This article is part of our collection on Retail and Wholesale
With high-profile retailers closing stores, going into administration and reducing headcounts, the high street is in a state of flux. We ask four industry experts how businesses can future-proof their brands and operations.
Last updated: 21 Jul 2020 6 min read
“I don’t buy into the idea of a ‘retail apocalypse’. Sure, the sector is in the midst of a seismic and quite painful transition. But this is retail Darwinism. It’s survival of the fittest on the high street – retailers either evolve or die.
“So what might retail look like in 10 years’ time? We’ll have fewer, but more impactful, stores. Retail will become far more blended as the convergence of online and offline worlds accelerates. We’ll see more digitally native brands make the leap into the physical space, in a bid to offset rising shipping and customer acquisition costs but also to engage with customers in a way they never could online. Meanwhile, legacy high-street retailers will use technology to bring the physical store into the 21st century. Stores will become frictionless and hyper-personalised. Skipping the checkout will feel normal, and not like we’re shoplifting.
“If we can buy literally anything online today, retailers need to give their customers a reason to ditch their screens. Online shopping has revolutionised the sector, but it’s still a very functional experience. Retailers can put the touch and feel back into shopping by creating immersive, sensory experiences that can’t be replicated online. In the future, stores won’t just be a place to buy, but also a place to eat, play, work, discover, learn and even rent products.”
“We are in a period of rapid change. Mobile (and online generally) is disrupting the customer journey and ramping up expectations around immediate gratification, while economic shifts mean that young people have less spending power than prior generations. This, combined with changing values around buying things (versus experiences), as well as concerns around climate change, is leading to a very complicated situation for retailers.
“For businesses, the key strategy will be to approach all of these key behavioural and values shifts with empathy, and by creating strategies that elicit a more humane relationship with the customer. Central to this will be managing the tension between the rise of a personalised, technologically led future with a desire for human connection.
“At the same time, we are facing a period of increasing disconnection – increased mobile use is making people feel less connected – so retailers need to look to strategies that make consumers feel more connected with brands. As artificial intelligence becomes more prevalent, people still want to interact with a real person – even as technology improves. This means that brands creating the right kind of relationships are poised for success – for instance, people that have used the styling service at John Lewis spend on average 30% more over the year following a session than those who don’t.
“Retailers need to evolve their strategies to service the customer; by reducing friction when they want to move through stores more quickly, but then also building more human relationships to drive long-term loyalty.”
“It is not uncommon to read headlines that herald the end of physical shops. The internet, so the logic runs, has given us a more convenient and often cheaper ways to buy things, thereby making shops obsolete. As gripping as such proclamations may be, they are a long way from the truth.
“Fundamentally, stores still have a role to play. In some sectors, stores are a vital part of the purchasing process as they allow consumers to see and try out products before they buy. The role shops play and how they fit into the retail ecosystem is changing and retailers need to embrace that change if they are to thrive.
“Physical shops are here to stay. They form a vital part of our social and economic fabric. However, the nature and form of the stores of tomorrow will be necessarily different from those of today”Neil Saunders, managing director, GlobalData Retail
“One size no longer fits all. Retailers need to have a variety of store formats to cater to different markets and locations. That might mean smaller stores to address high-growth urban markets and larger outlets that act as showcases for products.
“Shops need to be as automated as possible, mainly so that unnecessary cost can be stripped out and operations streamlined. Given the investments being made in digital and the propensity of the online channel to take a share from physical stores, finding such efficiencies and savings are a necessary part of making the economics of shops work. This might involve automating checkouts or using kiosks to allow shoppers to find the information they need.
“Physical shops are here to stay. They form a vital part of our social and economic fabric. However, the nature and form of the stores of tomorrow will be necessarily different from those of today.”
“The past decade of retail has been filled with constant disruption from technologies. Wherever you look, the entire UK retail landscape is evolving into a new era. Retailers of all shapes and sizes are struggling to become successful, data-driven businesses because they are being held back by legacy systems, a lack of investment and dwindling imagination. Overall, retailers have lost their purpose.
“Stores will be fewer, smaller and more digitised and will thrive as brand-experience centres; not just a place to sell ‘stuff’. Therefore, we’ll see a number of investments that are driving physical-digital synergies, from digital shelf-edges and checkouts to facial recognition technology for payments, all offering unique in-store experiences.
“The mix of talent and workforce will change as robotic process automation will help retailers automate the mundane and focus on the things that matter. Margin-eroding promotions will give way to profit-focused targeting of customers assisted by artificial intelligence and machine learning, in turn driving precision and personalisation.
“Retailers that survive and thrive will move from being shopkeepers to customer-keepers, adopting the principles of retail 100 years ago, where a retailer would know its small customer base, their families and provide curated services like personalised pricing. Simply put, failure to make this change could mean failure to survive.”
Retail and Wholesale