The following guest article has been written for InternetRetailing by Chris James, Vice President, Oracle Retail. Oracle provides retailers with a complete, open, and integrated suite of best-of-breed business applications, cloud services, and hardware that are engineered to work together and empower commerce. Leading fashion, grocery, and specialty retailers use Oracle solutions to anticipate market changes, simplify operations and inspire authentic brand interactions.
Despite the attempts of naysayers to prophesise the impending demise of our bricks and mortar stores, high-profile acquisitions of major retail outlets take place more regularly than you’d expect, given the sector’s perennial pessimism. Indeed, earlier this year, RPC reported there had been a 15% increase in retail mergers and acquisition, as brands realised they must possess a strong presence both online and in-store.
Take the landscape right now: Sports Direct just purchased department store behemoth House of Fraser, whilst Wyevale Garden Centres (the largest garden centre group in the UK with 140 stores) is going to be sold imminently – and received an incredible 900 bids from buyers when it initially went on the market.
Does this new-found faith in physical stores merely represent an irrational nostalgia for the British high street, or do these buyers and bidders realise it’s no longer enough to dominate a single channel? Perhaps, rather than closing them down, bricks and mortar stores could be the lifeblood that propels a business to a lucrative new level.
When analysing acquisitions in the retail sector, the pervading question remains: why are some stores deemed worthy of purchase? Why was House of Fraser such an attractive acquisition target for Sports Direct, whilst department store chain British Home Stores (BHS) ended up joining Woolworths and Borders as another headstone in the retail graveyard?
The answer lies in the customer experience. The country’s leading retailers are those investing in this space, turning to technology to improve the service they deliver to their customers. Shortly after its takeover of House of Fraser, Sports Direct owner Mike Ashley was quoted as saying he wanted to turn the 59-store chain into the ‘Harrods of the high street’.
It’s no surprise Ashley wants to emulate Harrods, the high street shop that’s been differentiating itself with huge success for a number of years. Examples of the luxury department store innovating include a mobile app featuring an in-store mapping tool. Equipped with beacon technology, it helps customers navigate their way around the premises and find their favourite brand.
Another example is Harrods’ facial recognition technology, used to monitor how customers are reacting to its in-store digital advertising – measuring age, gender and viewing time. This feedback lets Harrods see the demographics of people visiting its store and which brands and areas within the store they’re interacting with most.
It’s also likely Wyevale Garden Centres is such an attractive prospect for buyers as it comes equipped with its own innovative services. The centres place huge value in profiling customers in order to deliver the most effective experience possible. Customer overview technology lets the garden centre gather shopper data regarding historical purchases and frequency of visits – regardless of which store they’re frequenting, creating a detailed profile of shoppers.
By learning more about their customers, brands like Harrods and Wyevale Garden Centres are building a customer experience that revolves around each individual shopping journey – collecting only the most relevant data, allowing them to deliver an experience that really resonates with shoppers, and presents an attractive proposition for organisations looking to purchase retail brands.
EMPOWER EMPLOYEES WITH TECHNOLOGY
The staff working on the front line of bricks and mortar stores are at the heart of a retail business. Regardless how many takeovers and acquisitions take place, changes in management, or overhauled business structures – it’s the employees working on the front line and interacting with customers every day who will make or break a retail brand. Yet a lot of organisations struggle to manage these employees effectively, especially when they’re spread across multiple locations.
Technology is the key to bringing all of them together, facilitating top-notch communication, collaboration and sharing of information between employees, regardless of store. Technology gives employees instant access to information services and back-office inventory – eliminating the tedious ‘let me go and check if we have that in stock’ disappearing act synonymous with poor customer interactions. Product details are available at the touch of a button, meaning employees can provide shoppers with relevant information, regardless of where they are during the transaction.
The result is an empowered employee who can identify and react to customer concerns quickly and efficiently, which, in turn, saves time and increases accuracy. And we all know what happens when a frontline sales employee is afforded more time to focus on selling. They generate more revenue.
Is omnichannel a sustainable strategy in retail? With the emergence of any new business trend, there will always be questions raised about whether it will truly serve as a sustainable, long-term business strategy – or merely be another fleeting bandwagon everyone jumps off after a couple of over-hyped years.
The answer in retail is most definitely the former. Omnichannel is here to stay, and companies that stubbornly avoid its meteoric rise will follow in the footsteps of former retail stalwarts like BHS and more recently, Toys R Us. There are numerous reasons these stores failed to attract any successful takeovers, but the most pertinent to this article was their reticence to digitise their services and products.
By its own admission, Toys R Us typically fared well during peak holiday times because shoppers would visit stores in a panic after worrying their last-minute orders from online competitors would not arrive in time. However, as competitors evolved their manufacturing and delivery processes to satisfy customers who demanded same-day and one-day delivery turnarounds, Toys R Us failed to invest significantly in its online arm.
Similarly, BHS failed to keep on trend. Digital transformation and its website were treated as afterthoughts, resulting in a chronic lack of online conversions. Most damning of all though was a failure to use a digital shop front as a means of enticing shoppers in-store.
The fact BHS and Toys R Us failed to maintain relevancy and adapt to changing customer demands for so long meant that when the time came to sell, the potential for buyers – and, therefore, the queue of buyers – was virtually non-existent. The building blocks are clearly already in place for sought-after chains like Wyevale Garden Centres, which consistently demonstrate a willingness to innovate and adapt to shifting customer demands. Indeed, as recently as last year, Wyevale underwent a major overhaul of its EPOS systems to improve its customer service.
Let’s face it, the golden age of the British high street is over. The sooner we accept that, the sooner we can start focusing on new ways to delight our customers. But that doesn’t mean our bricks and mortar stores don’t have a viable future. Whilst online shopping is convenient, customers are still looking for retail brands that will interact with them in a physical environment with a human touch. Take Apple stores as evidence for this. Anything you can buy there, you can also buy online, but still people pop in to play with the latest goods and see innovations first-hand – and consult that handy Genius Bar.
So, whilst we can still expect to see retail brands cutting their physical stores over the next few years, this isn’t necessarily a negative, as the bricks and mortars shops that remain will be married to a company’s online offering. And, to succeed, they’ll be finding new ways to innovate within their shops – providing an experience-driven, personalised shopping experience that’s part of a strategic, data-driven omnichannel strategy.