The Physical Attraction of Retail

Comm update_11 June3Traditional retailers are working hard to make customers fall in love with stores all over again. If affections are to be won back, it will entail providing a more blended, personalised experience, whereby mobile presents the opportunity to send tailored offers and discounts, while the store itself becomes a place for shoppers to evaluate products with their own eyes, consult experts and socialise.

Stephen Smith, Chief Customer Officer at supermarket chain Asda, says: “The work we are doing around reinventing our large store formats is important for long-term growth. People are making fewer visits to large stores so we’ve got to continue to invest in the physical space and give people reasons to shop in store… [which means] making that physical space work as hard as possible for us. After all, it’s still what drives the bulk of our sales and profits.”

Customers will choose to visit a physical store if it means they can have an experience, either service or product led, which is not available to them online. Gary Favell, CEO of retail concern Bathstore, comments: “In our sector, customers want support, advice and guidance. We offer a personalised, full service solution through ‘service by design’, which can only truly come to life face-to-face. Our website educates customers about [this service], then signposts customers into the store.”

Naomi Wells, Head of Future Planning and Sustainable Development at Waitrose, part of the John Lewis Partnership, says: “You’ve got to make sure you are constantly introducing new experiences for your customers. For example, in our York branch of John Lewis, we’ve partnered with Hotel Chocolat to open a cocoa bar café in the store. Then there’s our tie-up with [luxury travel operator] Kuoni, which offers concessions inside our Oxford Street department store… we’ve also introduced a dry cleaning service in our Waitrose branches and extended our click-and-collect service so that it operates between both John Lewis and Waitrose stores.

“It’s about those extra offers you can deliver that encourage the customer [to shop in a physical store]… They can get everything on the web, so when they come into a shop they are looking for an experience, rather than a transaction.”

Pushing the boundaries

It’s clearly in traditional retailers’ best interests to find new ways to drive footfall in stores as part of their multichannel offering. After all, according to research from EY, online sales still make up just 12 per cent of total retail sales in the UK.

Julie Carlyle, Partner and Head of Retail at EY, says: “The question has moved on from asking ‘is the high street dead?’ to ‘what will the high street look like in the future and what purpose will it serve?’. Whether that’s showcasing products in stores, using space to click and collect… [it’s whatever] supports the current retail model.”

Cross-sector partnerships are becoming more important as is the ability to maximise the in-store experience through digital and the use of customer intelligence. Julie continues: “If you look at the fight for the pound spend [in retail], some of that’s coming from hospitality, some from what you would call old-fashioned retail and some from media. And I think there’s a real blurring of the lines between what is actually retail and what are other subsectors, so thinking about who your competition is has become more tricky.”

As new technology becomes available, that all important customer experience can be enriched. Take Apple’s iBeacon app, which goes beyond tracking a smartphone user’s location to estimating their proximity to, for example, a display or checkout counter in a store, in order to offer personalised discounts and special offers to customers.

Peter Williams, Chairman of online-only fashion retailer boohoo.com and former CEO of department store Selfridges, says: “There is no doubt that people like a bargain. And actually, if they’re being given the opportunity to buy something that’s 10 per cent off and the store they’re in just tips them, they may well take it up. So, if you can get the technology right and persuade the consumer that [in-store smartphone tracking] is accepted behaviour, then it might just have some mileage in it.”

Other companies moving in this direction include European property developer Hammersons, which introduced the Kudos loyalty app last year to enhance the multichannel experience for the retailers it houses. Steve Muylle, Professor and Partner at Vlerick Business School, and a Criticaleye Thought Leader, explains: “[Kudos] fires discounts for a meal or a coffee at customers after they were in the store for a while, making them rest and enjoy the break, so that they can continue shopping afterwards. The app also tracks their movement.”

Of course, the use of this technology needs to be carefully judged. Julie comments: “Retailers need to strike a balance between being able to find out data about their customers and guide them in the right direction without inundating them with offers or getting to the stage where customers are actually a bit worried about… [the retailer] knowing everything about them and following them around.”

Hayley Tatum, Senior Vice-President for People at retailer Asda, comments: “Customers just want convenience, which means shopping on their terms, in their way, however it suits them. It’s vital to make sure that physical stores remain relevant to what customers are interested in… whether that’s to browse or meet friends, so it provides a hub, a meeting centre and a purpose for people to visit.”

Ultimately, this is what creates loyalty. As Steve puts it: “Retailers that support the consumer decision journey with the right offline-online combo will certainly have the competitive advantage.”

I hope to see you soon.

Matthew

www.twitter.com/criticaleyeuk

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s