The need for innovation and speed in retail
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THE RETAIL STORE IS DEAD. LONG LIVE THE RETAIL STORE… Despite these challenges, there are still opportunities for retailers who get it right. The first is the physical store. Reports of the death of the high street have been greatly exaggerated. Amidst the hype of the relentless growth of pure-play online retailers, it’s easy to overlook the fact that physical retail sales still make up the lion’s share of overall retail sales. According to figures from the UK’s Office for
National Statistics, in-store sales in key retail categories still account for well over 80% of total sales. For clothing stores, the split is 86% in-store versus 14% online, and it’s almost the same for department stores. For household goods, it’s even higher, at 90% in-store versus 10% online. That’s also echoed in US figures, where the US Census Bureau says ecommerce sales make up only 8% of the annual $5 trillion US retail economy. Of course, those percentages are changing
every year as online continues to gain share. According to data from tech industry analyst Forrester, UK ecommerce grew five times faster than offline commerce in 2017. And Forrester predicts that, by 2022, a third of non-grocery retail sales will be online, up from 25% in 2017. The high street of 2022 is likely to look very
different from today’s, not only because of the rise of online shopping but also because of the continued growth of out-of-town retail parks. There are almost 2,500 fewer retail stores in the UK than three years ago, and the British Retail Consortium points out that there have been more than 3,200 retail insolvencies in the UK since the start of 2015.
BLURRED LINES What does this mean for retailers? Stores aren’t going away anytime soon, but they will have to adapt. And the lines between digital and physical sales and shopping experience will become increasingly blurred. Consumers expect their digital experience
to be both easy and efficient, but also expect those same characteristics in the physical aspect of retail as well. If companies can’t produce an enticing and pleasing physical experience, consumers will look elsewhere.
The blurring of these physical and digital
channels impacts how we shop and how retailers need to adapt. A US survey by Rice University’s Graduate School of Business of more than 46,000 consumers last year found that a mere 7% were online-only shoppers. However, just 20% were store-only shoppers. The vast majority – some 73% – used multiple channels for their purchases. Not only that, but the study found that these
omnichannel customers who use multiple channels for their purchases are more valuable to a retailer than single-channel shoppers. When compared to store-only or online-only shoppers, the omnichannel consumers spent an average of 4% more when they shopped in-store and 10% more when they shopped online. Martin Schofield, former IT chief at Burberry
and Harvey Nichols, and now director at consultants Retail247, explains: “As a consumer, my need is simply to be treated well and consistently—however, whenever and wherever I choose to interact. To meet these needs, we need a real-time foundation that manages products, stock, sales and customers in its stride. We need to get the basics right.” That means retailers need to invest in
technologies that blend the physical and digital shopping experiences. Brands also need to develop strategies to help innovate and future- proof their stores to stay competitive in today’s marketplace. The store is now a point of inspiration, a
testing lab, a servicing site for orders and returns, a help desk and a shipping centre. The physical store is a mere extension of the ecommerce experience. It’s a place where the consumer can easily return something they bought online, or see, feel and try a product before they buy. In addition, stores should be able to pick up where a shopper left off online, where sales associates are re-engaging with conversations around abandoned carts or wishlists in an effort to help complete a purchase.
LOOK TO THE CLOUD While this sounds like common sense, achieving it isn’t easy. Transforming a
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