Revolutionary return from clicks to bricks

Retail occupancy levels are at an all time low as out-of-town centres and online shopping boom. Will bricks and mortar retailing truly be replaced by the online experience, leaving town centres deserted? A new revolution is gaining momentum, writes David Martin – pure play retailers are moving into the physical world

Online retailers are agile due to a relatively flat structure.

Speed to market is much better than traditional retailers. They don’t rely on outdated, siloed legacy systems and processes. They can bring new ideas and technologies for a bricks environment into play much more effectively.
But the biggest difference between etailers and retailers is cultural. Retailers understand how to develop a strong brand through digital channels, even within a bricks environment. It’s about change, constant updating of content and understanding the power of social media.

Why, then, should a pure play etailer even consider moving into physical environments with all the extra costs and challenges that entails? One reason is that clicks retailing needs the bricks experience to really complete the offer, especially when it comes to complex services or niche, luxury and big ticket items.

Instant gratification, impulse, spur of the moment – all need states that drive purchase. Even with same day delivery there’s a delay. But if you’re enticed into a shop, you can get things there and then. Retailers are also renowned for complex return policies, so an easy return policy accessible through a physical environment can benefit the online offer.

Having a physical presence also allows brands and retailers to remain top of mind for consumers while out and about, and encourages impulse buys. NetFlorist, South Africa’s leading online floral and gifting supplier, announced plans earlier this year to open 20 bricks-and-mortar flower markets in major shopping malls. NetFlorist has made a resounding success of online retailing, with 30 per cent year-on-year growth.
The physical flower markets are projected to increase turnover by 100% and greatly increase the company’s customer base.

Their presence will increase profitability by providing better economies of scale and affording NetFlorist the opportunity to share facilities with complementary brands.
The markets will also make NetFlorist’s premium-quality flowers and exclusive products more accessible, particularly to those who prefer not to, or cannot, shop online.
It’s difficult to achieve an online ‘retail therapy’ experience in terms of total immersion of the brand and its products.

There’s nothing like being in a physical environment to satisfy the basic human need to be in places with other people. In early 2012, etail giant Amazon announced plans to open its first physical retail store in Seattle. Its aim is to provide customers with hands-on interaction with its growing line of gadgets. This is a major departure for Amazon, which has thrived by competing aggressively on price with traditional retailers that are saddled with the cost of leasing physical stores.

But Amazon’s line of Kindle devices, and soon to launch smartphones, may sell better if consumers have a chance to try them out first. Stores will help the company to explain how to use these gadgets and provide cross-selling opportunities for other products and services. Amazon’s newly introduced city centre collection lockers in the UK are an innovative bricks solution to etailers’ convenience challenges.

THE BRAND IN THE HAND
A recent survey by Lightspeed found that consumers perceive multichannel retailers with bricks-and-mortar stores to be more reliable and trustworthy than online-only rivals. Buying certain products and services requires big decisions, road-testing, or a more personal and expert reassuring touch. It’s a brave cyclist who buys a new bike without actually testing it out. And what about the anxious first-time parents in need of expert advice when buying a buggy, cot and car seat?

Most people look to a small group of individuals for advice and reassurance, such as friends, family and their doctor. We are starting to see a new generation of brands that act as impartial advisers by coexisting in a single space that offers edited choice, expertise and more reasons to visit and engage.

Lloyds Pharmacy is currently testing a concept that could revolutionise health and wellbeing – the Health Village. Teaming up with a variety of health and wellbeing brand partners, these retail health centres offer a wide range of products and services under one roof. They also offer the Lloyds Pharmacy Online Doctor service – an innovative and discreet in-store online service.

The brand’s community-based philosophy, combined with the expertise and reassurance of its partners, is the perfect way to offer local, personalised, convenient healthcare services. In the US, Target this year joined forces with regional specialist retailers to open shops-in-shops that sell collaborative product ranges specifically aimed at local shoppers’ needs.

Some people have mooted the idea of enticing shoppers back to town centres through local art spaces or community meeting places. Although worthy and well-intentioned, these are just displacement activities. They don’t get to the nub of making bricks-and-mortar retail relevant and engaging enough to give customers more reasons to go back. So what’s in store for the future?

RETAILERS EMBRACE DIGITAL
Traditional retailers have tried to understand in-store customer journeys – shoppers’ missions, mindsets, behaviours and ultimately the path to purchase. All that has changed – different customer journeys are now taking place simultaneously across channels and technologies.

For example, banks of checkouts? Not any more. Superficial product information on flimsy bits of A4 paper? Not very 21st century. Online brands’ love of technology means established in-store retail norms will be replaced by a ‘have a go’, no-barriers approach to the mortar environment. Think digital signage, mobile pay points, music that changes to match the clothes you’re trying on using RFID tags.

Take John Lewis, which recently installed virtual fashion mirrors in its Oxford Street branch. And Apple and Sephora, which are equipping their teams with tablets that act as sales stations and send emailed receipts. In Japan, Citibank has created rooms kitted out with in-branch video technology so customers can talk with a mortgage adviser even if there isn’t one available in the branch. Customers have the reassurance of being in a physical location but can access other experts virtually to instantly fulfil their needs.

Smartphone penetration in the UK has now reached 45% – it’s even higher in the US at 50% and it has more than doubled in Japan in the past year. Converging phone, video, internet, wallet, apps and social media, smartphones are the bridge between
the physical and digital worlds.

Not only will they link shoppers to their friends, bringing them into the browsing and shopping mix, but sales staff will access more knowledge about products and services through smartphones or tablets – supported by videos and digital demonstrations.

Even the tedious chore of queuing to pay will be gone, thanks to near-field contactless technology. Once payments are made, loyalty schemes and vouchers that drive future visits will be delivered digitally.
Major global retailers such as McDonald’s, Subway, Boots and Exxon have adopted contactless payment technology. Because no signature or PIN is required for smaller purchases, consumers are likely to spend more money more often due to the ease of transactions. Mastercard Canada says it has seen about 25% higher spending by users of its PayPass-brand RFID credit cards.

PRICE MATCHING
Gone will be the days when products are cheaper online than in-store, and when customers go to shops to road-test products and then go away and buy them cheaper online after checking out price comparison sites. Retailers will provide transparency and in-store price matching on the spot through mobile or in-store technology.

The shopping environment will be all about experience, rather than stuff. Stuff in all its ranges, sizes, colours and packaging will be available, but will not be main attraction. Apart from all the emotional, rational and functional aspects of making choices and purchases, people also need somewhere to go and hang out.

The food/café offer as part of a retail experience is now a hygiene factor. Events, demonstrations, activities, in-store theatres, bars and gardens are what’s needed. At the end of last year, online bank ING Direct launched its eighth bricks-and-mortar
outlet in New York City’s Union Square. It’s a 17,000 sq ft café. You can’t make a deposit or a withdrawal, but you can grab a cup of coffee, take advantage of the WiFi, and enjoy face time with others. The bottom level of the space allows small business
owners and non-profits to host meetings free of charge, for as many as 50 people.

ING Direct has found that deposits have increased by about 10 per cent in the cities where it has a physical presence. People have become accustomed to shopping on their own terms, deciding where, when and how they want to buy. A brand’s multichannel strategy facilitates this, offering a joined-up experience across all platforms on which it chooses to operate. Etailers have the chance to embrace true multichannel retailing in a way that most high street retailers can only dream about.
With the likes of online retailer Kiddicare acquiring ten Best Buy stores across the UK and reporting a 20% sales lift due to its multichannel strategy, and Amazon recognising the importance of experiencing
its brands in real life, big change is afoot.

ASOS could well be coming soon to a high street near you.

David Martin is joint managing director of retail design agency M Worldwide