What now for the store? Marks & Spencer and Poundland are among the retailers announcing they are closing multiple sites over the next few years as they look to rationalise their estates, while businesses such as Carpetright, Halfords and Oasis appear to be on a perpetual drive to revamp the look of their shops and develop a fresh look and approach to selling.
In the grocery space, Waitrose and Sainsbury's are among the operators continuing their focus on opening smaller format, convenience shops, while December has seen Amazon get the whole industry talking with the opening of its first grocery store trial in Seattle which seeks to facilitate checkout-less shopping, where transactions are automatically made using proximity mobile technology without the need to queue.
There is talk in the analyst community of Amazon white labelling the store infrastructure and selling it to other businesses in the grocery industry, so have we seen the next era of the physical shopping environment? What do all these changes mean for the future role of the store?
In November Essential Retail teamed up with Manhattan Associates and Centurylink to host a retailer dinner at Sartoria in Mayfair, involving some of the high street's most prominent names. Representatives from Dune Group, House of Fraser, Kurt Geiger and New Look, as well as Cote Restaurants from the hospitality world, analysed how technology is impacting traditional store retailing and offered some insights from the heart of the industry.
Key points centred on the need for retailers to better engage store staff to deliver an on-brand and relevant customer experience, the effective ways the industry is combining stores with their increasingly popular digital platforms, and the cost of new store retailing. In summary, it looked at people, place and profits, in relation to the store.
Putting aside the use of live video or web chat capability, which can help provide customers with a personalised, human interaction when shopping online, the people piece is where stores can really stand out from the digital world.
It is becoming clear as all retailers strive to ramp up their in-store customer experiences that engaged, enthusiastic and helpful staff who have an in-depth knowledge about the products or services their company offers can be a real differentiator in the industry.
Melanie Humphries, regional sales director – EMEA at telecoms business CenturyLink, commented: "I think we have undervalued the roles of customer-facing staff in our shops, supermarkets and in our restaurants for a number of years.
"The way the world is evolving, and how we spend and save money, businesses are going to have to be looked at differently, with models adjusted to accommodate."
She added: "Years ago, store associates had to be salespeople, but in the last 20 years this position changed and these same positions were deemed as being fulfilment people only, with minimal knowledge and skills on a minimum wage. It is only now that we're actually going back to them being salespeople, but they're savvier, customer-friendly, with increased product knowledge and more in tune to the emotional needs of their customers."
New Look is one of a number of retailers to have changed its approach to in-store retailing in recent years, with the use of technology key to supporting this new direction. In some of its shops, the fashion retailer arms its staff with tablet devices so they can provide customers with a more comprehensive service than perhaps they did in the past, based on analytics from the online world.
Ash Madhav, analytics manager – eCommerce, said: "We've got some staff walking around with tablets serving customers, which is great for service and great for newsletter-opt-in data capture. It gives an opportunity to engage and converse.
"We've always had people engaging with customers, now some of them are doing the same role with tablet devices. They know exactly what is going on online because we share a lot of online data with them."
She explained: "If we tell them what has most demand online they can merchandise efficiently in the store based on that information. If we see a big uplift in 'going out' ranges we can get the message to store teams to create a trend around that. There is a lot of data being shared now with store staff, who then have conversations with customers based on that information."
There are different reasons why consumers start a shopping journey, and it is up to individual retailers to cater for all eventualities. During the conversations over dinner, the subject of "balance" cropped up repeatedly, with retailers' store estates being depicted as either facilitating or providing an alternative to the quick and easy convenience purchase, or acting as a destination for those who are not just looking to find the cheapest goods at the click of a button online.
Georgia Leybourne, international marketing director at Manhattan Associates, asked the question: "Why does someone actually go into store?"
"Either because they've decided they need something 'right now' or because they want a bit of an experience," she added.
"The role of the store associate is to make that a reality and produce the goods. If what's wanted isn't in stock then the store associate needs to find it quickly and efficiently and let the customer know when they're going to get it to them and how."
Retailers in the room recognised the most successful businesses operating in their industry will be those which manage to successfully merge their offline and online properties and secure customers who shop with them across multiple channels. In addition to mobile point of sale referenced and used by New Look, perhaps the most obvious example of digital and physical shopping converging is through the process of click & collect orders.
Verdict Retail released a study in November which suggested click & collect is outperforming the wider online channel with expenditure expected to increase by 64% between 2016 and 2021. Clothing & footwear has reportedly accounted for 54% of all click & collect expenditure in 2016, while almost two-fifths of consumers make an additional purchase when collecting an online order from store.
These are trends that ring true at New Look, with Madhav saying: "There's a really nice multichannel behaviour we are seeing – a good percentage of our click & collect customers make a purchase when they come to collect in store.
"Data shows that multichannel customers are more valuable to the business."
Multiple studies of late have underlined what many retailers will only be too acutely aware of internally; that much of the modern retailing model can be margin-eroding and difficult to make profit from. Discussion around the dinner table turned to the huge balance required to continue making money while generating the sought-after seamless customer experience across all channels with the likes of rapid delivery options, the latest technology in store and investment in back-end systems that start to facilitate that all-important holistic view of shopper.
For Tom Burridge, project manager – multichannel at department store chain House of Fraser, he believes retailers establishing a single view of their customers is the key goal for stores to grow in power and relevance in the eyes of consumers. He described gaining a single view of shopper as "the Holy Grail", and it is certainly something businesses in the sector have been striving for over a number of years now.
Burridge spoke of how the information needs to be used to combat the fact shoppers hold the power in the exchange with retailers because they typically have access to price comparison, customer reviews and a wealth of product information at the swipe of a screen on their mobile phones.
"The way you combat that – through processes such as clienteling – is by having the single view of customer and pre-empting and targeting the promotions," he argued.
"Even if it's as simple as knowing what size shoes someone has, what colour they tend to shop most often or what brand they prefer. Then you can go off in any direction because the technology is way ahead of where the industry is."
He added: "You can get a million analytics tools, you can target promotions, or introduce recognition tools in store. You can go down that route, but no-one really wants to because it's too much.
"There's a balance there, and no-one has found it, probably because no-one has got that single view of customer yet. It's not a million miles away – a lot of retailers are very close to it."
The money man in the room, Cote Restaurants' chief financial officer Strahan Wilson, said he is continually looking to calculate the return on investment from the various tech investments that are possible to make. There are new ways of measuring success in the retail space, it would seem, and it does not all come down to the bottom line of each store.
"You are starting to see your retail estate as a marketing tool and not as a selling tool, and that changes things in terms of profit attribution," he noted.
Dune Group's retail omnichannel manager, Dave Abbott, explained his business is an example of an organisation changing the way it measures the success of its stores and how they are rewarded. It involves a "change of mindset", he noted, with shops given key performance indicators that do not simply revolve around sales, but speed of fulfilment and the part they played in an eCommerce transaction.
"We call it the omnichannel value of stores," he explained, adding that by offering digital receipts to in-store shoppers the store has played a role in collecting customer data and introducing shoppers to the brand's digital properties.
Burridge summed up the shift in function, which some of the retailers in the room and other notable examples such as the likes of Carpetright and Halfords are adopting. Even businesses that were previously online only, such as fashion house Missguided, mattress specialist Casper and furniture seller Made.com, are opening up bricks and mortar stores to extend their respective brand reach and find new routes to market.
"What retailers are doing now is moving away from what is effectively a store full of products to a full-on shopping experience," he said.
"Stores have got to lean towards experiential shopping. It's all about the store as a destination."
Full list of roundtable participants:
Chaired by Ben Sillitoe, editor at Essential Retail; Ian Butler, managed services principal at CenturyLink; Melanie Humphries, regional sales director – EMEA at CenturyLink; Strahan Wilson, finance director at Cote Restaurants; Dave Abbott, retail omnichannel manager at Dune Group; Caroline Baldwin, digital features editor at Essential Retail; Giuseppe Guillot, logistics & systems infrastructure director at Kurt Geiger; Tom Burridge, project manager – multichannel at House of Fraser; Georgia Leybourne, international marketing director at Manhattan Associates; Ash Madhav, analytics manager – eCommerce at New Look.
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