Retail has been through a challenging period and many are predicting continuing doom and gloom in the coming months. Yet despite the uncertain political backdrop, I firmly believe retail is entering a new and dynamic era.
The internet has brought about a change in shopping habits and a new breed of consumer – one that has more power. There is more choice, delivery times are quicker, we can shop 24/7 and we have access to a far wider range of products.
Recent research shows that in 2017, 20% of total comparison goods spending in the UK was online (£45bn) and this is forecast to increase to 31% (£103bn) by 2026. However, at 86%, the proportion of comparison goods spending offline will still be significantly larger than online spending. Over the next decade, physical retail will remain the dominant sales channel.
All retailers will be forced to create a point of difference to drive sales. Part of the solution will involve technology. China is leading the field in using AI to enhance the shopping experience. Men’s clothing brand Jack & Jones offers smart clothes recommendations powered by intelligent fitting rooms where a ‘magic mirror’ allows customers to view themselves wearing a range of virtual outfits without having to go and collect the actual items off the peg.
Meanwhile, in the UK, Net-a-Porter is using an AI personal shopper to select clothes for consumers, while Amazon Echo is working with Vogue and GQ customers to offer fashion suggestions based on photos that they upload from their smartphones.
Revising business models
As a result of this constantly evolving technology, retailers must continually revise their business models to keep up. As they do so, they need to understand that consumers no longer think in terms of online versus bricks and mortar – sales from all channels are now intertwined.
Physical retail space brings an element to the shopping experience that cannot be replicated online. We shop with our senses and make many purchasing decisions through this emotional connection.
However, what consumers really value are experiences rather than just material products. Retail and leisure no longer sit independently, which is why at the St Enoch Centre in Glasgow and Telford Shopping Centre in Shropshire, we are introducing concepts that will offer a spectrum of family attractions.
As well as looking at how physical space can be made more experiential, successful retailers will incorporate the internet and technological advances into their operations. Offers such as click and collect boost footfall and according to professional body Revo, up to 60% of click and collect buyers make another purchase on their shopping trip.
Bricks-and-mortar retail is by no means dead in the water. It is important to remember that changes in shopping habits and trends bring opportunities as well as challenges. There are exciting times ahead.
Chris Geaves is chief executive of Sovereign Centros