The future of physical retail stores

store open signMy Sunday morning exercise regime used to involve, wearing activewear and donning a pair of runners to walk up Oxford Street in Sydney. Admittedly the extent of my cardio workout would be going in and out of shops, trying on different items. It was the same for Bridge Road in Melbourne and most Westfield Shopping Centres. Wandering through the boutiques of small-to-medium sized retailers can count as legitimate exercise (especially when you include all the jumping involved with trying on skinny jeans). However while many high-street hubs are being overwhelmed with ‘for lease’ signs, there are still a few small to medium sized retailers realising the potential of a seamless online to offline customer experience. 

The battle of online versus offline shopping experiences is not new. According to research by AT Kearney, online will account for or influence 59 per cent of retail purchases by 2018 even though 94 per cent of total retail sales (including grocery) is still generated through bricks-and-mortar stores. Bain & Co in 2017, also predicted that 75 per cent of sales will still be occurring in a physical location by 2025. While large, big-box retailers are already looking at the ways to integrate online and offline, how can small-to-medium boutiques use a physical presence, that they might already have or look to invest in, to also leverage an omnichannel experience?

Physical to online stores should be seamless

For those with stores, offering ‘click and collect’ – that is the ability to purchase online and pickup from your store at the customer’s convenience – is a must. However be warned, ‘click and collect’ will not be a significant revenue stream, rather it will close the loop of the customer’s experience with you and decrease likelihood of cart abandonment. In a report by Visual Website Optimizer, 28 per cent of shoppers will abandon their shopping cart if presented with unexpected shipping costs – offering ‘click and collect’ is the lowest cost method to offer ‘free shipping’.

Key to implementing ‘click and collect’ is an integrated Point of Sale (POS) and inventory management system across all stores and online. Too many Australian companies have seen the online trend, then ring-fenced inventory for just online and as such, divide their business. If you go into a store, and the shop assistant has to call another store to check if an item is available, that retailer is already failing. Every retailer should take the time to stocktake, centralise inventory management and stores should be able to view real-time availability of products in other stores via an online inventory management system. The implication of not having a real-time sync of inventory, means that products can be sold out instore but show as ‘available’ online, leading to a poor customer experience who buys the product then is told ‘sorry we’re actually out of stock’. The lack of ability to offer a real-time inventory check by store and online, holds many retailers back from having an offline to online seamless experience (not to mention benefiting from the efficiency of better inventory management). 

Beacons to light up customer phones

Another potential technology use from your store presence and better inventory management could be to use beacons. Beacons are low-energy Bluetooth devices that emit a signal that can interact with a mobile device. It is a physical device that many larger retailers are currently testing to see if it can drive foot traffic within shopping centres. For example a customer can be walking in or near your store and receive a notification on their mobile that for the next 30 mins, they get 20 per cent off any purchase.

However use of beacons is limited, given the user must download a specific app and enable notifications – two actions which may render beacon adoption into QR code territory. The concept of enticing customers through their mobiles when in the same locality is something to be explored. While it might not be a driver of revenue, even providing reminders for ‘click and collect’ when near the shop, or weekly shopping list reminders when near a supermarket, could compliment the customer experience.

Instore experiences build brand reputation

The trend of offline to online goes both ways. Increasingly, pureplay online retailers are establishing a physical presence – GlamCorner, Mon Purse, Warby Parker to name a few. The fact is, a physical presence reaches a new customer base and builds credibility. In research conducted by Whisbi, 55 per cent of online shoppers would prefer to purchase from a retailer with a physical presence. Stores still matter. But now there is an opportunity to use a store to build or enhance your brand’s reputation – create inspiring, Instagrammable experiences. For example on the side of Westfield they have a colourful angel wings mural – beautiful, yes, but also perfectly positioned for someone to have a ‘photo with wings’, post to social media and have [email protected] in the background of all these photos. You can use your store to localise your brand to the area. Use pop-up shops to test product in different market demographics, or create urgency and natural traffic to your online store.

Amazon Go, the cashier-less grocery store, is another example of innovating the physical store to build reputation. The current beta version has launched only in Seattle, and uses cameras to detect movement and a customer’s smartphone to register payment. While full functionality might be delayed, Amazon Go is an excellent example of offline/online seamless interaction.

While a physical store might not be a big driver of revenue in the future, it still is an opportunity to connect your brand directly with customers, put your products in their hands. If you have access to a store presence, think about how everything from store layout to shop assistants can be consistent with your online experience and encourage further purchasing.

Arani Satgunaseelan is a principal consultant at ADP & Co, a management consultancy specialising in strategy and analytics for the retail sector. Arani can be contacted at [email protected].

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Comments

2 comments

  1. Michael Baker posted on May 4, 2017

    Arani, thanks for the thought-provoking commentary. It raises so many questions. I think click-and-collect is way oversold, particularly by retailers looking to put the responsibility/costs for delivery back onto consumers. I've heard a lot of reasons why click-and-collect is a good thing but all of them sound like excuses. One thing click-and-collect does do is get consumers off the hook with Australia Post, an organisation whose consummate skill at delivering 'sorry-you-were-out-please-drop-by-the-post-office-after-3pm cards foists on shoppers an unexpected form of click-and-collect anyway. Other technologies, including beacons, have terrific potential, and please Lord make sure that the technologies are directed toward removing pain points rather than adding 'vibrancy' to the shopping experience with things like mobile marketing. If I ever need to get a message on my mobile phone from a retailer 'reminding me' that I have a click-and-collect in the area - it's time to shoot me. reply

  2. Dave posted on May 5, 2017

    "If the shop assistant has to call another store to check if an item is available, that retailer is already failing." If a there is not a shop assistant to call another to sight an item a customer is looking for then the retailer has failed. Click and collect has dangerous connotations in serving the retailer before the customer not to mention the exorbitant costs that will certainly be in incurred with a half-baked concept logistical reply

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