February 18th, 2016 Customer Experience and the Retail Store of the Future By Dominic Stinton

It doesn’t take an eagle eye to see that the high street and physical store itself are changing. The ROI on traditional high street stores has significantly decreased in the last 10 years; the killer combination of large shopping malls (think Westfield etc.) and ecommerce mean the viability of large stores has significantly diminished.

With that said, High St shops aren’t going anywhere fast, and there are signs that some pure play ecommerce brands in the US are investing in bricks and mortar to create brand engagement, as a reaction to the spiralling costs of doing business online via expensive Search campaigns etc.

However, there are definite trends emerging in regard to High St shopping behaviour:

• New tendency to shop all hours
• More frequent smaller shops, rather than a single large weekend shop
• Consumer lifestyle changes (work, rest, play) altering how people perceive their free time, social activities and disposable income
• Advent of click-and-collect, reserve-and-collect, has increased the need for smaller ‘metro’ style shops

The high street has also transformed from a purposeful shopping trip into a social leisure trip, mixed with top-up shopping tendencies.  As part of this, the High St is also becoming a centre for health and wellbeing.  As consumers continue to become more aware than ever of looking after physical and mental health (especially millennials, who value their physical appearance more than ever), spas and beauty services are starting to emerge in the High St, and also as concessions within some traditional retailers.

Moving further into consumer needs, there will be several consumer-oriented forces driving retail in the next years:

Personalisation: “Make my shopping experience contextual and relevant”

In 2015 survey at least 50% customers claimed to expect retailers to provide a personalised service.  As this expectation grows retailers will have no choice; in fact the tipping point has been reached already. The concept of ‘use my name‘ is a major step change for many retailers – overcoming silo’d customer information data stores to deliver a consistent message to the customer, which is done so on first name terms and based on intimate knowledge shared by the customer.

Yet as data becomes the modern day currency most sought-after in the economy, consumers may become more sensitive, less forthcoming with data, and anonymity may become commonplace.  Therefore behavioural analytics will be paramount.  Being able to personalise brand experiences based on understanding behavioural brand interaction patterns pumped through sophisticated learning and algorithms will be a necessity.

Convenience: “Make my life easier, simpler and hassle free.”

In a fast moving society, obsessed with ‘time maximisation’, providing convenience and ease of shopping will be critical to every retailer.  The concept of anywhere, anyhow, anytime will become commonplace customer expectation.  We will see an overhaul of customer journeys.  More ways to order, collect, view physical goods and in what is not necessarily the ‘traditional’ store of today, will be imperative; coupled with new enabling technology to facilitate the speed of buying (e.g. voice activated / gesture driven), and payment (e.g. mobile payments, virtual currency) elements of the customer journey will be the norm by 2020.

Today we already see the Internet Of Things both interwoven and intervening within our purchasing journeys, from watches that enable simple re-ordering facilities through to connected washing machines managing replenishment their washing powder – much in the same way retailers have successfully done in their own supply chain.

The purchasing journey will also start and end in different places and may not be a single customer /single brand relationship. Brand collaboration will become more commonplace, fulfilling complete end-to-end journeys.  Enabled by technology and data sharing, intelligent physical products will drive customers lifestyles e.g. health monitoring products identifying a customer’s need for certain vitamins, which will be directly linked to purchasing options.  Another example might see intelligent vitamin boxes recording consumption, providing reminders and automatic re-ordering

Experience: “Make my shopping experience fun, social and pleasurable / delightful.”

With greater transparency and instant access to price and alternative products and product quality information, retailers will require a new differentiator – the battleground will become Customer Experience.  From digital online research through to post-purchase engagement, brand experience and associated net promoter score will be fundamental to future success.

We will see more and more concierge-like engagement, using ‘clientelling’, VIP-like appointments, and product / service personalisation, all aimed at delivering a lasting memory.

In addition to these behavioural changes, these are our top 6 trends to look out for as the retail store leans into the future:

1. Shop as mobile website, mobile website as shop
For a younger generation, they will have grown up with an integrated view of shopping – they won’t distinguish between on and offline shopping. The one constant for them will be their smartphone – so retailers that properly embrace mobile’s central role in their marketing, will succeed. And mobiles will play a role instore too, as beacons and other smart device technologies are steadily rolled out. Most importantly, mobiles will become the dominant interface between retailers and their customers, and will create personalised, memorable services that save people time, find them the best offers, and make their shopping experience more memorable.

2. From a tyranny of choice, to storytelling and themes
The tyranny of choice is being challenged by retailers like Aldi and Lidl (where a store will have on average 3000 SKUs, versus 300,000 in Tesco) and online retailers like Amazon, which have become proficient at proposing tailored, relevant offers. And the craft revolution in food and beer has led to a proliferation of specialist, niche retailers making healthy profits. So less will become more, at least as far as the customer/retailer interface is concerned. With more shopping going online, this will affect what product offline retailers carry; perhaps shops will become show rooms for innovation and will be measured against more brand-centric objectives than present. Some retailers are even turning over their space to create interactive experiences, which are more about storytelling than they are commerce

3. Local community and identity
People are becoming bored of identi-kit High Sts dominated by the same old brands, with the same old refits. They now want to see retailers blend in with their historical settings, creating unique bricks and mortar experiences that celebrate localism, instead of stamping it out. No one knows this more than Tesco, which has really suffered in recent years and met much opposition to its tyrannical approach to high st takeovers. A brand that behaves in the opposite fashion is Byron Burgers – each restaurant feels unique, and celebrates its locations and locality. This will also represent a challenge from a technological infrastructure perspective; technology and local identity will need to be complementary and seamless.

4. Understanding browsing and research needs
Like most brands, retailers will need to get better at understanding the browsing and research phases of the customer journey, and not just acquisition. This will also apply to post-purchase. To this end, retailers will need to help consumers during these phases, both on and offline. This will also mean an end to all-pervasive sales activities which currently dominate most retailers’ visual merchandising, both on and offline. It will also mean integrating user reviews more fully in store, so that customers can readily access what other people think about products when they pick them up.

5. Employee and customer affiliate marketing
Brands are starting to look to their own customers or even staff as discrete retail ‘channels’, not only providing them with the tools to share content with their networks, but actually allowing them to provide differential pricing and offers to friends, and rewarding them accordingly. Whilst this isn’t new (Tupperware and Ann Summers parties spring to mind) technology can allow this to happen at scale.

6. Harness your retail marketing with big talked about events
Retailers are using digital channels to better connect big, talked-about real world events with their immediate commercial plans, no more so than the fashion industry; London Fashion Week for example has seen brands hugely ramping up their ability to bring new looks and trends more quickly to their customers, via Twitter and contextual advertising platforms.

The net of all this is that we’ve never lived in a more exciting era for shopping than we do right now. The combination of better experiences, personalised needs being met, and retailers disrupting the traditional retailer-consumer contract, means that retailers that embrace new ideas and business models with relish, rather than fear and intractability, will be best placed to succeed in the future.