The high street debate is one that attracts much comment on the Econsultancy blog.
Feelings run high when it comes to ensuring the survival of stores in our towns. The situation has yet to crystallise, though it’s clear there are business models that aren’t best suited to bricks and mortar any more.
Alongside the trend towards experiential retail (shops doing more than simply selling stuff that consumers can buy cheaper online), a trend towards creating social value in the community may be emerging.
High street vacancy rates are steady in the UK at 14% in 2013 and independent stores such as cafes are on the increase. Part of the reason for this is social and local.
Most of us still value our retail centres as places to take a ‘humanity bath’, meeting people outside of the office, the church/mosque/synagogue and your neighbourhood.
But what else can big retailers do to engender a closer community? Does every store have to get involved? What about digital technology, can it play a part at a community level?
The RSA (Royal Society for the encouragement of Arts, Manufactures and Commerce) has released a report detailing the business case for socially aware retail. The report includes the results of six months of research with three ASDA stores.
Whilst most of the findings are relevant mainly for larger focal points, chiefly supermarkets, here’s what I gleaned...
The RSA is quite clear that there is an opportunity.
In this report we argue that building a future retail model which coordinates corporate operations to maximise local social and economic impact will become a key competitive advantage in a decade in which traditional physical stores are set to experience transition and disruption.
The report terms it ‘community venturing’ and begins by giving some hazy ideas as to what form these ventures could take.
Examples range from sharing data within and between businesses and public authorities; offering new services for citizens and entrepreneurs as well as consumers; bringing a range of public service interactions into the store; and better utilising assets such as car parks for commercial and community use.
With price and location already established bases for competition, will experience and social environment develop into a better defined draw for customers?
The UK Government passed the Social Value Act in March 2012.
An Act to require public authorities to have regard to economic, social and environmental well-being in connection with public services contracts; and for connected purposes.
So it’s on the national agenda in the UK at least.
Retail is important locally
Retailers employ more than 3m people in the UK and are a part of daily life for the majority of the UK population. The importance of retail is arguably even greater in the US, despite a more diffuse population.
Retailers are likely to be local in make-up of customer base and workforce. Supermarkets and large retail stores are often landmarks that take an important role in local communities.
It’s interesting to note that retail park space in urban areas has relatively low vacancy rates, but nationwide, the picture for retail parks is much bleaker.
Click to enlarge this lovely BRC infographic.
Physical retail has been challenged
Physical retail has been variously adversely affected by online retail, collaborative consumption and subscription services.
The backlash against morally dubious, big corporates is evident
The working conditions and tax affairs of many big businesses, including pure plays like Amazon, has caused great public awareness of perceived social injustice in retail.
The backlashes against Starbucks (tax avoidance), Vodafone (tax avoidance), Sports Direct (zero hour contracts) and Amazon (poor working conditions) indicate that a business creating social value is perhaps likely to see commercial benefit.
Buy-to-give retailers, though not specifically local, have done well commercially whilst also giving sizeable gifts to charitable causes. TOMS, Warby Parker and MyGoodness are three such examples.
Adding social value at stores
Recommendations could include:
1. Refurbishment of stores to make better use of space, perhaps allowing for education and training, arts, crafts and design, cooking, public events, exhibitions and meetings.
2. Space could be purposed to generate commercial revenue for activities of social value. This could include exercise classes, sports, gyms, or expanded healthcare facilities.
3. Make stores into hubs for one-man-bands and small businesses. Many freelancers and small businesses are run out of cafes such as Starbucks. If big retailers like supermarkets can provide free WiFi (ASDA does), a café open early until late and a community hub, this is not far fetched. FedEx Kinko’s is a precedent.
4. Digital interfaces to list community activities and ventures, to keep customers aware of what’s going on.
5. In the medium-term, bring leisure and entertainment activities into stores and car parks. In the long-term, endow community trusts with these unused assets.
6. Lead community engagement by sponsoring a local festival or amenity such as a park.
7. Choose one local issue, e.g. lack of leisure facilities such as a swimming pool, to take ownership of from the store community hub.
8. Invest in business education and mentoring hubs in store.
9. Support nearby agricultural spaces such as allotments. These can be managed from store or provided with education and equipment.
10. Use stores as a recruitment hub for local volunteering.
How to change the operating model
- Gain insight into which issues matter to their customers and neighbours locally, which matter to their staff and organisation, and the overlap between the two.
- Designate explicit roles and expectations for who amongst their staff is responsible for relationships with various local stakeholders, and build capacity for these roles accordingly.
- Set operating principles for local autonomy for retail stores.
- Establish key performance indicators which measure progress towards social and commercial impact in the outcomes articulated. These should comprise core indicators – common across a business – supplemented by locally defined indicators which are meaningful in the local context. Indicators should relate to activities undertaken, and measure net social outcomes alongside net commercial impact.
What about digital’s role in all this?
ASDA has been the first national retailer to introduce free Wi-fi in all stores. This is a first step to promoting the store as a place for small businesses and community ventures to meet and work.
Lockers/click and collect; part of encouraging community is also allowing for convenience. With the provision of scheduled pickup of groceries from a locker or click and collect, customers may be encouraged to visit the store (allowing flexibility) rather than ordering a home delivery. Yes, this may discourage some customers from spending time browsing but it may direct more visitors into the store.
Digital interfaces are needed to provide information about community ventures and events. Awareness can be built if more flexible facilities are available to publicise events.
More computers for staff and customers should be provided. In big supermarkets there are often one or two computers for staff to use. Although many people have their own devices and WiFi is often the most important step in cafes in-store, supermarkets and community hubs are good places to promote digital literacy. For those that don’t use tablets, for example, having some to explore in-store would be beneficial.
These devices could even allow some people to use store catalogues, explore latest offers or use click and collect if customers are at the store to do something else and want to save time.
Augmented reality can play a part in gamifying the shopping experience for kids, too, making the supermarket a more fun place for the family. See ASDA's example here.
Gamification can be used with older markets, too, as Topshop does for the student market.