Birmingham’s new Grand Central shopping centre encapsulates the future for high street retail, argues Heiner Evanschitzky, professor and chair of marketing at Aston Business School
There are many challenges facing today’s bricks and mortar retailers as the market reshapes to match changing consumer habits. Across the sector, the looming presence of online retailers continues to make traditional physical stores less relevant, and those in the middle of the market who did not move quickly to focus their brands have found themselves squeezed by the success of discount retailers and the growth of premium brands. The consumer is becoming more discerning and better informed; they want the best value, and they want convenience in how they get it.
Take the example of the supermarket sector. The troubles at Tesco, Sainsbury’s, Morrisons and Asda show us there is less and less room for mid-market ‘everything for everyone’ style retailers. If you can’t compete on price, you have to compete on quality – that’s why Waitrose and Marks & Spencer have seen profits hold up well as Aldi and Lidl began to dominate the market. Waitrose and M&S moved swiftly to focus its business and differentiate itself on quality, and Waitrose was also swift to capitalise on its urban convenience store locations, leaving the giants of the sector floundering.
High street retailers are not immune to these customer trends, and they too must rethink their models and locations in order to survive. The traditional sales-focused high street shop is falling behind the requirements of today’s consumer; the future of high street retail is inspirational and experiential, rather than motivated by the act of making a purchase.
The newly opened Grand Central shopping centre in Birmingham represents the perfect setting. The centre’s tagline – ‘We’ll meet at Grand Central’ – gets to the heart of the change in mindset that’s required. Shopping has long been a leisure activity, and shopping centres have long been places people meet to spend an afternoon. It’s a common pastime to spend a few hours wandering around the shops, looking at items on your imaginary wishlist before stopping for coffee or lunch. What is not necessarily part of the itinerary is making a purchase. While it can and certainly does happen if something catches their eye, it is not the ultimate goal for many when they pay a visit to their local shopping centre or high street. This has been a conflict between retailer and consumer – the retailer wants the sale, and the consumer wants a pressure-free leisure experience.
The growth of online shopping means that product sales do not need to occur in-store. Today’s average consumer is comfortable making purchases online, with the confidence and internet-literacy that comes with its daily use. They look up product reviews, ask questions, search for the best deal, all at a time and place that suits them. The only element lacking from online shopping is the tangible experience of seeing and trying out a product, and with many purchases – the high value ones especially – this is still something consumers want to do before committing.
Physical stores must continue to fill this role, but can be better utilised by turning their focus to it, rather than continuing to focus on and be judged by sales. Instead, high street retailers can use their prime locations – like those at Grand Central – as brand showrooms. These would turn conventional stores into places to experience products ‘in-use’, with staff on hand to answer questions and explain the services and solutions that exist around the product.
This is the model that Apple has been following with its stores since its launch of dedicated physical locations in 2001. Rather than serving a traditional purpose in the pursuit of sales, its focus is on making sure the experience of using Apple products is the best it can be – rather than sales assistants, there are Apple geniuses, and rather than lines of stock on shelves, there are large open plan spaces with uncluttered tables showcasing the products in situations close to the ‘in-use’ environment. The Apple Store has been an unusual presence on our high street and in our shopping centres, standing out amongst traditional retailers, but it points the way to the future for our retailers – particularly for similarly premium brands with high value products.
The key is adapting to the changing face customer habits and understanding how people think about products – they are rarely purchased for their own sake, instead the consumer is aiming to find a solution to a problem in their life. For larger retailers this means showrooming your stores and focusing on the service your brand provides, not just thinking about the immediate sale. There’s an opportunity for independent retailers too, by understanding their customer base better than anyone else, and providing a tailored service that solves problems and makes their customer’s easier, they can compete with larger brands on these terms.
Adapt quickly, and the future of high street retail in this country could well be entire Grand Central-style shopping centres full of experiential showrooms, following the model established by Apple, less focused on sales, but more focused on their customers.