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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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GUEST COMMENT Clicks and bricks: why we need a symbiotic relationship between on- and off-line retail

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This year, high-street suffered the worst Christmas sale-growth:ONS
This year, high-street suffered the worst Christmas sale-growth:ONS

In December, the Centre For Retail Research revealed that six shops a day have disappeared from British high streets over the past seven years, with some 1,300 stores hit with insolvency.

 

Furthermore, ONS figures out early this year show that the British high street suffered its worst Christmas sales growth in five years, as shoppers tighten their belts.

 

There’s clearly no doubt that the retail sector is being redrawn, mostly thanks to the rise of online retail. But these statistics also underline the challenges facing the whole industry.

 

Where does this leave a nation of shopkeepers? Are we instead to become a nation of e-tailers and distribution hubs?

 

Not necessarily. But unless retailers embrace the changes now irrefutably upon them, and rethink not just what they do but how they do it, they will struggle. This has implications for the relationship between online retail and physical stores.

 

The power of the physical store

 

In today’s omnichannel world, a shop clearly needs to be much more than just a shop.

The evolution of internet retailing means that 9 to 5 shopping is a thing of the past. The internet has also given consumers more control over their shopping habits than ever before, with people being able to buy their groceries without having to step foot in a supermarket or purchasing a new item of clothing for a party without moving away from their desk.

 

But the truth remains that many consumers still like to go into an actual shop and see or try the products in real life - something that will always be important. Physical stores offer a level of convenience very different to that provided by online outlets; the two play complementary roles and retailers who can, should look at both a physical and virtual presence.

 

The increasing importance of leisure in the retail mix also has implications; retailers won’t want to miss out on the footfall available in prime leisure locations. But to take advantage of this, they’ve got to adapt to this context, rather than selling on their traditional terms.

 

“Showrooming” is one positive trend that has emerged in this context, whereby shoppers go to brick-and-mortar stores to browse and examine merchandise, then turn to online channels to make the final purchase - often at lower prices.

 

In fact, research by Retail Dive revealed that over 55% of consumers visit stores before buying online, emphasising the idea that physical stores and omnichannel experiences are crucial for modern retailing. If this trend becomes the norm, the high street will change drastically again, as shops are adapted as locations for viewing and selecting, rather than buying.

 

To win in this scenario, retailers must maintain some kind of presence on the high street or leisure hub. So rather than competing against one another, this makes the case for the two channels - online and bricks-and-mortar - to become more symbiotic.

Adapt supply chains to improve in-store service

 

 

Against a shifting economic backdrop, retailers of all shapes and sizes must still prioritise customer experience. Customers won’t abandon the emphasis on a service that fits in around their busy lives, rather than the other way around, even if spending is under pressure.

 

Delivery and returns are a key part of this - customers won’t stay loyal to retailers that make this difficult or offer a poor experience. And again, physical stores are an ideal added location for this. For instance, same day delivery for online purchases really is the new norm now, with brands using it to boost sales; high-street stores must make sure to stay abreast of this trend and ensure that they adapt their supply chains so that they can mirror the kind of convenience traditionally offered by online retailers.

 

Stores that get this right will feel the benefits - as Next saw over Christmas, with click & collect helping boost in-store sales. This is supported by research by YouGov which found that 54% of consumers stating they had used click & collect – with almost a quarter of these (23%) stating they had made an additional purchase in-store when picking up a click & collect order. But the only way this will really work is with a flexible and fast supply chain, that doesn’t just tolerate spoke-and-hub distribution. Delivery from store and returns that can go straight back out on the shelf are needed to ensure the behind the scenes operation keeps up.

 

This is a challenge for many. But the benefits of stores as more than retail spaces open in daylight hours to sell are appealing. Real estate has a bright future as a hybrid space used for sales, a service point for online purchases and as mini distribution hubs for fulfilment.

 


The complexity of co-dependency

 

There is no doubt that increasing co-dependency between on- and off-line retail offers the chance to give customers a better, more convenient and rounded experience. But it’s also clear that this symbiosis creates complexity and some challenges that need to be overcome. To work harmoniously, both sides need to think about the benefits they bring and value they add.

 

We believe the effort is worth it. Too much of the debate has focused on one or the other - bricks and mortar or pure-play e-commerce. The truth is that in many situations, there is a middle path. One that offers the best of both worlds, and the rich benefits that each side can bring. In an omnichannel world, one side needs to support the other to create the best possible offer. In a harsh climate, this mix is going to be more and more valuable.

 

Shoppers nowadays want to engage with their favourite retailers on their own terms and demand a five-star experience online, in-store and on their doorstep. Ultimately, retailers wanting to win big in 2018 need to make sure that their online and in-store presence and offerings - from the point of purchase through to delivery and even returns - exist side-by-side and operate without the separation which has become the crux of the modern omnichannel retail experience.

 

Author: Patrick Gallagher, the chief executive officer at On the dot - part of the CitySprint Group

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