The Changing Retail Landscape

The transformation in the process of shopping and shopping behaviour over the last decade has been extraordinary. The growth in online shopping, the changing mind-set of consumers, and the rise of digital and social media has led to a much more fragmented approach to shopping in terms of what, where, how and why people buy. The online possibilities have opened the retail scope to international activity, changing the focus of traditional retail process into a more connected and convenient relationship.

There are many factors which influence the retail sector at global and local levels along with society trends that will have a profound influence on the retail environment, some of the major influences being;

  • The growth in urban population
  • Self-driving cars and the revolutionary impact they will have on all aspects of mobility and transport.
  • Increasing information flow and the role of all types of media

The necessity of ecological sustainable development.

Retailers must stay relevant in relation to the frequently changing habits of the consumer. To do this, they must have extensive knowledge and appreciation of current consumer behaviours and the way to act within this context. The competitive nature and easily interchangeable options that consumers now have has forced retailers to stay relevant in the now, convenience based economy.

Online v’s Offline

Increasingly over the past few years, physical retail has not been able to compete with the personalisation and convenience provided by online shopping.  With access to vast amounts of valuable customer data, online retailers have had a huge advantage over offline retailers.

There is a behaviour change with the rise of the Millennial (born 1981 -1995) and Generation Z (born after 1995) shoppers who prefer to shop in a physical store. Immediate gratification is the main reason for this shift and retailers are responding to this development by creating experience-rich showrooms and, are seeing the impact on sales as result. Many retailers in the United States have reinvented their retail experience by taking customers on a journey through their experience-focused appliance showrooms. Luxury settings have been created for customers to test products by washing dishes, cooking dinner, or taking a shower.

Customers can take a shower at the Pirch home store in New York.                                                Image source: The New York Times

With a similar experience focus, Fang Suo’s Commune in Chengdu, China was voted the World’s Best retail Store in 2013 – with the initial focus to provide much more than a bookstore, it gives the community a gathering space that has 7,000 to 20,000 visitors a day. Fang Suo Commune is a multifunctional space combining a bookstore, cafe, gallery, culture gathering, fashion and design store together in an environment that draws the consumer in but more importantly, it provides the relevant creative space that the consumer needs to feel comfortable. The store focuses on the Life Aesthetics, with a hope to create a commune for creativity lovers. Everything in Fang Suo is made of natural materials, such as wood, bamboo, stone, iron, copper that gives a natural yet aesthetic space, a perfect environment for the consumer relationship to thrive.

Inside the Fang Suo Commune. Image source: iziretail.com

Omni- Channelling

An omnichannel operating model is one where customers are able to interact and transact across all channels and touch points of their preference interchangeably and simultaneously.

The multi-channel experience is what most businesses invest in today. This includes having a website, blog, Facebook, Instagram and Twitter. They use each of these platforms to engage and connect with customers. However, in most cases, the customer still lacks a seamless experience and consistent messaging across each of these channels. You can have outstanding mobile marketing, engaging social media campaigns and a well-designed website. But if they don’t work together, it’s not an effective omni-channel.

Successful omni-channel strategies have three key elements:

  1. Recognition: the identification of individual audience members.
  2. Engagement: a mix of customer facing channels that deliver the best possible customer experience.
  3. Orchestration: the coordinated management of the promotional and transactional customer experience, leveraging a combination of data driven insights.

UK fashion retailer Oasis is an effective user of an omni-channel strategy, this encompasses an ecommerce site, a mobile app, and several brick-and-mortar locations. Oasis effectively unites these separate channels to give people a great shopping experience while also, aligning the consumers with the ‘lifestyle’ of the brand.

Oasis arms its in-store staff with iPads to give shoppers on-the-spot information on product availability. This also allows the staff to ring up customers from anywhere in the shop. And if an item isn’t in-stock, the staff can use their iPads to place ecommerce orders for the customer. A similar service is also available for online shoppers. If an item is sold out online, customers can use Oasis’ “Seek & Send” service where the retailer searches its stores for the product and ships it to the shopper. Once the item is located, Oasis will send an email to notify shoppers and enable them to track their goods.

In addition, Oasis provides convenient (and free) options when it comes to returning items. Aside from letting people ship their items back or return them by heading to any Oasis branch, the retailer also offers easy returns through a service called Collect+ that lets shoppers return purchases through a network over 5,500 drop off points in local stores, including convenient stores and grocery stores, allowing customers to return items outside of the normal 9 to 5 post office hours. This is a vital link between the pure ‘physical’ retail store and the convenient world of online shopping. Providing the consumers with more flexible options, providing more chances to engage and continue the retailer – customer relationship.

Oasis Seek & Send mobile app. Image source Multi Channel Merchant

Technology

The rapid development of technology and the influence that it has had on retail has been traditionally hard to predict. However, current technology is already able to create animated and automated customer experiences. Giant retailer Tesco partnered with Samsung in 2011 to introduce virtual stores on the walls of metro stations and bus stops in South Korea after observing that the typical Seoul commuter did not have the time to shop at their nearest brick-and-mortar Homeplus store. Tesco adapted their stores to the local consumer in an effort that has been a huge success.

A customer using their smart phone to scan the virtual store. Image source: Lildoremi.org

Customers download the Homeplus app into their smartphones and then use their phones to scan the QR codes of the products they want to purchase. The posters in the virtual stores are designed to resemble the actual aisles and shelves of a regular Tesco store, making the experience very user-friendly. Once their order is complete, they pay online and schedule a time for delivery.

Technology in brick-and-mortar stores can be used in various ways to trigger an in-store experience, to appeal to mobile users, to increase convenience for shoppers and employees or to promote a retailer’s brand.

Virtual reality and Augmented reality

These two mediums are a blend of the digital and physical allowing a shopper to shift seamlessly between the two spaces. Augmented reality uses technology and data to create bespoke shopping experiences that recognise every person is different, and with different needs. Cosmetics company Charlotte Tilbury had  a “magic mirror” concept developed which is a virtual makeup selling tool in store that allows users to try on different looks that are digitally superimposed onto their faces in 40 seconds. They can then send the selection of photos to their email address, ready to be referred to later or shared socially. And they then can buy products, available from makeup artists standing nearby.

Magic Mirror in use at a Charlotte Tilbury store. Image: Holition.com

Big Data

There is information everywhere and on such a scale that analysing, correlating and reinterpreting this data has become of critical economic value. Big data is about extracting the meaningful, insightful and useful data that provides value to a customer. New technologies for collecting and analysing these huge bodies of data will help us make sense of our world in ways we are starting to appreciate. For retailers, the use of big data has two sides. One is the opportunity to offer a high quality of customer experience by quickly responding via the right channels on the expectations of its customers. An advantage of this approach is that retailers can personalise these experiences from their knowledge of the customer’s profile. The other side of big data use is the opportunity for retailers to gather and analyse data from web browsing patterns, social media, industry forecasts, existing customer records to predict trends, prepare for demand pinpoint customers, optimise pricing and promotions and monitor real time analytics and results.

Big data application is a digital revolution which is almost unprecedented. For retail it represents a cultural shift in the way that retailers connect with consumers.

These major themes are moving the relationship between retailers and consumers into a ‘lifestyle’ choice instead of being defined purely by physical location to shoppers. Smaller retailers are now able to have a brand and presence online, giving them the reach that would have simply been impossible by relying only on physical stores. Engaging with the customer before and after the sale has also changed the retailer and purchase process. The ability to align customers with the brand, rather than relying on pure quality, price or convenience.

These different areas are now shifting the impact and use that retailers have to engage with the consumer. The ‘retail store’ is also a changed definition, not only are consumers able to visit a physical location, they are now able and expect an experience with many of their purchases. Retail is no longer about a location or a channel. It is about being an adaptive organisation that integrates with customers’ lives in meaningful ways. A highly connected, personalised shopping experience which can only be achieved by having a reliable, scalable and personalised network infrastructure in place to help with the process. Integration and alignment with the brand is not only important, it’s a must.

Stephen Tull

People & Culture

Emma O’Reilly 

Marketing Manager

References

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