Open all hours: the future of the high street

The current gloom on the high street would have us believe that the future is bleak for physical stores, but retailers are using lateral thinking and innovative digital ideas to create shopping outlets fit for the 21st century.

Tumbleweed rolling through our high streets is a picture some have been quick to predict,” says O2 sales and service director Feilim Mackle. “I don’t believe that will ever be reality. The high street is transforming before our eyes. Technology is opening new doors for retailers and I think the high street of the future will be defined by the digital experiences that make our lives easier.”

The current doom and gloom around the UK’s high streets has many wondering which brand will go into administration next and what the future holds for retailers. But some, like O2’s Mackle, argue this is an exciting time and new channels such as online are an enabler rather than a threat.

Reasons for this optimism are evident in initiatives such as Google’s recent announcements it will be helping retailers to adapt to changing consumer behaviour - invaluable support considering that many of those that have entered administration failed to adapt quickly enough to digital innovations in their field.

Google aims to raise awareness of how people use their smartphones while in stores as well as highlighting its latest tools, such as mapping, video chat functions and how to link online behaviour to offline purchases.

Google country sales director for the UK Peter Fitzgerald says: “Retailers spend a lot of time thinking about how they grow their business by opening new stores and having the right stores in the right place. Yes, stores are very important, but now it’s also about providing a great experience digitally.”

The decline in footfall has been attributed to the rise in consumers shopping from the comfort of their own homes, but online retailer Kiddicare, which initially had one store near its Peterborough headquarters, continues to go against this trend by opening physical stores.

Later this month, the Morrisons-owned retailer is launching a fourth new format store in Rotherham, which involves digital elements such as ordering kiosks and electronic price tags, and plans to open an additional six stores this year, having bought empty Best Buy properties.

Meanwhile, Oak Furniture Land, originally an online brand started by Jason Bannister, who sold £10,000-worth of furniture on eBay for four times that amount, now sells more stock through its bricks-and-mortar stores. Last year, it turned over £85m, not bad for a company that opened its first ‘real’ shop in 2009. Its success is due to sourcing direct and cutting out the middle man ‘at every stage’, he told the Daily Telegraph last week.

Audi is also mixing digital with the traditional showroom experience. Last year it launched a digital showroom - the Audi City project - in London and opened its second in Beijing in January. The new stores enable Audi to showcase its entire range, not just the models in the shop. Customers can select their preferred options from millions of possibilities and see a life-sized version of the vehicle on giant screens. Twenty digital showrooms are planned by 2020 as part of a global project.

Virtual and reality

It’s clear that digital is part of the evolution of the high street but a vital aspect of this change is that staff are needed to complement the technology. Audi UK national sales manager Gary Pearson says that the digital side has to integrate with the customer experience and behaviour. “If you wander into the showroom and people point you to a digital screen or table but you want a lot more, it’s really not adding anything to the brand experience. Customers will see through it quickly.”

Audi City staff are divided between the hosts, who have been recruited from retail brands such as John Lewis and Apple, and traditional sales people who take over from the host once the consumer indicates an intent to purchase a product. This is intended to maximise the customer experience (see Q&A).

Mobile technology is bringing together the best of both online and offline retail to improve customer experience

Staff knowledge is one of the reasons why Kiddicare has developed a physical presence. With certain of its products there can be health and safety concerns, for example with car seats and push chairs, and having people to explain and demonstrate is an invaluable asset.

“Our staff are well trained and understand the different aspects of the products and elements of safety,” says Paul Allen, multichannel programme director at Kiddicare.

Employees are also given training on the new technology for up to 10 weeks before the store opens and they specialise to ensure their knowledge is not spread too thin.

Technology, he says, is beneficial for speeding up processes so that staff can focus on customer service. Electronic price tags, for example, mean staff are not re-pricing items on a daily basis.

Brands providing specialist staff along with new technology in-store could stave off the trend in ‘showrooming’, where consumers browse in-store but buy online, potentially from another retailer. Andy Mulcahy, head of communications at IMRG, the UK’s industry association for e-tail, believes the trend “throws down the gauntlet for customer service”.

He says: “In the recent past, we tended to train shop assistants as till operators who were not required to have a great deal of product knowledge. I expect to see a return to assistants who really understand what they are selling. Offering that kind of experience is a bit more difficult to do online.”

Olivier Ropars, senior director of mobile at eBay, also believes that “retailers with a high street presence have a significant advantage over pure online retailers, as consumers can experience the products, get advice from knowledgeable staff and purchase what they desire instantly with no shipping costs.”

He says: “The use of mobile technology is bringing together the best of both online and offline retail, to improve customer experience and give more reasons for consumers to visit stores.”

He cites large-scale retailers that are using technology on mobile phones for consumers to find their way around stores, apps to scan products and access product information such as compatibility, warranty and stock availability. He adds that some are offering self-checkout through mobile phones so that consumers do not have to queue to pay in store.

Getting consumers into a store, rather than purely researching and buying online, is the first step but repeat visits and purchase is essential for the high street to survive. There are many ideas suggested by innovative companies, some of which have become a reality. These range from mobile apps to alternative click and collect options.

For example, a South Korean chain of convenience stores developed its smartphone app to encourage people to return to its stores and also alleviated the issue of wasted food. The store created a virtual ‘refrigerator’ for its app where customers who bought a buy-one-get-one-free promotion could delay taking the free item by putting it in their virtual refrigerator to pick up another day.

Another example is ByBox, which started off delivering parts for field engineers overnight to its collection of 600 lockers across the UK. The company then moved into retail by offering an alternative delivery location for consumers shopping online. The company has worked with 30 companies including brands from the JD Williams group, which include Marisota, and online lingerie retailer Figleaves.

It is also looking at ways to encourage people back on to high streets. Last December, ByBox installed a locker in the centre of Abingdon, Oxfordshire, where those collecting their parcels were sent an offer to spend at a nearby retailer.

“If you collect something in the morning, on the screen on the locker it will ask you, say, if you want a cappuccino for £1 and it sends a code to your phone,” says Stuart Miller, ByBox co-founder and chief executive. “The system [has that mobile number] anyway as it is where the PIN code for the locker is sent. It’s early days, but the aim is to get people back on the high street, spending with local retailers.”

Filling vacant space

The trend in click and collect fully emerged at the end of last year with John Lewis and Argos leading the way. IMRG’s Mulcahy says there are other opportunities for this, suggesting that vacant retail space could be used for click and collect or to enable people to try on items and return if they are not suitable.

For example, if someone ordered an item in three colours, a separate click-and-collect store could dedicate space for them to try those items on, with staff on hand to help people and return unwanted goods, alleviating the returns process in online shopping.

Finding an alternative way to use retail can also provide consumers with variety on the high street. Ministry of Stories, a London-based children’s charity that helps 8- to 18-year-olds with literacy, operates from the Hoxton Street Monster Supplies shop and can be found behind a secret door in the store. (See case study) It is a symbiotic relationship: the shop helps raise funds for the charity while the writing centre provides literature to sell in the shop.

Such is the power of the high street that Barnardo’s is using its retail space to change perceptions of its charity shops. Girls Aloud singer and the charity’s celebrity ambassador Nicola Roberts launched a new Barnardo’s store in Manchester last August to better compete with big-name retailers such as H&M and River Island. Stock is presented in a different way so that it appeals to shoppers accustomed to high street brands.

Barnardo’s director of retail and trading Gerard Cousins says: “The store challenges the old stigmas and perceptions of charity retail. All retailers have their own individual customer profiles and it seems to make sense to play to their strengths and provide these customers with the shopping experience they are looking for.”

The future of retail shows a heavy emphasis on the customer experience and evidence suggests there is a demand for this. Research published last week by Oracle Retail shows 74 per cent of UK consumers (71 per cent globally) use brand reputation as a source of information when choosing a retailer. The Evolution of Experience Retailing, which looks at a UK sample of more than 500 consumers and 3,500 globally, aged between 18 and 60, also shows that 71 per cent of UK consumers (70 per cent globally) value advice from friends and family whereas 43 per cent (42 per cent globally) value information provided by the retailer.

Service in the spotlight

Since good reputation and recommendation come from providing great service as well as advertising and brand messages, retailers are right to emphasise the experience of the customer as well as brand marketing messages. If service does not meet the standards or needs of the consumer, the study shows it has direct implications. More than half of those surveyed would actively recommend not going to a retailer, 63 per cent expect money back or a gift and just under half would never go back.

The future of the high street lies in service and adapting the offering according to what consumers want and how they shop, so that it works with other channels rather than competing with them.

Whether it is digital screens and kiosks in stores, with staff on hand offering personalised shopping experiences or enabling purchases in-store via mobile, knowing how consumers shop will enable retailers to understand what is required to survive.

Mackle at O2 says: “In today’s ever-changing digital world, big data has the potential to unlock benefits for consumers and growth opportunities for businesses. But many consumers don’t see the benefits of sharing personal information. Businesses and retailers need to demonstrate the benefits of them providing such data and use this to ultimately improve customer experience.”

Catherine Thomas, head of marketing at commercial property company Land Securities, which has a large retail estate, warns retailers to listen closely to consumers and adapt quickly. “Retailers have much greater licence than before to try new ideas that are backed by quantifiable customer insight. It’s a great opportunity that those retailers which are holding on to and growing their market share are taking advantage of.”

Retail statistics

  • UK retail sales values were up 1.9 per cent from January 2012, when they were down 0.3 per cent on the preceding year.*
  • Total sales were up 3 per cent against a 2.1 per cent rise in January 2012. This is the highest total sales growth since September 2012 and like-for-like sales growth for 13 months.*
  • Online sales were up 10.1 per cent over January 2012, when they had risen by 11.3 per cent.*
  • Three nations/regions reported an increase in footfall, including the West Midlands (10 per cent), Scotland (6.2 per cent) and Greater London (3.1 per cent).†
  • The UK town centre vacancy rate was 11.3 per cent in October 2012 (high streets and shopping centres), the highest figure since the Monitor began in July 2011. †
  • Northern Ireland (20 per cent), Wales (15.1 per cent) and the North & Yorkshire (14.6 per cent) had the highest vacancy rates. †

*Source: BRC-KPMG Retail Sales Monitor, January 2013
†Source: BRC/Springboard Footfall & Vacancies Monitor

Readers' comments (9)

  • It is pretty clear that physical retailers have to undergo a metamorphosis if they want to win the competition with their super- agile online counter parties whose business model has its own indisputable benefits (no real-estate costs or inventory). Nonetheless, the consumer still values the offline shopping experience and this is where physical retailers have to improve and invest. Technology plays a key role in creative a narrative in-store and bridging the online and offline worlds. I've developed this idea a bit more in an article ''Save the physical store from extinction'' http://www.digitalsignage.net/2013/02/08/digital-signage-physical-retail/

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  • The digital evangelists keep on telling us that the future of retail is online. No it's not. It offers a vital additional channel, but for the overwhelming majority of consumers, the overhwelming majority of their purchases will continue to be in shops. Why? because shops are fundamentally 'fit for purpose', they satisfy the sensory urges in a way that digital distributors can't. Online is no longer 'cheapest'. Its USP over bricks 'n mortar is browsing huge ranges in one place.
    A big probelm for digital merchants is that they're carpet bombing consumers with their communications, most of the clutter left unread or are direced to the junk folder. Going forward, the motto 'less is more' has to be applied.
    Consumers don't understand how divulging more data about themselves is a 'good thing'. It's about trust. And at a time when most digital merchants use the channel as an opportunity to distance themselves from their customers, or direct them to an Indian call centre, I'm afraid this dissolves any trust.

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  • Why do digital stores do so well? Convenience. They are open 24 hours a day. Good online retailers get purchases to you within 2 days. They also offer the ability to track purchases. Some purchases - you really do not need to see in order to make a purchase decision. This is why I did all my Christmas shopping with Amazon this year. To compete, physical retailers also need to think convenience. They need to adopt a rich blend digital (in store and out of store) with physical, so that opening times/availability of stock/staff's product knowledge etc. all work together to create a superior customer experience.

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  • There is a big differentiation between high street and out of town retail parks. High street will definitely continue to suffer and I think only certain sectors have the opportunity to survive in the high street and the rest will falter. I don't see how improved customer service will change that either. The combination of the growth of the likes of Tesco and online shopping will mean physical stores will see less and less footfall. Out of town retail parks seem to be OK currently because consumers see them as a place to go, they tend to have a coffee outlet, and importantly there is parking. All these factors make visiting the high street redundant, and hence why more and more of them are becoming a row of charity shops, estate agents and takeaways.

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  • It will be exciting to see who picks up and maximises on these opportunities. Having well-trained knowledgable staff (who know about the products they are selling) on the store front has proven to be a challenge for many retailers, never mind staff who can assist with new technology use. Marks and Spencers provides a great example of this - in store last week my wife noticed all the interactive touch screens, and no one using them! M&S are good with customer service but they haven't managed to reduce the queues or improve the service with technology in-store yet, lets' watch this space.

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  • At a time when high street retailers are seeking innovative ways to drive footfall and coupon redemption is growing, it is perhaps surprising that many retailers cannot yet redeem digital coupons.

    As these coupons can be accessed on mobile devices, the issuer can target the consumer on the move wherever they are. The chances of the coupon being misplaced or forgotten also decrease as consumers are likely to have their handset with them most of the time.

    However, even though digital coupons represent an effective way to drive sales, at present the process of redemption in-store is not as simple as it should be. For example, for coupons stored on a mobile device, there is currently no standard for transactions of coupons at the till or any other method of transferring coupon data efficiently and consistently to the Electronic Point of Sale system. There are currently many different variants of systems that can be adopted and this needs to become consolidated to provide greater clarity for retailers. To address this, retailers need to act fast and work with solution providers to agree a standard that can be adopted by the industry.

    Ultimately, consumers need to be given a choice in format. While mobile coupons tap into the trend towards increased smart phone usage, many still prefer options such as loyalty card, print at home or mass printed coupons. For retailers to really feel the benefit, all forms of coupons need to be securely redeemable at the till.

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  • It's way too easy to put all retail challenges in the physical vs. digital basket. Yes, some (ultimately badly run) retail businesses have folded during the recession - but so have a number of businesses from other industries. To that extent, why draw parallels between car show-rooms and convenience stores? It's too simplistic to suggest that the future of shopping or high street retail will be driven by technology (whether that is online, mobile or in-store). Ultimately, the future of the high street will be dependent on consumer (or shopper) demand. And consumers will always want to have the opportunity to satisfy immediate demands, not browse endlessly before waiting for a delivery. Tesco knows this, and that's why they have doubled the number of stores they have in the UK, and the increase in physical retail sales outstrips the growth in online shopping. The challenge for retailers (and brands sold through retail) is to keep their physical retail offer in line with how people shop, which can mean simple, insightful changes to their business, not just putting all of their eggs in the basket of unproven technology.

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  • The main problem with the high street is that B@M premises are subjected to over priced greed on business rates from councils. The high streets are dead, as well as paying high rental rates along with the business rates, then take the tax into consideration the independent has a deficit like no other to battle. It's not like starbucks where they can offset there tax here in the UK so they don't pay anything, an independent trying to live doesnt get that chance. The councils need to start profiting from high parking charges and bring business rates down. I know a great landlord who has been fantastic in reducing and working with small business owners but yet the council refuse to reverse business rates despite 25% of the town centre shops being empty... When will the government step in to really make a change and do something about it!

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  • I am trying to put some business back into a local high street where there are shops closing down. The council remains reluctant to accept my request an drather than prioritising and speeding up a plananing decison decides to go through the motions of its procedures which is a great reason why people are detered from reviving the igh street. not enoug is being done by the local council's because they do not see the importance of time and money, as they are paid regualarly on a salary.

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