With many predicting a dire future for physical shopping outlets, 4C Associates’ Milan Panchmatia explains why shops will continue to play a key role in retail strategy.
There is no denying the huge impact online retail has had on bricks and mortar shops, however, that does not mean there is no place for physical store fronts in today’s world. Nowadays consumers are constantly bombarded with targeted messaging while developing increasingly short attention spans. Retail spaces have an opportunity to provide something different, an experience as opposed to a transaction.
Shopping for USPs
In the past, one of the attractions of visiting a shop, was expert advice, however this is no longer the perk it once was. More and more people rely on online peer-to-peer recommendations and carry out research before making a purchase. This is something companies such as Amazon have been able to leverage to provide customers with huge variety and competitive prices, alongside customer reviews.
Physical stores simply cannot compete in that area therefore the entire experience needs to be reconsidered. The focus needs to be on creating an experience for customers and adding extra value. For example, H&M’s new Westfield London store has a nail bar, Foot Locker’s store in Liverpool One has a barbershop and Ellis Brigham, in London has its own ice-climbing wall!!
Each of the above demonstrates how stores are becoming less about transactions and more about showcasing brands and creating experiences for customers. However, there are a number of more commercial innovations, which shops can also embrace.
Pricing, personalisation and beacons
Peak pricing reflects the ‘Uberisation’ of many commercial models and is expected to become common in supermarkets and petrol stations, before spreading throughout the retail sector. In practice it involves dynamic pricing of goods based on demand, for example, ice creams on a particularly hot summer day.
Tesco, Sainsbury’s and Morrisons have already trailed this technology using electronic price tags and experts predict fixed prices for consumer goods will be a rarity in a few years. This approach will enable customers to plan ahead for better deals and shops to offer flexible pricing enabling them to smooth out the peaks and troughs of demand throughout the day.
Store beacons, battery-operated wireless devices that transmit Bluetooth signals to smartphones, are another exciting opportunity. They allow shops to personalise messages to people within a shop, via an app. They are currently being used by some of North America’s biggest retailers, including Macy’s, Target and Urban Outfitters. Beacons create an incredibly personalised, real-time experience for customers, delivering relevant content to their connected devices.
Making stores sweat
Physical shopfronts have had a difficult few years and will continue to struggle unless they adapt. Having a physical presence for consumers to interact with can be an invaluable asset for any retailer, but it needs to be optimised for a changing customer base.
Peak pricing, in-store beacons and service customisation via online data, are all proven or highly promising ways to increase in-store revenue. Combined with in-store pick ups, these methods can produce significant ROI through upselling, whilst increasing customer loyalty.
Retail is changing, but there is plenty of life left in physical retail – companies just need to understand what they can and cannot offer. There is little point trying to match the breadth of choice of products available online, however, focussing on the experience of shopping is an area where shops have a huge advantage. If used correctly, bricks and mortar retail outlets can engage customers in a way the internet simply cannot and this is what the retailers need to exploit.