If you look at the news headlines, you may end up forming a gloomy picture of the state of retail.
Right now, around 16 high street shops are closing every day in the UK. In the US, the past several years have seen some huge bankruptcies, such as 125-year-old retail stalwart Sears and legendary international toy warehouse Toys R Us.
However, these closures actually come amid a bullish international retail market. In the US, retail sales increased 0.7% from July, defeating gloomy market predictions. Cross the oceans to China and this pattern is repeated, with retail sales forecasted to grow 3.5% in 2019.
In other words, despite the bankruptcies, the retail market is in a healthy state. Consumers are still keen to go in-store, with research from 2018 suggesting almost all (96%) US internet users continue to visit shops to buy clothing, shoes and accessories.
The issue that has afflicted the subjects of most headline-grabbing bankruptcies and closures is not consumer interest, but obsolete experience. The impersonal experiences that large retail stores have traditionally offered is no longer to consumers’ tastes – and in order to ensure they aren’t the subject of the next dismal headline, retailers must be ready to transform.
The future of retail is all about experience
Commodity goods lend themselves to being sold online. Why go to a store that merely presents shelves of products if the treatment offers nothing over the online shopping experience? When customers visit the high street, they must be presented with something different. They need to be engaged and excited. Retail stores must become destinations – not simply places where a consumer can buy goods.
This is crucial, as one in three consumers (32%) says they will walk away from a brand they love after just one bad experience, while 42% would pay more for a friendly and welcoming experience. Meanwhile, 73% of customers point to experience as an important factor in their purchasing decisions, while 65% find a positive experience more influential than great advertising. Delivering a better retail experience encourages customers to return, boosting revenue and long-term profit. The in-store experience is therefore essential to shoring up the future of high street retailers.
Rachel Schechtman, founder of New York concept store Story, put it nicely when she said, “There is a solid chance that you can be using square footage more productively. We don’t need another retailer selling jeans and black pants, unless they bring a point of view and an experience that no one else has.”
But bringing this point of view requires an entirely new way of thinking.
Embracing an experiential approach
To take full advantage of the opportunities that creating shopping experiences can offer, the shopper must be central to the planning of retail campaigns. Planning should not start with the product to be sold, but with what will turn the customer’s head. Where do they like to spend their time, and why do they like spending their time there? If you weren’t selling anything at all, why would they want to come to the shop in the first place?
Thinking in this fashion is the foundation for truly shopper-centric retail. However, with years of best practice pushing retailers in other directions, it can be hard to switch to such an approach.
A greater challenge still is gathering insights on the shopper in the first place. Retail campaign planning
and execution is often fragmented, with online businesses separated from physical stores, and brand teams distinct from retail teams. A lack of data exchange between these teams is detrimental to the substance of any customer insights drawn.
To gain a holistic picture of the shopper, a retailer must understand what is and isn’t engaging them – both on the website and in the store. Data must be drawn from the entire shopper journey. Quantitative data such as sales numbers and shop footfall should be combined with qualitative data such as how they respond to in-store marketing materials.
This joined-up insight can be crafted into a detailed shopper persona that forms the basis of a truly appealing shopper experience. Moreover, with a single view of data delivering insight on what is and isn’t working for the shopper, the retailer will be in a stronger position to adapt and optimise campaigns in real time.
Many retailers are already enjoying the benefits of this customer-centric way of thinking. Iconic retail brands such as Nike, Apple and Costco continue to prosper, despite relying heavily on bricks-and-mortar.
One fitting example comes from technology giant Samsung, which overhauled a handful of its customer care centres in the US to double as remote working spaces. Partnering with co-working space WeWork, three pilot locations were opened in Detroit, Miami and Williamsburg, offering customers a workspace complete with video conferencing systems so they could stay productive while waiting for their devices to be repaired.
Nike opened a new five-storey retail store in New York City last year which offered a mini indoor basketball court, a treadmill, a system that simulates runs in different locations, a small soccer enclosure, a shoe bar where shoppers can personalise their Nike trainers and coaches who put customers through drills to test out different pairs of shoes.
To transform the shopping experience in such a way is no mean feat. It lives on having access to joined-up insights based on data from customers’ online and offline lives, plus a creative approach to converting such insights into engaging, relevant new shopper experiences.
One route to tackling the challenge is to collaborate with a partner that understands both the hard and soft sides of retail: that can manage the data flows, turn them into actionable insights, and has a network of creative partners that can conceptualise, design and build cutting-edge, effective and trackable retail experiences.
By understanding the entire journey a shopper makes, and using that understanding to underpin experiences that play to the strengths of physical shopping environments, the transformation from transactional to experiential retail becomes possible. It’s clear that many retailers need to make just such a transformation if they are to avoid becoming the next high street headline.