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The Future of Retail Innovation
24TH JANUARY 2019
It’s no secret that the U.K.’s high street stores have been through some challenging times. In the past 12 months, a string of big names have gone out of business (with more predicted). The pound weakened, the “Beast from the East” cold spell shut stores, and the impact of the apprenticeship levy were also factors.
But compounding these has been another challenge in and of itself: the ability to transform fast enough to keep up with rapidly changing shopping habits.
Ambitious retailers must do two things in 2019 if they are to thrive:
- Understand the new and emerging behaviours of their customers.
- Use those insights to create innovative experiences that blend the very best of the physical and digital worlds.
New Customer Behaviours
There is mounting evidence that consumer behaviour is dividing into two modes of shopping: “chore” and “cherish.”
We go chore shopping to purchase commodities, and we expect our experiences to be as convenient and frictionless as possible. But chore shopping isn’t just about one-tap purchases and same-day delivery. Research suggests that convenience shopping would drive U.S. consumers into stores as younger people used physical locations as “product playgrounds.”
Cherish shopping describes the more experiential side of retail, centred around in-store product discovery and socialising with others. Recent research commissioned by Property Week shows that while people are shopping less regularly in-store, their time spent in-store is about the same. At the same time, retail spend has increased 4.6%, and catering spend (food and beverages) is up by 8.8%, indicating how people are choosing to spend their time and money on shopping trips that include experiences such as dining and drinking.
Adapting to this new bimodal behaviour could be tough for some. However, I believe it represents an opportunity because, in my experience, the marketplaces under the most pressure are those that would benefit most from divergent thinking and disruptive innovation.
Innovative Customer Experiences
Retailers that will thrive in tomorrow’s marketplace will use these new customer insights to guide investment into creating stellar “phygital” experiences–those that seamlessly blend the very best of physical and digital worlds.
Here are three areas that retailers should be considering:
1. Increase Footfall Through Digital Channels
Businesses should be experimenting with new ways of turning physical stores into acquisition channels, raising brand awareness, and bringing new customers into the fold. “Click and collect" is one such strategy. Some 42% of European consumers used this type of service in 2017, and 24% of them made spontaneous in-store purchases while collecting.
Argos, whose store is represented by a catalogue, is seeking to take advantage of this growing trend by becoming the first UK retailer to offer a voice-shopping service on Google’s Home speaker. The retailer has built a voice user interface enabling customers to search a range of 20,000 products, check availability, and arrange same-day collection.
2. Create Engaging Phygital Experiences
Stores aren’t just channels for moving products. They also can be used to strengthen shoppers’ relationships with a brand and its products. For example, Lolli & Pops’ “Magic Makers” program uses AI-enhanced analytics to recognise opted-in loyalty members in real time as they enter a store. Employees can greet them by name, deliver a personalised experience, and make powerful product suggestions.
3. Seamlessly Integrating Back And Front Offices
Given the pressure to reduce margins, retailers are increasingly looking to robots to automate labour-intensive processes. So it’s no surprise that we’ve seen the arrival of Spyce, a robotic kitchen that sautées hot meals in three minutes. In the kitchen of this Boston-based startup, machines perform the routine work of cleaning, washing, and cooking. This allows staff to focus on arguably the most human aspect of retail customer engagement–hospitality. This is a great example of humans and machines coming together to co-serve a next-generation service for customers.
Despite the challenges of 2018, the high street is not going anywhere, and the future looks bright for those retailers that can respond rapidly to the needs of their customers. But one thing is clear: For businesses that aspire to thrive in the coming years, staying stagnant is not an option. As ever, adaptability is the key to survival.