2018 is already proving a tough year for retail. British institutions Toys R Us and Maplin plunged into administration earlier this year and Debenhams, Mothercare and Carpetright have all issued serious profit warnings. However, while undoubtedly a number of brands continue to struggle, brick-and-mortar retail is not dead.
The great shift that retailers must come to terms with is that they can no longer rely on footfall to drive their business. Instead, they need to actively attract shoppers to their stores.
The three great drivers to attract people into stores is convenience, price and experience. But when competing with e-commerce brands, convenience and price can be a tough battle, with home deliveries and cheaper unit rental off the high-street. Experience presents the greatest opportunity for brick-and-mortar retailers to re-establish their relevance and attractiveness to consumers.
Just as e-commerce pioneers provide exceptional online consumer experiences, experiential retailers are reinventing the in-store experience. These experiences must attract and delight, address the rational and emotional needs of the consumer, and deliver memorable engagement throughout the shopping journey.
The types of experiences that retailers are choosing to invest in can be grouped into four main categories: convenient, communal, curated and immersive. For the most successful retailers, deciding on which of these experiences to prioritise and how to connect them typically evolves out of an intimate understanding of the consumer journey and an acknowledgment of the overall brand value proposition. So, which do you choose?
The consumer’s interest in experiences follows a traditional hierarchy of need. As such, before offering sensory experiences designed to wow and delight, retailers must first address unwanted friction and inconvenience in the shopping journey. Many retailers have been experimenting with digital technologies, including smart sensors, facial recognition, computer vision and machine learning to remove checkout delays, make it easier to find items, reduce the wait times when returning items or pick up online orders.
Earlier this year, Amazon set the bar for frictionless retail when it announced a new humanless grocery concept, Amazon Go, where consumers can walk in, pick up items and leave without going to the checkout. By using the same technology as self-driving cars - including image-analysis technology that identifies people and objects in their field of view - this new concept store detects when items are taken from and returned to shelves and tracks them in a virtual cart.
Frictionless retail will soon become a customer expectation, with consumers demanding a combination of mobile point of sale, checkout-free technology, virtual shopping assistants, “buy online and pick up in store” kiosks, subscription services, auto-replenishment, pop-up stores and more.
One way in which brick-and-mortar retailers have sought to attract experience-focused consumers is by tapping into the post-modern, tribal need to connect to a larger cause, social network or affinity group. By re-imagining the retail experience as a place for igniting real-world connections in an increasingly digital world, retailers are turning physical stores into destinations for gatherings of loyal consumers who align themselves to particular causes, interest groups or cultural distinctions. From charming hybrid retail cafes that inspire interaction between consumers, to shopping mall fitness facilities, to idyllic retail lifestyle villages that encourage shoppers to linger, there are plenty of examples of community-focused concepts that speak to the modern function of retail spaces.
Proliferation of choice is a defining characteristic of post-industrial societies, both in terms of the number of decisions we must make every day and the number of options to choose from. And psychologists widely agree that this proliferation of choice can equally lead to negative states, including regret, dissatisfaction, decision-paralysis, indisposition and a feeling of oversaturation.
Against this backdrop, the future of retail will not be about having a large variety of products, as it has been in the past; rather, it will involve winning over consumers with thoughtful curation of products and experiences. Retailers have an opportunity to help break down, guide and inform the consumer decision process, and in so doing, make the buying experience simpler, more relevant and more enjoyable.
For many retailers, the concept has become synonymous with a careful selection or tailored assortment of products that share a common theme or message. But this only scratches the surface of the emerging opportunity. In the broader sense, product curation is about storytelling, editorialising and conveyance. Retailers need to tell the story of the selected products, explain why they were selected, and what meaning or value they provide, either individually or as a combined set – connecting with consumers through themes, imagery and stories.
Immersive experiences relate to a broad range of consumer-centric experiences intended to surprise, delight and wow the consumer. These experiences range from immersive and interactive displays, leveraging augmented reality (AR) and virtual reality (VR), to personalise content and pop-up shops, all offered in a unique environment emphasising newness and impeccable service.
Whether its Zara’s in-store AR experience, where shoppers use their mobile phones to see models wearing selected fashions, or cosmetics retailer Sephora’s mobile app, called “Virtual Artist,” which enables users to digitally experiment with different lipstick shades, eyeshadows and false lashes, these interactive and immersive in-store experiences are meant to create a more engaging and entertaining retail experience.
Experience is the new frontier or retail
For all the undeniable advantages of digital commerce, it will never completely replace in-store shopping. Study after study has shown that the majority of consumers still want to be able to touch, feel and test the product before completing a transaction. Instead, it is a question of who in, not whether, brick-and-mortar retail survives.
The next frontier of retail will be personalised, contextual, sensitive, adaptive and responsive. Technology will play an essential role in enhancing the in-store experience, and seamlessly integrate online and offline experiences in a way that creates lasting memories.
Scott Clarke, Chief Digital Officer and Global Consulting Leader, Retail, Consumer Goods, Travel and Hospitality, Cognizant
Image source: Shutterstock/Olesia Bilkei