How can retailers adapt to make their physical stores shine?
The difficulties faced by physical retail outlets have not just been driven by the COVID pandemic. Excessive rent, unexciting retail concepts and changing consumer behaviour are all playing their part in shifting turnover away from the high street, and one of the biggest factors is the growth in eCommerce. In November, M&S reported that online sales now account for 34.4% of its clothing and home goods.
But scratch below the surface, and there is evidence of a resurgence in physical stores. Take Amazon, the standard-bearer for online shopping. In October it opened its first non-food store in the UK at the Bluewater shopping mall in Kent. It stocks products that have been scored with four stars by online shoppers and will use data from its website to determine the products that are finding most favour with local customers. While Amazon could simply be ‘showrooming’, sceptics believe it is making a foray into the physical retail space to test the market. What is clear is that the opening of the 4-Star store sends a signal of intent to consumers about the value of physical shopping.
Amazon is using in-store display screens so shoppers can see products from some of the small businesses that use its marketplace. Also in use in other retail outlets, interactive displays give shoppers tools including product lookups, demos, and even stock checks without needing to engage with a sales assistant. It saves them time, encourages social distancing and perhaps most significantly, bridges the gap between physical and digital, allowing customers to satisfy their desire to touch and feel products with their need to price compare and assess reviews.
Retailers are not stopping with in-store displays, however. Some have launched ‘shoppable windows’. These use QR codes to provide a fully interactive display on their storefronts so customers can shop and get product information, even when the store is closed. A recent example is at Ffenestr Siop Cywain in Wales, which allowed consumers to browse its display of food and drink items clearly displaying QR codes which, when swiped, directed them to the producer’s website.
Click and collect
When the pandemic forced consumers away from stores, some retailers accelerated their click and collect services to enable kerb-side pick-ups. Currys PC World was a pioneer, allowing customers to connect with the service through their smartphones, while DIY store Homebase and Pets at Home also offered similar services. With stores now open, many retailers are leveraging customers’ preferences for this delivery mechanism to encourage them into their shops. This gives them the opportunity to market additional products, and pushes impulse purchasing up. Barclaycard research found that by offering click and collect, 34% of retailers saw in-store sales increase.
Retailers have reinforced their engagement with customers using loyalty points schemes for decades, but by taking a slightly different approach, these programmes are proving to be one of the strongest strands in omnichannel shopping. Using mobile apps, retailers can offer bonus points, special offers or rewards that can be redeemed both online and in-store. Additionally they offer advantages in terms of customer data gathering, as the McKinsey Rebooting Retail report says: “A loyalty card account can be a unique identifier of a customer across physical and digital interactions, and provide additional insights to increase personalisation.” In an industry constrained by personal data regulations, the loyalty programme still has the power to keep retailers and customers uniquely connected.
Not a new innovation, but the convenience and accuracy of self-checkout technology has vastly improved in recent years and was particularly popular during the pandemic, allowing customers to feel safer when they shopped. The range of payment options which now include the ability for customers to scan and pay for items using their smartphone, or to use contactless payments, has only accelerated the popularity of self-serve checkouts.
The last stage in the physical retail journey, the checkout can be a source of irritation, particularly if it’s too slow and retailers are slowly implementing improvements. Brands including Apple have been using iPads to process payments, and in 2020 M&S introduced an on-the-spot system which allows customers with a small number of items to checkout via a ‘Queue Buster’ assistant and a handheld device. The payments are all contactless and aimed at making M&S’s physical outlets more efficient. In general, however, even without ‘roaming cashiers’, retailers are moving towards NFC payment solutions which support contactless, ensure security and enhance payment processes.
There’s no doubt that the face of retail has changed, but while there are multiple advantages to ecommerce, it cannot ever replace immersive brick-and-mortar ‘retail therapy’. The challenge for retailers is to differentiate physical shopping and make it an outstanding leisure activity, one that complements eCommerce and ultimately satisfies consumer demands for a seamless multichannel experience.