24 Feb 2014

The Future Of Retail Stores

Electronic stores that look like nightclubs, in-store innovations such as endless digital aisles and information rich phone apps or tablets on the sales floor. This is a world where buzz words include – Personalisation, Visual Curation and Social Interaction and if you don’t jump on to the new world order – you are going to be left far behind.

The premonition that online would signal the death of the retail store has actually breathed new life into an industry where game changers soon realised that the convenience and competitive pricing of online could only go so far.

The art of shopping has always been a social ritual of our society. In store events, pop-up stores at festivals and social curation can create the connection and experience that deliver consumers the biggest addictive hit. Shopping should be fun, playful, theatrical – an ideal often employed by large overseas department stores such as GaleriesLafayette or Selfridges, who use celebrities, in-store events, fashion and art shows to entice customers into stores.

Department store Myer has now adopted this tactic by quadrupling its budget for events this year and recently hosted a VIP designer shopping night with live music for the enjoyment of its biggest spending clientele. Bernie Brookes, Myer’s chief executive spoke of their vision for the future         

“We want to get theatre back into stores. There is no doubt the more we can do of that the better”.

We are also seeing massive showroom interactive events. This concept has been embraced by retailer Winning Group, in Sydney, offering hosted events & cooking demonstrations with high profile celebrity chefs. Retailers who offer in-store events drive traffic in-store and now with the growing trend of pop-up stores, they have the opportunity to take their brand to any location or event.

Doug Stephens, CEO and founder of Retail Prophet said it best when he urged retailers to, “Stop thinking about channels. Think about moments. Online technology offers your consumers the opportunity to buy your product in any moment. Your physical store, meanwhile, offers your customers experiences and moments to fall in love with your brand”.

Social Interaction

This craving for an experience or connection can also be catered to online by adding personalisation, social network layering and curation capabilities to your site. Pinterest, a visual scrapbooking tool where users ‘pin’ images, follow other uses with like-minded style and create their own collections, is already used by many brands to showcase products and connect them with potential consumers. The online marketplace is now copying these visual curation and social layering tools in their own sites.

Within the next 12 months – eBay in Australia will offer users the ability to collate visual collections and also follow other users. Retail experts will also curate collections and an Editorial Director will select and publish a daily eBay Today news page. This curation will help users navigate through a huge catalogue of 100 million live listings. Their goal is to make the eBay site much more social.

Social Media is about marketing, collecting and distributing information and getting a better understanding of your customers – rather than e-commerce. It is also about customer service with research showing that one in five Australians has made a complaint via Facebook or another social media channel and one in ten has used social media to request advice. Leading brands will respond to customer comments within the hour.

Social behaviour is changing – steered by technology, changing demographics and a globalised economy. You are no longer just selling – you are interacting and engaging with your customers, conversing with them and offering them an experience that keeps them coming back for your brand either on line or in-store.

Participation and Personalisation

Personalisation is getting your consumer to participate – one online store leading the way is Australian based Shoes of Prey – which gives consumers the option to design their own shoes from a choice of templates on their site, see other people’s designs and share their creation through social media such as Facebook & Twitter.

Consumers want something special and unique – which has led to the popularity of marketplaces for handmade items such as Etsy. Visual sites with strong communities and curation features are offering many different designs for many objects – people are getting more educated in their choices and are expecting a higher level of design.

There is also rise of giving as social currency seen in the success of collaborative consumption businesses like  Airbnb and car-sharing club GoGet. Retailers are now getting involved in crowdfunding  sites like Kickstarter and Pozible to launch new products.

TimRayner the co-founder of consultancy Philosophy for Change explains why retailers should engage in these sites to launch new products. “When you are using crowd-funding and taking part in campaigns on Kickstarter, you’re also feeling like you’re part of a social event. Part of what people find enjoyable is that you are contributing to a movement to create a product or make something happen and there’s an additional layer of personal satisfaction that comes from that”, he said.

The Rise of the Visual

Adelaide based Thereitis has developed technology that creates the illusion of a 3D collection, letting users zoom in and scroll through numerous items from different angles. Interactive and intuitive it aims to replicate an in-store experience, which gives lots of choices, colour and products – meaning you might find something else catches your eye other than the intended product and ultimately buy more. Their stats show that 50% of web traffic in Australia is now mobile or tablet – which means retailers have a smaller display to present images and can struggle to get enough items on view.

Video is becoming a major tool and investment for online stores. Retailers such as North Face and REI demonstrate their products in live action – you can see people wearing their gear hiking up in the mountains or producing mini TV shows where you can click a button onscreen to purchase what you see someone wearing.

The high usage of mobile visitors means retailers can also now use the provided geo-location details to tailor particular offers to particular local customers.

Its true in the future, purchase and distribution will be the main focus of online, where as stores should be more focused on ‘distributing experiences’ – instead of just taking something – you are making or experiencing something.

Toronto based Sport Chek’s, concept store blends the  physical and digital experience with the use of  140 display screens in store allowing customers to play with products, request product samples, access live twitter reviews as well as design and order their own custom designed Reebok shoes.

In the retail store of tomorrow, Tech is front and centre – with the integration of online characteristics such as endless digital aisles and information rich phone apps or tablets in-store.

Cloud based technologies will provide sales staff and shoppers product info and reviews as well as help buyers tailor store inventory to suit customer demand.

The widespread use of Smartphone’s has accelerated consumer access to information and products. Today’s consumer expects to get anything they want, at any time, from anywhere they are.

One retailer stepping up to meet those expectations is Kate Spade in New York, offering consumers digital windows  in store that display products on a large touch screen monitor through which customers browse and select items to purchase with the benefit of having it  delivered to them anywhere in the city in an hour – 24 hrs a day.

The world is getting smaller…

International retail giants may continue to land on Australian shores but experts predict that retail exports will boom from $5 to $16 billion in 5 years time. Online retail is looking more and more lucrative with a predicted 44million US shoppers interested in buying direct from Australia retailers by 2018.

The future is not just about online but a combination of the two channels meaning retailers will need to captivate and drive traffic from both.

In recent years bricks and mortar retailers have added e-commerce sites – now we are seeing the reverse as online retailers open up pop-up stores.  The online/offline boundaries are blurring, consumers are switching between the two channels constantly

Today’s consumer may practice  “show-rooming”  where they view products in store and then purchase later online then  next change their strategy  to “web-rooming” – researching desired products on line and then heading in store to buy. Retailers need to cater for both these preferences – they both have a significant impact – no matter what trend tends to be greater.

Inventory Management is Key

All offline inventories should be available online – this is where a lot of retailers need to step up. Retailers must have an integrated strategy for online and offline inventory – there should be one single logistics strategy to enable options like ‘click and collect’, meaning a customer purchases online but can pick up in store. In the US, Target is now offering this service as well as being successfully employed by JohnLewis in the UK. In future we may see retailers add comfortable lounge like seating areas where customers wait to pick up their products and more food & drink Kiosks being set up in-store.

Consumers will always be drawn to the “instant ownership” factor. Amazon just can never compete with a customer who thinks ‘well I can drive there and pick it up now’– the store will still win. The younger, more tech savvy generation will demand unlimited options forcing retailers to enhance the immediacy of physical retail with a magnified digital experience. Staff & in-store technology will be wired to offer up information at the touch of a button all in a highly stylised atmosphere seeming more like a destination or club.

POS System Integration Imperative

To achieve the efficiencies needed to be profitable in this new world of retail, the technology platforms underpinning the In-Store and Online businesses must be integrated, and here-in lays a significant challenge for retailers.  A recent survey by Forbes magazine identified 72% of CIO’s (of tier one retailers in the US) plan to change their POS and retail technology in the coming 18 months, as a direct result of existing systems not being up to the task of present date requirements.

Retail Express offers end-to-end Retail Operating Software, complete with powerful eCommerce integration. For more information, visit www.retailexpress.com.au or call 1300 732 618.

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