iStreet – The Future of Retail
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iStreet: the future of retail
Consumer buying behaviour is now a landscape of shifting sands, with technology driving the supposedly inevitable evolution away from bricks and mortar. Yet, a look at the showrooms of the near-future reveal a more complex story, writes Katrina Bell
If the naysayers, and online retailers, are to be believed, traditional showrooms will eventually go the way of the Dodo as the purchasing power of the Internet marches in time with consumers rabidly chasing value, not purely in monetary terms, but also their willingness to sacrifice their time.
However the retail narrative that will become the norm in five years’ time is already, in part, already here, and rather than tolling the bell for the high street, innovation could be the key to rejuvenating showrooms’ prospects. The future of retail is almost upon us and it is in no way one-dimensionally digital.
First, the predictable news: brand loyalty is on the wane and showrooming is on the up – TNS Global estimates that 54% of Europeans visit showrooms, with 30% admitting to using their mobile device while actually in the shop, the worst offenders being 22- to 30-year-olds, particularly women. Perhaps proving the female gender’s greater ability to multi-task?
The new consumer
Consumers that shop around consider themselves discerning and readily use technology as a vital weapon in their fight for the best deal – showroomers have replaced tyre-kickers as the retailer’s prime nemesis.
We all take a strange delight in announcing how cheaply we sourced our daily comestibles as well as bigger ticket items – it’s not as if you hear about snapping up a fantastic deal in the housing market any more. This doesn’t explain, however, the dilemma of all retailers – that customer patterns are a confusing mix of price obsession on the one hand, and success stories like John Lewis, which builds its reputation on customer service not cost.
Take the buyer who is swayed into buying a gardening tool online at a DIY shed because of the next-day delivery if they click before 4.30pm. Notch one up for the Internet? Not really. That same customer would have to exhibit superhuman restraint not to have picked up a few other bits had they driven to the store half an hour away. That same DIY shed still has to pay the on- costs for those convenient late-night shopping hours whether you buy in store or online. Then consider the other customer who researches their purchases and then visits the shop anyway to experience the product in the real world – a behaviour now nicknamed reverse showrooming. And that’s before you wade into the morass of the newly termed analysis paralysis – a state of mind entered when consumers literally can’t decide between the myriad of choices.
Argos, a brand that sits squarely in the nation’s hearts as a place to get what you want, at a price you can trust, when you want it, recently reported that multichannel accounts for half of its revenue, and yet 90% of purchases involved in-store involvement.
Online sales is estimated to be worth around 8% in the UK and yet a recent Kantar report suggests that while the 50% of the decision process is ‘influenced’ by online browsing, shoppers still prefer to purchase in-store. If this metric sounds contradictory and confusing, you are not alone in thinking so. Consultants Accenture reported that three-quarters of business executives don’t understand changing consumer behaviour, and four out of five admit they are so far failing to capitalise on the growth opportunities new technologies offer.
Bathroom manufacturer Roca Group’s ‘clicks and bricks’ initiative, which allows customers to purchase from a central website and then collect from a local retailer, is surely proof positive that the KBB industry is slowly waking up to the need to adapt, to keep up, or even, to stay ahead.
How to learn to love technology
Now, the good news. Advances in consumer behaviour are also a golden opportunity for retailers to evolve their own offer to steal back the initiative with the Internet discounters.
The central tenet of this changed relationship will be a combination of technology and data expertise, combined with good-old-fashioned experience retailing that places a premium on solid advice, sprinkled with a a shift in expectation on the part of retailers as to what their future showroom looks like. It’s no secret that spiralling rents are felling even the biggest brand names along our high streets and in our retail parks, hence the latest announcement that B&Q will space-share its site at Bamber Bridge in Lancashire with cut-price grocer Morrisons due to ‘unsustainable’ rents.
Similarly, Bathstore is testing a new, smaller format in Harrogate that will feature a reduced number of roomsets, supplemented by touchscreens showcasing the entire range. It’s a a move that echoes the success of Adidas’s Virtual Footwall that begun popping up in stores all over the world in 2011.
They show not only the entire online inventory, but the ability to see what people are saying about the products on social networks.
The Home Shopping Network, partnered with Intel, has been trialling its Interactive Touchwall which lets customers at wine events in the US to take cooking classes with super-chef Wolfgang Puck and experience gadgets and goodies that they would only ever get to see online and on television. The ultimate touch and feel for the Web generation.
Perhaps in recognition of consumers’ ultimate love of connecting with real-time products, e-commerce giant eBay Inc has recently announced the introduction of a so-called Retail Associate Platform, which the blurb describes as aiming ‘to help retail brands better engage with their customers in store’. Hoping to garner extra leverage from behavioural patterns exhibited both off and online, the app offers retailers access to previous purchases as well as products they have expressed an interest in, but not bought. According to eBay, this will allow retailers to customise stores in line with more detailed consumer data.
What incentives does your average retailer currently use to lure warm bodies into the store, where knowledge, charm and honest-to-god sales savvy can not just seal a deal, but also provide up-selling opportunities in ways that the Internet will always struggle to?
Most KBB websites reveal a smattering of maps, storefront images, contact details and, for the more technically advanced, a slightly stuttering 360- degree view of the interior. But what if those same websites offered online prices available to use in store, vouchers to download or discounted extras such as taps if you complete the transaction once through the doors? All valuable incentives to grab the car keys.
And what if consumers could also have their parking fees repaid on presentation of their ticket in the same way that many cinemas already do in larger retail parks?
What ROI do you currently offer for a Facebook like or Twitter follow? Can that be monetised to create a sense of brand loyalty that translates into physical interaction? Those two old workhorses of retail, the recommendation and the testimonial, suddenly take on a new meaningfulness when conducted in the online sphere. We already know social network users expect payback for a presence in their feeds, so why not make it standard procedure to reward your fans with more than just a Thanks for the Like?
As Tesco’s chief executive told the World Retail Congress in Singapore in March: “Last year I called time on the old ‘space race’ – I said that in the future, we wouldn’t simply grow by buying more real estate, but instead change the way we engage with our customers and embrace digital retailing.”
“We’re living in a new age of connectivity. It’s transforming every retail company. The future cannot just be about developing low-cost goods and rolling them out to new markets. We need to rethink the way we retail.
‘Are we open, or are we closed?’ That’s the big question which will define the future of our industry. This is a world of hyper-speed choice and global connectivity – and you fail the moment you stand still.”
The next big step around the corner
Brent Hoberman knows a bit about online ecommerce – he is not only co- founder of furniture retailer made.com but was part of the double act with Martha Lane Fox that started up lastminute.com. “In the near future we’re going to see an awful lot of visualisation technology,” he says. “Returns with sofas were often because people couldn’t fit it through the door, but we’re going to see people uploading floor plans of their houses so that we know how everything will fit in. And augmented reality means that we will be able to see what items will look like in place, too.”
That doesn’t mean that Hoberman has foregone a bricks and mortar space – made.com has a ninth floor show in London’s chi chi Notting Hill Gate, which he admits, is only visited by a very small percentage of his customers. This is despite billing itself under the tagline ‘Beautiful designs without the high street mark up’. “There’s something reassuring for customers knowing we have a physical presence,” he says.
And should you need a final nudge, it’s worth a gander at the latest Minority Report-style innovation from Intel, billed as ‘The future of digital signage’. AIM Suite bombards mall browsers with customised billboards as they wander through the halls, anonymously detecting demographics like gender and age through an optical sensor, which then tailors the content appropriately.
Be sure, the future of retail isn’t so much imminent, it’s here already.
Trends to look out for
Augmented reality: imagine your website allowing customers to walk around a virtual store, meet friends and test products, even video chat with sales assistants back at HQ. Ikea’s next digital catalogue will allow customers to see what the products will look like in their own homes.
Dark stores: Tesco has five dotcom-only facilities already. As the pressure on distribution networks inevitably increases, so does the need for brands big and small to provide next-day, convenient delivery times.
Apps: mobile brand apps will more and more make it easier for consumers to make shopping lists of items they want and need, and then communicate those with retailers.
In-store price-matching: being able to see a comparison in-store will offer reassurance, and potentially put off the moment customers take to their mobiles.
Gamification: a trend that has become the default setting for many Web and app developers. Games are fun, so make buying fun by adding elements of competition and skill. Think Angry Bidets. Not as easy as it sounds.