand, understand their proposition and be advised about product.
Therefore multichannel retailing, if executed well, can be extremely lucrative - John Lewis, for example, another pioneer in the multichannel arena recently announced a 60% rise in profits. In stark contrast to Burberry, a recent visit to Gap exposes a company, like many others, who continue to operate behind the curve, potentially to their own detriment. In recent years Gap has lost UK market share for failing to present a unique selling point to its customers, who in-turn have switched to their competitors offering similar products, often cheaper. At present Gap does not have a UK focussed website which makes the possibility of multichannel redundant. There is no real investment into new technologies and customer engagement is minimal. Arguably investment into multichannel and its in-store environment could once again differentiate the brand and, like Burberry, re-engage with its customers.
Retailers such as Burberry are an example of creating a multichannel environment in which customers positively react to better store environments, new technologies, increased customer service and more convenient delivery options.