David Martin, co-managing partner at the London retail design and branding agency, M Worldwide, believes e-tailers are poised to lead the resurgence in UK high streets
High street occupancy levels are at an all-time low, internet shopping is increasing exponentially, slick comfortable shopping centres are the retail therapy medium of choice. Is the high street and traditional retail doomed? Will bricks and mortar retailing truly be replaced by the online experience, leaving shops bare and high streets deserted as we all shop from home or work?
I say no. But it’s not about a Mary Portas back to the future revival of traditional retailers. A new phenomenon is gaining momentum. That of e-tailers moving into retail – from clicks to mortar. It’s still in its infancy, but given the number of conversations we’re having with online retailers on this subject right now, a retail revolution is at hand. And the e-tailers may very well hold the trump card.
E-tail versus retail
The flat structure of online retailers means they’re agile. Their speed to market is much better than traditional retailers. They don’t have to rely on outdated, cumbersome and siloed legacy systems and processes, so they can bring new ideas and technologies for the high street into play much more effectively. But the biggest difference between e-tailers and retailers is cultural. It’s about understanding how to manage and develop a strong brand through digital channels, even within a bricks environment. It’s about change, constant update of content, and understanding the power of social media.
Why leap from clicks to mortar?
With lower overheads and running costs, why should an e-tailer even consider moving into physical environments and all the challenges that entails? There’s the practical reality of creating a real life customer journey and experience, displaying and moving products around, the logistical side of the physical world, along with dealing with frontline staff and customer service.
Clicks retailing needs the bricks experience to really complete the offer, especially when it comes to complex services or niche, luxury and big ticket items.
Here are a few reasons why etail’s moving into physical stores:
Immediacy and convenience
Instant gratification, impulse, spur of the moment – all need states that drive purchase behaviour. Even with online same day delivery there’s a delay. But if you’re enticed into a shop, you can get things there and then. E-tailers are also renowned for complex return policies, so an easy in-store return policy can benefit the online offer. Delivery times and taking time off work to wait in are just not that convenient. Or, as I experienced in the frantic run up to Christmas, a £200.00 product was just left on my doorstep.
Amazon’s newly introduced city centre collection lockers are an innovative bricks solution to e-tailers’ convenience challenges.
Fulfilling a basic human need
It’s very hard to achieve the retail therapy experience online in terms of total immersion of the brand and its products. There’s nothing like being in a physical environment to satisfy the basic human need to be in places with other people.
It was said at one time video and DVD would be the death knell of the cinema. What actually happened was movie houses started to do a better job in fulfilling the large screen experience: reclining seats, proper food and drinks served at your seat, leading technology in comfortable and contemporary surroundings. Just as cinemas are about screening movies, shops are about showcasing and selling products and services. But the context and way the retail experience is currently delivered has to be rethought.
In early 2012, e-tail giant Amazon announced plans to open its first physical retail store in Seattle, selling tablets and e-readers. Its aim? To provide customers with a hands-on experience of its products.
Reassurance – the brand in the hand
Buying certain products and services requires big decisions, road-testing or a more personal and expert reassuring touch prior to purchase. It’s a brave cyclist that buys a new road bike without actually sitting on it and taking it for a test ride. And, what about the anxious first-time parents in need of expert advice when buying buggy, cot and car seat?
Most people look to a small group of people for advice and reassurance – friends, family, doctors. We’re seeing a new generation of brands that act as impartial advisors by coexisting in one space – a kind of fragmented department store model that offers edited choice and more reasons to visit and engage.
Lloyds Pharmacy is currently testing a concept in two UK locations that may very well revolutionise health and wellbeing – the Health Village.
Teaming up with brand partners such as Betterlife, Connect Physical Health, Hidden Hearing, Shuropody, Sk:n and Vision Express, these are the UK’s first retail health centres that offer a wide range of healthcare services under one roof.
They also offer the Lloydspharmacy Online Doctor service, an innovative and discreet in-store online service. With healthcare needs of local communities increasingly changing and people no longer passive about it, Lloyds Pharmacy’s community-based philosophy, combined with the expertise and reassurance of its partners, is the perfect way to offer personalised, convenient healthcare services. It’s a really smart move, and by bringing in brand partners, newness and content are much easier to generate.
What’s in store for the future?
Some people have mooted the idea of enticing shoppers back to the high street through local art spaces or community meeting places. Although worthy and well-intentioned, these are just displacement activities. They don’t get to the nub of making bricks and mortar retail relevant and engaging enough to give customers more reasons to go back. So what’s in store for the future?
Redefinition of the customer journey
Traditional retailers have tried to understand in-store customer journeys – shoppers’ missions, mindsets, behaviours and ultimately their path to purchase. All that has changed – different customer journeys are now taking place simultaneously across channels and technologies.
Banks of check-outs? Not any more. Superficial product information on flimsy bits of A4 paper? Not very 21st century. Online brands’ love and embrace of technology means established in-store retail norms will be replaced by a ‘have a go’, no barriers approach to the mortar environment. Digital signage, mobile pay points, home delivery order points, magic mirrors in changing rooms, music that changes to match the clothes you’re trying on using RFID tags.
Bridging the gap between mobile and mortar
Smart phone penetration in the UK has now reached 45% – and growing. Converging phone, video, internet, wallet, apps and social media, it’s the bridge between the physical and digital worlds. It links shoppers to their friends, bringing them into to the browsing and shopping mix.
Sales staff will access more knowledge about products and services through smart phones – supported by videos and digital demonstrations. Even the tedious chore of queuing to pay will be gone thanks to near field contactless technology. Once payments are made, loyalty schemes and vouchers that drive future visits will be delivered digitally.
McDonald’s and Superdrug have already trialled prepaid technology for smaller purchases. And in February 2012 Barclays Bank launched Pingit, which allows users to transfer cash between mobile devices.
Price matching – closing the circle on e-tail versus retail
Gone will be the days when products are cheaper online than in-store, where customers go to shops to road test products and then go away and purchase them at a cheaper cost online. Retailers will provide transparency and in-store price matching there and then through mobile or in-store technology.
Leisure meets functional shopping
The shopping environment will be all about experience rather than stuff. Stuff in all ranges, sizes colours and packaging will need to be available, but it will not be the main attraction. Apart from the emotional, rational and functional aspects of making choices and purchases, people also need somewhere to go and hang out.
The food/cafe offer as part of a retail experience is now a hygiene factor. Events, demonstrations, activities, in-store theatres, bars and gardens are what’s needed. But only those with the right mind set can deliver them. Take the lackluster sampling and demos seen in UK supermarkets – they are the biggest food retailers in the land and their cafes are hardly temples of food love.
At the end of 2011, online bank ING Direct launched its eighth bricks and mortar outlet in New York City’s Union Square. This is a 17,000sq ft afe. You can’t make a deposit or a withdrawal, but you can grab a cup of coffee, take advantage of the WiFi, and enjoy face time with others. The bottom level of the three-story space allows small business owners and non-profits to host meetings, free of charge, for as many as 40 or 50 people. If you think this all sounds a bit too touchy feely, consider this: ING Direct found deposits increased by about 10% in the cities where it has a physical presence.
Newness and content
Traditional retailers, especially those in fashion, often excel in terms of product newness, but lack originality in how that’s presented. E-tailers, on the other hand, excel at fresh and new ways at looking at content. This puts them in good stead to make stores feel really different on a regular basis.
The real innovators will also be those that harness the power of consumers through social media, creating and driving content with imagination and clear focus about their point of difference. They’ll also leverage their supplier brands to do more and be more active.
Thanks to low overheads and start up costs, pop-up retail initiatives will continue to draw crowds and are a great starting point when moving from clicks to bricks. They’re seasonal, surprising, ever-changing and create buzz.
Supermarket Sarah is a great example of the power of pop-ups. It started life as an online store – part gallery and part set decoration, featuring an artfully dressed and continually changing wall of one-of-a-kind goods.
In January 2011 Supermarket Sarah took a step out of the virtual world with a 30ft high pop-up wall at Selfridges’ London Concept Store. Sarah also blogged about her new finds, upcoming themes, and collections for the wall. The pop-up wall was so successful she was given a longer residency in Selfridges’ ground floor giftware department and continues to spread her concept into the real world through galleries, shop fronts and bars. This brand sums up e-tailers’ ability to chop and change very quickly. Retail doesn’t have to be about signing a lease for 10 years.
Humans are inherently social animals. While there are those for whom shopping is a chore to be done as quickly and painlessly as possible, for many others shopping is an art in itself — and stores are the galleries. E-tailers have the chance to embrace true multi-channel retailing in a way most high street retailers can only dream about.
With the likes of Kiddicare signing a deal to acquire 10 Best Buy stores across the UK and Amazon recognising the importance of experiencing its brands in real life, I’ve no doubt big change is afoot.