Reinventing store portfolios for an omnichannel age
Nearly 650 shops and restaurants, run by a handful of major chains, have shut in the UK since the start of 2018 or are at risk of closure, according to a BBC analysis.
The mainstream media has devoted huge amounts of coverage to the “carnage ravaging Britain’s High Streets”, amid weak sales and rising costs. But this is not the first time bricks and mortar retailers have had their backs against the wall. We saw the same thing back in 2008-9; buoyant pure-plays, high-profile collapses, job losses and so on.
The good results made fewer headlines. And this time around, the likes of Tesco and Primark have flown under the radar. The former is battling back from a tough few years and the latter is being held up by those in the know as the physical retailer defying current convention that online is the answer to all woes.
Nonetheless, there’s no denying that e-tailers – and Amazon in particular – have changed the face of retail. Andy Mulcahy, Strategy and Insight Director, IMRG, recently commented that, if strong e-commerce growth continues throughout 2018, it would be tempting to envisage a new era, where store portfolios are reduced faster under a far more radical programme of consolidation than we have previously seen.
Digital transformation will go high up board agendas and more ‘digital transformation director’ job titles will appear. But what, he asked, does that mean for the High Street? “It’s important to remember that shopping centers have generally performed better than High Streets recently, so it’s not that physical retail spaces can’t work,” he said.
“The question is – if retail were to start again entirely from scratch tomorrow, what would a retailer’s physical space look like? Would they be shops in the traditional sense, using all the space to market stock? Would we actually even create High Streets again?”
I would answer yes to that last question, while also stressing the need to adapt to current trends: lower footfall and customer confidence; increasingly fickle and tech-savvy omnichannel customers; the need for theatre and engagement, which can be achieved by rolling out cutting-edge technologies such as Artificial Intelligence, machine learning, mobile payments and virtual reality.
For the way forward, look no further than Amazon and Alibaba. Amazon Go, the former’s Seattle-based cashier-less convenience store, opened its doors to the public earlier this year. Alibaba recently took the wraps off its own cashierless store, situated at its Hangzhou HQ.
Futuremart sells a range of Alibaba merchandise. Customers use facial recognition to enter the store and scan a QR code with their Taobao, Tmall or Alipay apps so they can shop. A Happy Go meter measures how happy they are, with big smiles earning discounts. Facial recognition and RFID technology at the exit recognise shoppers and the products they want to purchase. Then payment is taken from their Alipay accounts.
Traditional retail will pull through, but only by ramping up technology investment and digital transformation strategies. There will be some new entrants, some big-name departures and some fantastic innovation. The High Street is dead, long live the High Street!