Each week I see another article saying roughly the same thing – online shopping will kill off high streets and close down physical shops. Apparently, we’re turning away from visiting shops to buy, and instead are buying online; and as each retailer announces problems or profit warnings, we assume that is another piece of evidence to confirm the inevitable. At the time of writing this we’re waiting to hear about Debenhams plans for “restructuring” its business; its believed to include the closure of about a third of their stores to generate around £100 million in savings
I can’t predict the future, but I am seeing some things that suggest the high street isn’t dead yet. But for it to survive and remain a meaningful part of a consumer’s shopping decision, like most industries, retail needs to move on and re-invent itself.
Traditionally we’ve thought of online and in-store retail as mutually exclusive. Even organisations structure their business streams into online and in store – different P&Ls completely. I’ve recently seen some amazing examples of “new retail” where online, offline, logistics and data are all seamlessly merged.
So, this is what I’ve seen or read about. Alibaba is a Chinese multinational conglomerate specialising in e-commerce, retail, internet, AI and technology. Founded in 1999, the company provides consumer to consumer, business to business and business to consumer sales services via we portals as well as electronic payment services, shopping search engines and cloud computing services. It owns and operates a diverse array of businesses around the world in numerous sectors, and is named as one of the world’s most admired companies by Fortune.
Their Hemma Supermarkets is a growing chain, and their Shanghai store is quite different. Everything happens through a mobile app, whether that means sitting on your sofa ordering online for home delivery; researching products on the shelves in-store via barcodes. All the way through to payment it’s all done via an app. The stores act as fulfilment centres for both online and in-store orders, and customers based within a 3km radius can get their groceries delivered in as little as 30 minutes.
Then another example. A pop-up shop on the campus of Hong Kong Polytechnic in partnership with US lifestyle brand Guess? Customers check into the store using their mobile IDs from Taobao, Alibaba’s eCommerce platform. Inside the store each item has a radio-frequency identification (RFID) tag, so when a customer takes a piece of clothing from the rack, the nearest “smart” mirror displays it, together with product details. The mirror can also suggest mix and match items from the store, as well as styling suggestions based on the customers previous purchases. Payment is taken through the Tabao app, so no till queues.
Similar technology exists in London in a Farfetch store. Traditionally a luxury fashion eCommerce platform, they have since installed a similar concept in its Browns East store in Shoreditch. Admittedly Farfetch are targeting luxury clothing shoppers.
In a recent report by Bain & Company they predicted that with the continuing growth of online shopping, three quarters of luxury purchases will still be made in-store by 2025. But what if we shifted our understanding of online and in-store? Today the function of a store is to attract customers and drive sales. What if we shifted that slightly, and considered the function of a store as customer engagement? Not worrying whether I purchase in store or online – as long as I purchase!
I recently went to Top Shop in Oxford street, London. Dotted between the clothes were cafes, ice cream stalls and sweet stands. This was definitely more than simply a way to drive sales – this was an experience! But the last thing I wanted to do was carry lots of shopping bags down Oxford Street that day; but I certainly saw things that I liked and would buy online. That way I’m getting the best of both experiences. The engagement and experience of the store, and the convenience of online.
Will we need people in the new retail world – or simply effective logistics, smart mirrors, payment tools and a way to manage customer’s purchasing data? No. Even in the future, the role of the sales assistant is still key. Human beings are sociable animals and the sales assistants will be the elevated to Brand Representatives interacting with customers in a totally different way. Because sales assistants will be able to access a customer’s online profile, their current and past browsing and purchasing history, Sales Assistants could offer a highly personalised shopping experience.
It’s quite possible that the high street could die, unless the new world of retail looks at things totally differently, from the bottom to the top. Changing every single aspect of how we do retail. The people and the culture will be the hardest part to change – no doubt in that. I don’t mean consumers, because I think they will embrace this approach, and it’s probably very close to how they shop currently. But organisationally, this is a big change.
The customer experience will become even more important because that’s wants driving people to purchase; so this also means that the employee experience will remain just as important. We’ll need to encourage and reward very different behaviours from our sales assistants, and inevitably we’ll need to take them on a journey of change to adapt to this new world. So even if you don’t have plans currently to invest in a “smart store” format yet. Don’t underestimate how important the employee experience IS, and WILL be. Take steps now to embed this into your culture and manager training – the future is closer than you think!