There is no denying the impact ecommerce has had on retail – not least playing a key role in driving UK retail spending up to a 31-year high. But what of stores? A report out this week suggests that, far from being ‘old tech’, stores actually hold the key to making ecommerce more efficient and helping retailers meet the growing demands of consumers for better, faster, bigger.
The report suggests that stores, combined with technology, can lift bricks and clicks retailers to new heights, offering distribution points for same-day delivery, better click, collect and return points, as well as acting as showrooms and, let’s not forget, sales places in a traditional vein.
According to the Edge Retail Insight’s Winning Strategies: Store of the Future 2021 report, the reallocation of store space to accommodate new shopping habits could mean that up to one third of store space could be resourced to fulfil online orders in major channels and larger store formats as ecommerce share of global chain retail sales grows - reaching 34.8% by 2023 and almost 40% by 2025. Ecommerce growth jumped two years ahead of Edge Retail Insight projections made prior to the COVID-19 pandemic.
This is gives many ‘traditional’ retailers a much-needed fillip: for months, if not years, physical retail has taken a bashing. The pandemic and the rush to ecommerce only exacerbated that. But, of course, physical retail isn’t dead. Consumers still want to go places to shop, they just want to use them differently and to see them much more integrated into online retail so the process is seamless.
This hasn’t been lost on IKEA, which has looked at how to use AI and better data collection to improve recommendations and attendant marketing to drive up sales across online, in-store and the click and collect model. It has seen AOV rise 2% globally – quite a feat.
However, the need for more efficient ecommerce is not the only force acting on retailers: they are increasingly coming under pressure to be responsible, ethical and sustainable. In fact, a study out this week finds 35% of shoppers already say that they will only associate with brands that treat staff fairly, source goods ethically, and do not misuse consumer data.
The lacuna for retailers lies in how to join the ethical and the technological to create the kind of service that consumers demand, but at a cost that they can bear. One way is to look directly at delivery, as DPD has done with its ‘all electric’ delivery in Oxford.
The other approach is to look at how to do things differently on a more radical level – such as how Yellow Octopus is looking to make it easier than ever for consumers to recycle clothing. Either way, changing the way stores, technology and business ethics work together is very much the order of the day.