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Context: Reaching the tipping point

Retailing has always been a dynamic industry. For decades now, product developments, technical advances and changing customer preferences have been core drivers for new retail formats. It is no different these days, except that the ‘formats’ have transmogrified into ‘channels’, digital technologies are all-pervasive, and the way we all choose to shop is changing more rapidly than ever before. As the proportion of online business continues to grow, multichannel retailers are reassessing the role and profitability of their store estates.

Shoppers who use smartphones, tablets and digital assistants at home expect rather more from their retailing experiences than a traditional low-tech department store or supermarket. The results can already be seen across Europe. In the UK, problems at House of Fraser and Debenhams have hit the headlines. In Germany, Galeria Kaufhof is struggling while in France, Auchan, Casino and Carrefour have all failed to achieve any significant growth or improvement in profitability.

Today’s shoppers expect the same speed and convenience in the high street as they find online and are intolerant of any failing. They don’t expect out-of-stock warnings, while too long a queue for click-and-collect orders is a sure way to lose repeat business. To attract customers, real world stores need to add interest and excitement. Seasonal pop-up shops are one way to draw crowds and these have already joined the mainstream marketing repertoire. Zara opened one in London for collecting online orders as its innovative “store of tomorrow” was fitted out, while IKEA tried a pop-up café in Toronto selling its famous meatballs as well as showcasing its range of kitchen equipment.

A seamless and consistent customer experience in whichever channel shoppers choose to visit is also essential. It’s an approach which some analysts dub “O2O” – online to offline – and can involve tracking shoppers and their orders as they flit from mobile to desktop, to store, to contact centre and back again. The latest development at Delhaize in Belgium, for example, is Fresh Atelier. Launched in October 2018, it’s a small format convenience outlet that offers lunchtime snacks and sandwiches, while also acting as an ordering and collection point for the retailer’s full grocery range. Delhaize plans to open 200 such outlets over the next three years with CEO Xavier Piesvaux declaring the format, “an example of ‘instant retail’, in which offline and online shopping and ‘on-the-go’ are combined for the first time in this way”.

Many of the leading retailers in this Dimension have also put integration and in-store technology at the heart of their strategies. Burberry shoppers, for example, can use their smartphones in store to interact with RFID tags on products to access additional information – from production details to styling ideas for linked purchases. Its flagship stores are regarded as physical versions of its website, with similar use of video and interactive displays, and store staff use technology instantly to access a customer’s previous purchases – in whichever channel – to advise on suitable items. There is even a link to Uber from its mobile app to ensure that shoppers can reach their nearest stores quickly and easily.

The days when store staff had to teach customers how to use an interactive in-store video kiosk are long gone. Attracting today’s digitally savvy shoppers needs innovative formats that integrate online and offline channels for a seamless and convenient solution. Tomorrow’s stores should be much more than just handy locations for collecting click-and-collect orders. Stores need to enhance the customer experience, build brand loyalty and, following Burberry’s lead and because customers increasingly interact with retailers via digital channels, even offer a real-world version of the website.

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