Punished by the pandemic and besieged by online-only providers — legacy retailers are ready to shut up shop and leave town? Not a bit of it. Established retailers are fighting back, they’re investing in long-term growth and their plans include renewed focus on their one true point of differentiation – the physical store.
Our Chief Technology Officer Eric Bilange explains how and why retailers are investing in and around their bricks and mortar.
Which retailers are investing in physical stores?
More than you might think. But firstly, we must remember there are two ways to invest in stores. One is to reinvigorate or even repurpose existing shops. Secondly, there’s the option to ‘go for growth’ by opening new stores — and, while a lot of retailers have been in the headlines for rationalising their estates, you might be surprised at how many retailers actually plan to open more shops. For example, Dollar General alone are scheduled to open 1,000 this year, while other retailers like DICK’S Sporting Goods, Nike and Athleta have exciting expansion plans, too. And Amazon is opening more of its Amazon Fresh and Amazon Go concepts. So, as you can see, the death of the physical store has been exaggerated.
How are physical stores changing?
There’s a lot of talk in the industry about the ‘Future of the Store’. This includes using the Internet of Things (IoT), augmented reality and even artificial intelligence in stores. Not all of these technologies are here today, but, in the short term we’re certainly seeing clear trends in new and redesigned assets:
- Faster journeys / contactless service. As seen in Amazon’s till-free stores and instore apps like M&S Mobile Pay Go, which enable shopping on a mobile without a store assistant. There has also been a noticeable trend towards self-checkout, particularly in grocery.
- The store as a central hub. We’ll see physical stores reinvented as part-fulfilment centres or warehouses, to serve both physical and online customers.
- The store as a journey touchpoint. Retailers are tempting new customers into the store by having them pick-up or return items bought online, and then using the opportunity to upsell.
- Additional services. Brands see the power of additional services and reasons to visit. So, this might be an instore restaurant, or, for example, tailoring services. This multi-vertical thinking has been popular in grocery for some time (think dry cleaning services, petrol stations and cafés), but now we’re seeing it moving into verticals such as fashion and specialty.
- The store as a destination. Retailers and brands are focusing on offering ‘retail theatre’ experiences. KitKat has a Chocolatory in Australia. Nike has ‘Houses of Innovation’ which offer immersive experiences. H&M Looop in Stockholm has a machine that recycles clothes instore.
- Sustainability stories. Brands are using stores to showcase their sustainability credentials; think fashion businesses with re-use or recycle services and products, live herbs growing on supermarket shelves and zero/low packaging stores.
The two common themes running through all of these? Excite the customer. And make it easier to interact with the retailer.
What advantages do physical stores bring?
Successful retail is not just a matter of finding products people want to buy and selling them. It’s about brand engagement, the experience of shopping, the way the service makes customers feel. Physical stores have a captive audience in a way that online doesn’t. Customers can touch products, see them in real-life, try things on, feel the quality of produce, chat to sales assistants, ask questions face to face. Store shopping is not as convenient as ordering online — but most people can shop and get home from physical stores in an hour or two – something online fulfilment doesn’t yet do at scale, and without waste and pollution (especially given the quantity of home deliveries. The store will always be a more exciting experience. Retailers need to magnify the advantages that instore shopping offers.
Why invest in new stores now?
There are several reasons. The disruption of Covid has lowered rents and land prices – meaning it could be more economical now to open new stores. Between working from home (rather than commuting) fewer holidays and less going out customers have had less to spend their money on – we’re seeing reports of extra savings and an uptick in consumer demand. Many consumers who have spent months in lockdown are also keen to get out and enjoy the experience of shopping. There’s also a unique opportunity to create new types of customer journeys that blend online and offline shopping, using the store as a centrepiece. In many ways it’s an exciting time to be in retail.
How can retailers tempt customers into stores?
Covid has been so tough for retailers, and they need to prepare for the long-term ramifications. Clearly some customers are still not happy to be in busy, enclosed spaces. Others are turned off by the safety protocols. Retailers need to think engagement both online and instore. John Lewis does this brilliantly. It has sent vouchers out for free coffees and cake and other offers that can be redeemed instore. And it offers unique, enriched experiences online, such as live tasting and recipe video events. Through our work with Krispy Kreme we’ve seen how much difference personalised offers can make. Retailers need to think of new ways to get customers instore more often as well as what they want customers to do once they’re there. And we can help them convert visits into increased purchases.
How can Flooid help?
Retailers have key challenges in reimagining stores. Can they link online and instore journeys to make them seamless for the customer? Can they innovate with new technology and scale great ideas across verticals, countries and the entire store estate? Can they use technology to meet consumer expectations for speed and quality of service?
Flooid can make the difference. We help retailers bring physical and digital journeys together. With us, retailers can offer consistent shopping experiences, complete with discounts and promotions, both online and off. They can build the best experiences on top of Flooid app services, and capabilities such as self-checkout into our unified commerce platform and basket services or buy or build another capability – for example a mobile phone app – to revolutionise the instore experience. With Flooid, they have the platform, the partner, and the freedom to create something really special.
If you’d like to learn more about growing or reimagining your store estate, contact Flooid via firstname.lastname@example.org