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Comment: The Retail Times - They Are a-Changin'


There has been a lot of talk in the media recently about the poor health of the high street. Store footfall is down and our Ipsos Retail Performance Retail Traffic Index figures have become the worst on record.

Many observers fear the arrival of the digital age and that it is sounding the death knell for the physical store.

I would argue that digital technology is a catalyst for the re-invention of the store, but it’s not a given.

In the current and somewhat dire economic climate, retailers are tempted to cut costs by delaying refits, shrinking staff numbers, reducing stock, curbing training programmes and sacrificing service levels.

Going down this route, they risk losing their differentiators and instead encourage shoppers to focus on price and convenience, which plays into the hands of online retailing and will, if anything, accelerate the demise of the store.

There is no doubt that we are in a multi-channel environment and need to take a fresh look at the role of the physical store.

Bricks and mortar stores still have much to offer. They remain the most important physical touch point in shopping. However, the role of the store needs to change. Simply transacting is not enough.

In stores you have the irreplaceable ability to touch, smell, feel, inspect, try on and interact with the physical product; to gauge the height of a lamp, the texture of a suit’s fabric, the clunk of a car door shutting.

We know through our research at Ipsos that accessibility and interaction is a highly valued part of a customer’s in-store experience. We have all fallen for the tasters at the cheese counter and the location of the tactile cashmere jumper at the store entrance.

Deciding to make a purchase can also be exciting. Customers want instant gratification. Having to wait for delivery for even one day on the back of an online order detracts from the exhilaration.

Accurate and intelligent stock management will become vital to the ‘store of the future’. Accuracy is critical because customers can - and often do - check availability before visiting a branch. Their trip is wasted if the product is unavailable and their disappointment counts against the retailer.

By the time a customer enters a store, there is a good chance they have completed some online research about the product they want. They may have completed a product and brand search, found stockists, made some price comparisons and checked out user feedback and ratings. It is not sufficient therefore for staff in the store of the future to have sound technical training.

Savvy customers have come to expect more.

The occasion provides the opportunity for the store team to build relationships and trust with customers, responding to a customer’s own thinking. This role is a far cry from a ‘flog it and scarper’ mentality and much more of a full CRM function.

Also, the digital age provides shoppers with greater product choice, but greater choice has a downside. In a recent Deloitte survey, only nine of respondents said they wanted to see the retailer’s full range of products when they visit a store.

So equipping stores with edited ranges tailored to the local catchment and clientele is another means of adding value to a store.

The aspect of the ‘store of the future’ that gets the most airtime is when it becomes as much an entertainment hub as a place to view and buy; there to build brand presence and value. Brands such as Nike have built flagship stores of this type for a long time, but the concept now has more resonance in the multi-channel era.

Not all stores of the future will be as theatrical and extreme, but making physical stores into something more than just a place to sell goods is part of the future.

Nike Town continues to develop this concept, for example, setting up a running club from its stores - extending the value-ads context by providing a socialising opportunity.

The future of the store is secure as long as retailers accept the notion that a store should offer some value for customers and go beyond being simply a place to sell and buy.

But the store of the future can build on its merits further by harnessing and embracing digital technology.

Here are three examples.

Soon after the Berlin Wall came down, strolling around East Berlin, I was struck by the fact that retailers were missing a trick, not using their windows to promote their wares. I now see static displays of mannequins or piles of saucepans in the same light. We’ve become conditioned to ignore them.

This is not true though when you install digital screens that inject dynamism and vibrancy, and with their strong imagery they draw the eye and interest of passers-by.

More powerful still is the capability through face recognition software, to determine gender and age band of the stopped shopper, and stream imagery or messages specifically directed at the profile of shopper.

Beyond this ‘digi screens’ are being built with the capability of taking sales orders directly from shoppers outside, too busy to enter the store, or when the store is closed.

A second area for improvement is the cash desk. The need for conventional tills and queue points is rapidly approaching its sell by date. Self-service checkouts, of course, already have a place, but beyond this, the likes of Apple and Sephora are equipping their teams with tablets that act as Point of Sale stations and can send e-mailed receipts.

This trend is only going to become more mainstream and enable store design teams to rub out the need for some tills, giving them more freedom to be creative and flexible with the space.

Finally, and perhaps currently the most contentious area, is whether the store of the future will be equipped with free wi-fi. It may become inevitable in this era of the connected consumer.

Enabling the shopper to scan barcodes, access price comparison sites, and for the retailers to track online activity, alert shoppers to special offers and potentially track their movements.

Mobile technology is very disruptive to the store journey and much for the same reason as why you don’t see a clock on a shop wall, one could understand if it never becomes a given.

Going forward, suppliers will want everything - the advantages of digital and those of the physical store, tough different customers segments will value aspects of channels differently.

The store will remain the shopper’s key touch point in the multi-channel world and it will be thanks to the digital era that stores will be re-engineered.

Retailers should embrace the digital world, not fear it. And as long as they change their mindset from “How do we sell more merchandise from our stores” to “How do we create a value added experience?”, they will continue to have a future in the multichannel age.

Dr Tim Denison is Head of Retail Intelligence at behavioural analysis & insights specialist Ipsos Retail Performance

Published on Wednesday 13 June by Editorial Assistant

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