With soaring high street store closures still making the headlines on a regular basis in the UK, the retail and marketing sectors repeatedly grapple with the question: why are high street retailers still struggling to crack multichannel retail?
While employing ecommerce best practices and focusing on customer experience might seem like straightforward measures to those of us who work in digital, the woes of high street retailers are quite obviously not straightforward.
For one thing, even those high street brands who are lauded for having excellent digital strategies are suffering: John Lewis, often cited as a master of omnichannel strategy, saw profits down 99% in the first six months of 2018, and is closing its first store since 2006.
Is it simply that the appetite among consumers for physical retail stores is no longer there? Or is there something more complex at work? At The Big Bang, a digital marketing conference hosted by Marin Software and The Drum on Thursday 7th February, digital experts from Facebook, Google, Bing and Feedonomics discussed the problems facing high street retailers and considered the future of the retail store.
Re-envisioning the store
Early on in the discussion, panellists pointed out that many ecommerce players are now opening brick-and-mortar branches – and achieving great success with them. What might these digitally native brands be doing differently with offline compared to established high street retailers?
Emily Langston, Partner Solutions Manager at Facebook, suggested that the difference might be an understanding of mobile: not just having a mobile presence, but truly understanding the way that mobile is fundamentally altering consumers’ shopping habits.
“If you’re not thinking mobile primarily, then that’s one of the biggest pain points. You need to realise how impactful it is, and how impactful things like shopping on Instagram are,” she said.
Regarding ecommerce players opening up physical stores, Michael Wicks, Sales Lead for Google Shopping UK, emphasised that offline is still “hugely important”, but then questioned whether we should re-envision what a store looks like in 2019. As an example of this, he pointed to Apple: “Apple’s stores are their big advantage, but they don’t look like anything you would expect a store to look like.”
Indeed, many thought pieces have been written about the cleverness of Apple’s stores, and what other retailers can learn from them: from the sheer attention to detail to the way customers are encouraged to try out products, and the focus on the customer experience.
However, Wicks also acknowledged that it is difficult for high street retailers to simply reimagine their approach to brick-and-mortar retail, as most of them are locked into long store contracts that make a dramatic change very difficult.
Ikea to Bonobos
Ben Irons, Strategic Sales Director at Bing Ads UK, cited Ikea as an example of how the retail store could evolve in the future. Again, just like Apple, Ikea encourages customers to head in-store and try out its products, but also encourages them to buy online if they prefer, allowing customers to have both the in-store and the online experience. The Ikea website has a dedicated page for “How to shop at Ikea”, emphasising the range of purchase, payment and delivery options available to consumers.
Irons argued that the “emotional element” of shopping offline is a major driving factor behind customers continuing to purchase items in-store. “Seeing, touching, feeling what you’re looking to buy – encourages spontaneity and that feeling of euphoria upon purchase. Online can only replicate part of this.”
He also pointed out that online shoppers inevitably have to wait a few days for delivery, while customers shopping in-store can have the satisfaction of obtaining the item immediately.
As another example of how retail stores could look in the future, Patrick Hentschel, Senior Director of Global Accounts at Feedonomics, pointed to Bonobos, a men’s clothing retailer and another ecommerce player that is noted for being successful offline. Bonobos famously stocks very few items in its ‘Guideshops’, instead keeping just one item of every size in stock.
Customers coming into a Bonobos store can make appointments, return items, try clothing on and make purchases – which will then be shipped directly to their homes. This way, customers enjoy the benefits of an in-person shopping experience and face-to-face customer service, while the brand is able to cut back on the fixed costs associated with maintaining and stocking a retail store.
This idea is not far from the highly operationalised approach taken by New Retail grocery stores in China, such as Alibaba’s Hema and JD.com’s 7Fresh. Similar to Bonobos, Hema and 7Fresh stock fresh food primarily to inspire consumers and allow them to try the produce, which is then sent to their homes. As Econsultancy editor Ben Davis writes,
“At both Hema and 7Fresh, delivery is guaranteed within 30 minutes for those that live locally (within 3km).
That proposition means that the vision of people ordering the night’s food on the way home is a reality, as is the idea of using the supermarket as a showroom of sorts, with the delivery following you home. This is catnip for metropolitan shoppers who are time-poor commuters and don’t drive.”
Could these strategies save the high street?
The panel discussion at The Big Bang acknowledged the complexity of the problem facing high street retail brands. Unlike pure-play ecommerce brands that are opening up physical stores for the first time, they may not have the luxury of redesigning their entire shopping experience from scratch or tailoring it to work with ecommerce.
Additionally, as Facebook’s Emily Langston illustrated with her point about mobile, many high street retailers still lack an understanding of channels like mobile and their profound impact on the shopping experience, which is surely required before they can reimagine their strategy.
A closer integration between digital and offline might be the key. Ikea, for example, has designed its app to assist customers who are planning an in-store visit, helping them to make a shopping list and browse offers from local branches. Similarly, China’s Hema and 7Fresh encourage customers to shop both online and in-store, with data showing that customers who do both spend more on average.
The solution to rescuing the UK’s high street retail brands – those that can be rescued – won’t be an easy one. But one thing that seems apparent from the panel discussion is that physical retail is still the future – it may just look and feel different to what we’re familiar with today.