How pure-play retailers can succeed with a ‘clicks and mortar’ model
After 12 months of pandemic-enforced change in shopping habits, where the majority of retail sales went online due to lockdown restrictions; it seems that we’re tracking towards ‘a new normal’, as non-essential retail and the high street reopens to shoppers again. Through the last few months, many consumers have relied on ecommerce to enable them to carry on shopping through the Covid-19 pandemic. And, while online shopping has saved many retailers, is the future of retail solely digital?
Although non-essential retail has opened, there is some concern by consumers and retailers about people’s abilities to maintain social distancing measures and health protocols while browsing in physical shops. Despite this worry, the general view is that a large number of shoppers will return to the high street over time; purely because we enjoy the shopping experience.
As this takes place, Russell Loarridge, Director UK, ReachFive, argues that in some cases, numerous pure-play online retailers could suffer the same fate as the likes of Arcadia - which didn’t adapt quickly enough and embrace the omni-channel retail experience - and fail. His view is that unless some pure-play online retailers implement a ‘clicks and mortar’ model, that puts the desires and needs of the modern consumer first, they will likely come up against similar problems.
Online vs in-store - or both?
Retail as we once knew is now a distant memory. Covid-19 not only accelerated the adoption of ecommerce, but has also highlighted the limitations of an online-only model, particularly for non-essential items. But, the ease of a slick online experience can be quickly undermined by the disappointment experienced when purchased clothes don’t fit or the kettle that has been bought doesn’t match the online description – and time has to be wasted by shoppers to return them.
Online can also short-change the purchase experience for more luxury items. Yes, it is possible to buy a bike online, or a sofa. Even a car. But it’s not the same. Shoppers want to touch, feel and assess the quality of these items; and they also appreciate the knowledge and competency of those store assistants making the sale. Further, however good the online experience might be – and with great personalisation that drives loyalty and engagement, that experience can be fantastic – it is incomplete.
Yes, many pure-play digital retailers have excellent operational models. They know how to meet customer purchase and delivery demands. Some have created communities on social media and maximised the use of influencers and YouTubers, and invested in innovative interactive technologies in a bid to nudge customers towards the right products. But – what are they offering the teenagers wanting to hang out on a Saturday afternoon, try on clothes, while sharing a laugh and a latte? Or cyclists who want to meet for a Sunday ride at the local bike shop – picking up a coffee, a new pair of sunglasses and a chance to check out and discuss the latest models?
Human communication drives an engaged customer experience
There is no argument that online is convenient. But the past year has reinforced the divide between essential and non-essential retail; the contrast between the products people need and the items they enjoy buying. And, of course, the competition has increased. Every retailer is online now and customers have spent a year clicking from one to the other. Where’s the loyalty? Where’s the differentiation?
After the imposed isolation of the past year, the desire for physical shopping experiences is stronger than ever. If pure-play retailers cannot add high street engagement to the experience, other retailers will. And that will put a severe dent in the sales uplift enjoyed over the past 12 months.
Personal, human communication is a crucial part of the engaged customer experience – and without it, some pure-play retailers will begin to look as out of date and disconnected from some shoppers’ needs; similarly to those failed high street retailers of the past that never adopted online retail.
Making shopping memorable
This is not about stepping backwards and recreating past retail models. There is no need for pure-plays to invest in the extensive store estate that created identikit high streets up and down the UK. However, there is a massive opportunity to think creatively about how, where and when customers can become part of a physical interaction that fortifies the new, desired brand experience.
For example, pop-ups could create a special shopping destination – with devoted customers invited for time-limited VIP events at their local town, before the pop-up moves on to another location. The technology is simple – Wi-Fi, tablets and mobile payment solutions can be in place instantly. Loyalty solutions can capture customers both on and offline. There is no need for a full range of stock; a retailer could opt for a subset – a VIP range, for example – or just sample items that can be tried on in-store, ordered and delivered to the customer the next day. Add in screens, virtual mirrors, coffee and a hang out zone, and a retailer can create a new customer destination that changes the perception and enhances the brand.
Alternatively, a customer can order items to be waiting at the shop, try them on, leave them or buy them – easing the returns process (for the customer at least). While they are there, they get a chance to talk to switched on brand ambassadors; have a make-over; get measured; take a make-up quiz – and then test the recommended products. They can have a fun, enjoyable, memorable shopping experience.
Branding portfolio journey
In addition to this, adding a physical experience gives pure-plays, such as Boohoo, an even better chance to retain customers for longer, as they naturally move between brands. By building a profile for each customer across all the brands, retailers can follow customers as they move through teen fashion and start to look for something more sophisticated, once they reach their late 20’s to early 30’s, for example.
Rather than losing customers to the competition at this stage, proactive marketing can help nudge them across the brand portfolio to keep them within the business. Invite post-university students to a pop-up store for a ‘first job’ makeover; or have a 21st birthday event, with an ‘invite your friends’ offer, providing a chance to capture another set of customers.
The smart usage of physical stores will provide new ways of engaging with customers that completely changes their brand perception and engagement.
Just as the traditional high street retailers were confused by the online model, pure-play retailers lack experience in physical retail. With the acquisition of the Arcadia brands and Debenhams, ASOS and Boohoo missed the opportunity to buy this expertise, and leverage those individuals with skills in estates management, shop fit and, more importantly, face to face customer interaction. With that in mind, will the pure-plays react in time, or miss out themselves?
Buying these skills back in – or trying to develop this knowledge internally will take time. But other obstacles have disappeared, including retail landlords who are agreeing to far shorter leases with regular break clauses; and companies that are actively facilitating pop-up shops for retailers. Customers like the change – and the fact that high streets are no longer duplicated across the country.
This change can be accomplished - as long as pure-plays welcome the idea that a unique, engaging and efficient online retail experience no longer offers the personal differentiation it once did. If the pure-play retailers are to avoid the failure experienced by some of their high street counterparts, they need to acknowledge the shift in customer expectations and attitudes. Online footfall alone is not going to keep these retailers in business. The future of retail is clicks and mortar; and in order to create and keep loyal customers, retailers need to be able to combine the efficient, personal online shopping experience with the immersive engagement that is only possible in person.
Russell Loarridge, Director UK, ReachFive