Retail commerce | Retail
December 07, 2015
You don't need to be an expert to know that retail has undergone sweeping changes during the past decade, thanks to ecommerce, mobile, and other technological and media advances. But you might not know how your business can best take advantage of these changes, even if you don't have the deep pockets of a Wal-Mart, an Amazon, or an Argos.
Consultancy Retail Economics outlined the most important of these changes in its white paper "Ten Trends That Are Changing the Landscape of the UK Retail Sector"—and as you'll see below, these trends aren't specific to the UK.
Retail Economics calls this "consumer 2.0." Basically it's down to consumers having more information at their fingertips—literally—than ever before, thanks to the Internet and mobile. Shoppers can compare prices, check product reviews, and search for offers while walking down a store's aisles or waiting to be served. This has given rise to showrooming, the bane of many a smaller retailer: A store owner might spend a half-hour walking a shopper through the pros and cons of a half-dozen refrigerator models, only to have the shopper finally settle on the one that best suits his needs—and then search on his smartphone for a retailer that can offer it cheaper.
Some larger retail chains are combating this by offering lowest-price guarantees: agreeing to meet the lowest price of any competitor. This margin-eroding proposition is a costly one, however. Other ways to try to fight it are to provide less expensive value adds, from free installation and service for a year to discounts on future purchases to gifts with purchase.
This ties in directly with consumer empowerment. Retail Economics cites a study by Deloitte indicating that 35% of UK shoppers are using click-and-collect services, so that they can order something on their mobile and pick it up at the nearest store later that day—a figure that's expected to exceed 70% by 2017. "The movement toward 'en route' shopping will be supported by smartphone usage," according to Retail Economics, "and the demand for collection points strategically located in travel hubs such as underground stations, out-of-town retail complexes, and easy-to-reach high streets will increase."
How do you drag shoppers away from the comfort of their homes, where they can click and buy while lounging in their pajamas over a cup of tea, and into a store? By making stores entertaining in a way that websites can't be. In-store fashion shows, product demos, classes and workshops, even a special area for kids—such efforts not only enable physical stores to one-up ecommerce, but they also allow retailers to distinguish themselves from their competitors.
New spaces and new markets.
"The old model of investing in stores to grow market share is well and truly dead," according to Retail Economics. Retailers are of course looking to ecommerce to expand their reach, both domestically and abroad, but other options include concession retailing, or stores within other stores: Think the Apple Watch shop within London's Selfridges department store, CVS drugstores within Target stores, and Mini Boden and Topshop shops within Nordstrom department stores.
Pop-up shops and seasonal kiosks are another option. For years retailers with a highly seasonal business, such as food gifts merchant Hickory Farms in the U.S., rented mall kiosks only during Christmas or other prime selling seasons. Pop-up shops can also help promote a product launch or a special tie-in.
Self-checkout, equipping store staff with tablets so that they can help customers research and order items not in stock at that particular shop, and in-store terminals where shoppers can access the store's website themselves are just a few examples.
Co-creation and mass personalisation.
Retailers have long strived to offer a personalised, one-to-one experience. Now, in response to consumer demand, some are looking to offer personalised merchandise as well. This goes beyond the old standby of monogrammed items. The potential provided by 3-D printing is only now being explored. Retail Economics cites a recent joint venture of toy manufacturer Hasbro and 3-D printing company Shapeways, "whereby selected artists will create unique versions of trademarked Hasbro designs, which fans can then order and Shapeways will print."
Big data and continuous computing.
This one's pretty much a no-brainer—but even smaller retailers can (and should) take advantage of the insights data can provide. The more information you can capture about your customers, prospects, and potential audience, and the more you can slice and dice that information, the better you can target your marketing, merchandising, service, and just about every other element of your business to capture buyers and share of wallet. Though of course you already knew this!
The power of platforms.
In what is now called the sharing economy, "everything is for sale from everyone," as Retail Economics puts it. "Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider, owns no real estate." What that means to retailers is that the physical store is no longer the sole, or even prime, platform for selling goods to customers—tying in neatly to the earlier point that opening more physical stores to gain greater market share is no longer certain to deliver results. Likewise, even if you have your own online store, you shouldn't dismiss the thought of selling via an online marketplace such as eBay, Amazon, Newegg, or Shoply out of hand.
Thanks to mobile devices, people can—and do—shop anywhere, anytime. Make sure your business allows them to do so with mobile-friendly options.
We already mentioned the growing importance of big data. So it stands to reason that who owns and safeguards said data would become more important too. There are two aspects to this. First, consumers are more likely to provide data to companies they trust. Second, governments will continue to scrutinise the way organisations protect data from being hacked and stolen, as well as how data are shared.