“The Chinese use two brush strokes to write the word crisis, one brush stroke stands for danger; the other opportunity. In a crisis, we need to be aware of the danger but recognise the opportunity.” John F Kennedy’s words could not be more true for the retail sector.
Despite the well-documented threats to retail from e-tailing, increasing challenges brought on by CVAs and seismic changes in consumer behaviour, there are clear opportunities emerging to help boost revenue and revitalise the consumer experience.
While the main threat has been the digital revolution, many retailers and consumers still prize the personal service offered by a physical store. But digital competition has arisen not just from the likes of Amazon; retailers’ online and offline channels are often in direct rivalry. To succeed in this digital age, retailers have to make their online and offline offers complementary, embracing a number of channels to deliver the highest service across all platforms.
New opportunities are emerging, particularly in the form of click & collect. For example, one third of New Look’s online sales are now collected in store. Click & collect’s growth is expected to outstrip that of online retail, with sales set to rise 55.6% to £9.6bn by 2022.
Capitalising on this dynamic will bring traditional retailers a wealth of opportunities. Research by The Wall Street Journal found that 50% of customers now opt for in-store pick-up and 45% of these buy something else during their trip. This potential for upselling is a significant opportunity.
Shipping options that streamline retailers’ logistics, like click & collect, are key to alleviating the costs of returns and exchanges. By letting customers check size and colour, while upselling, stores can cut logistical costs as well as selling more, while offering highly valued flexibility.
Consumers can be driven towards click & collect by incentivising this option over home delivery, providing a free service and the convenience of any-time collection. As on-demand consumer culture has fed the desire for one-day delivery, high-speed services such as Amazon Prime have increased traffic flow and contributed to extra emissions. Click & collect can also help reduce this carbon footprint as stores revert to centralised distribution hubs, while still providing the convenience of same-day collection.
The consumer experience is an increasingly important part of the retail puzzle, especially when looking to capitalise on click & collect. In-store collection should be seen as a core business activity, with a focus on experience and potential to add value. Selfridges, for example, offers 30 minutes’ free parking for collecting customers. Other retailers focus on increasing customer dwell time, offering an enhanced experience with wine tastings and yoga. This recognises the continued appeal of interaction, which must be embraced as a 21st-century opportunity.
“50% of customers now opt for in-store pick-up and 45% of these buy something else during their trip - this potential for upselling is significant”
Collection areas could be adapted into an Ikea-type journey, encouraging spontaneous purchases. Click & collect could be more of an experience with refreshments on tap or activities on offer. In the not-so-distant future, technology could drive this experience, with the internet of things and AI creating a personalised journey for customers.
Retail tech is striving towards personalisation, with consumers creating and controlling their shopping experience. For example, Samsung’s new King’s Cross store will focus on the customer experience, bringing cutting-edge technology to life - a destination, not just a ‘shop’.
Click & collect offers an opportunity for property owners and operators to work together towards modernisation, curating physical store space, technology and product placement to enhance the customer journey. A collaborative approach with coherent omni-channelling will be a key determinant of success, separating winners and losers in an increasingly competitive market.
Bill Hughes is head of Legal & General Investment Management – Real Assets
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