Physical retail is still alive and kicking

The high street isn’t dead. In fact, it is evolving to meet the needs of digitally savvy, price conscious, promiscuous shoppers.
5 June 2018

The internet can’t replace the experience provided by brick and mortar toy stores. Source: Shutterstock

The “reliably dreadful” WHSmith has been voted the worst UK high street retailer, in a Which? survey of over 10,000 shoppers. Clinton Cards, Sports Direct, and Evans and Homebase – Bunnings also fared poorly.

Online enthusiasts would unquestionably flag up these truly depressing brick and mortar outfits as proof positive that the high street is in its death throes.

This is certainly a popular mainstream media narrative at the moment. Undoubtedly, times are tough.

Toys R Us and Maplin have gone into administration, whilst Mothercare, House of Fraser, New Look and Marks and Spencer are struggling.

But the physical retail apocalypse narrative has been overdone. The aforementioned retailers have failed, not the high street.

There are many others that are thriving. The Which? research offers up the examples of Lush, Savers and Smyths Toys.

“The top scorers generally offer something their online rivals can’t: sensory experiences, help with choosing products or first class customer service,” said Which?

Traditional retailers have various advantages over their online rivals.

Whilst many pure-plays like Asos and Boohoo are surging ahead, they are also faced with the challenge of how to extend the customer experience beyond price and convenience.

Omnichannel ventures, meanwhile, can use various channels to build different elements of customer loyalty and personalization. Hence Amazon and Alibaba have launched cashier-less stores, Amazon Go and Futuremart.

But to do so, brick and mortar retailers need to solve both technology and operational challenges, argues Prasit Ghosh, Director, AlixPartners.

“While the technology for delivering loyalty programmes across channels exists and is readily available, most omnichannel retailers still struggle with recognizing customers across devices and channels,” he said.

“Without this ability, the value of a loyalty programme is close to zero and typically results in large physical store portfolios and a host of customers services that add a lot to the cost base and very little to the customer experience.”

With technology challenges resolved, the focus of omnichannel loyalty programmes must be on the consistent delivery of the customer experience, as in most cases, it is the gap between the perception and reality of the shopping experience that destroys customer loyalty.

To address this, retailers can combine omnichannel transactional data with external data sources, like demographics, travel data, social media, post-purchase feedback and customer payments, and build new business models around the gaps.

In an attempt to offer a more consistent customer experience, we already see a trend in retailers trying to integrate vertically.

This means that they not only control the experience of the product and the store, but also the logistics of the delivery and the payment mechanism, and as with the recent example of Burger King’s blockchain loyalty programme, Whoppercoin, even currency.

“It’s in these areas we anticipate seeing more and more experimentation over the next few years as retailers seek to further innovate to maintain competitive advantage,” Ghosh concluded.