This is the question we addressed at a recent trade show. Our audience was from the jewellery retail sector but it’s an important question for all retailers today, no matter what sector you are in.
There has never been a more challenging time for bricks and mortar retailers. Digital retail is here to stay and it’s a wonderful thing but we all know it’s changed the way we shop. It’s delivered convenience – customers can browse and shop online whenever it suits them. And it’s provided access to more choice than we ever imagined possible – shoppers can surf the online stores of retailers from all over the world. Plus, it’s made comparison shopping easy– consumers are well-researched because they can readily compare products & prices. Indeed, many are better informed than the staff that aim to serve them!
This recent quote, nicely sums up the problem for digital retailers:
“Walk London’s Portobello Road, all the sights, the sounds, the smells, the diversity. You can’t get that online!” Oliver Spencer, Fashion Designer & Retailer
Yes, websites play a role in nearly every purchase today BUT they can’t ever give us really immersive shopping experiences. Whereas great physical retail stores facilitate two important things:
Vital face-to-face interactions – such contacts are the only way to build meaningful and closer relationships with your customers, AND
Satisfying customer ‘experiences’ – the sort of positive in-store time that creates a smile and a pleasant memory.
And of course, great authentic in-store customer experiences tend to create a demand for more. The more you satisfy your customers, the more often they will return AND the more they will share that great experience with friends and famiIy. Job done!
In Barclays The new retail reality report published last year, they found that UK consumers are crying out for a wider range of vibrant and diverse high street stores. They want more Independent specialist retailers as well as Independent cafes and restaurants and Boutique stores.
And in Goldman Sachs August 2017 retail report, they found that despite the growth in digital, 85% of retail sales are made in physical stores today. What’s more, they predict that this figure will only drop to around 70% in 5 years time. So their advice to retailers is
“… to play to the strengths of their physical assets, pick a purpose and better connect with customers”
So the overwhelming evidence is that there is a demand for physical stores but that to survive in this e-commerce era, retailers and their brands need to stay relevant and strong. And that is because consumers want clear messages. They don’t have the time or the patience for confusion – they will simply shop elsewhere!
Interestingly, Credit Suisse recently reported an additional challenge for today’s multi-brand retailers. They found that “There is little, if any customer loyalty to retailers without their own brands.”
Of course, this makes sense. If all a retailer does is represent the same brands as everyone else, how do you differentiate yourself to attract and retain customers?
We’ve seen this with some of our own multi-brand retail clients. The demand from some of the larger global brands can put pressure on space allocations and adjacencies, as well as on wider brand partnerships. In such cases, we’ve seen retailer starting to invest in growing their own-brand ranges.
“Retail’s not dead; it is changing…The physical store still matters” says Goldman Sachs.
“Omnichannel is changing the context of retail but we still see a role for stores, and we still intend to open new stores…in the right locations where we can get the right proposition. We need to make sure that the environment in our stores and on our website is consistent.” WatchPro, Interview with Noel Coyle, CEO, Fraser Hart
These two quotes above confirm that despite the digital disruption to retail – and the UK has one of the largest e-commerce markets in Europe – there is still a demand from consumers to shop in bricks and mortar stores.
Indeed, the Barclay’s New Retail Reality report, found that over 80% of people want to shop in the physical stores of national retailers, while 77% want to shop in local, independent retailers.
This appetite for physical stores is also borne out by the fact that a number of internet-only retailers are now exploring bricks and mortar stores. From giants like Amazon – who plan to open 400 book stores in the US – to Notonthehighstreet – who celebrated their 10th anniversary with a London pop-up store! E-retailers all over the world are recognising the value that face-face interactions with their customers can bring.
BUT to get customers over their threshold retailers must be clear about who they are and be clear about their proposition. Without this clarity retailers will struggle to attract customers or build loyalty.
Know your customers“As a retail business, it’s really important to stand for something – you’ve got to have a point of difference. I look at a number of retailers today on the high street and I think sometimes those points of difference aren’t strong enough in the customer’s mind.” Simon Belsham, CEO, Notonthehighstreet.com
What is on your customers’ minds – do you know? If you are not actively listening to them then how will you know what they want, how will you begin to ‘delight’ them?
Goldman Sachs has found that “Physical retailers who do a better job of getting to know their customers will see the dividends over the long term.”
And we certainly see this with our own retail clients. When we ask their consumers what they want, increasingly they are looking for shopping ‘destinations’ where they can immerse themselves in:
interesting and unique products;
authentic in-store experiences;
consistent on-line and in-store environments; and
tempting reasons to buy.
So investing in retail store design and great physical destinations for shoppers is more important than ever today. In fact, it should be part of any retailers’ strategic survival plan!