What does the future of retail hold?
The Covid-19 pandemic lockdown has been a test of endurance for retailers. Nationwide lockdown prompted major retail chains like Oasis & Warehouse, Laura Ashley, Debenhams, BrightHouse and Cath Kidston to file for administration, while the ever-resilient John Lewis Partnership’s chairwoman Sharon White this week warned that some of their department stores may not reopen after lockdown restrictions are lifted.
“Retailers are going to need to provide shoppers with more reasons than ever to visit shops, and crucially in the immediate term, give them the confidence to be in stores by making social safety a priority,” said Simon Hathaway, managing director of shopper agency Outform. At Swarm, we couldn’t agree more. We believe that retail has been on the cusp of a revolution for many years as brands juggle with online and offline stores. The recent pandemic and associated changes to consumer behaviour has turbocharged the need for evolution - not only to evolve from the challenges, but to survive.
We’re exploring some of the core values for consumers and how retailers, particularly in the physical world, can successfully transition from the Middle Ages to Modernity whilst keeping the spark alive between shop and customer.
After months of purchasing without personal interactions, consumers have become accustomed to this hands-off approach to shopping. To entice these consumers back into a store, retailers must offer a renewed focus on valuable customer interactions providing a unique in-store experience and enhanced service offering alongside tangible products. While many customers may be craving human, personalised and tactile experiences, retailers and consumers alike still hold valid concerns about health and safety and continue to follow government guidance. See how MAC Cosmetics have adopted augmented reality to sustain their personalised service, enabling customers to ‘try on’ various products via virtual overlays and live videos, before making a purchase. Retailers using AR have seen a 19% spike in customer engagement in the wake of coronavirus and those customers engaging with AR have also increased their conversion rates by up to 90% versus those that don’t. This should come as no surprise seeing as customers haven’t been able to see, touch, or feel any items in recent months, making them more open to trying new experiences, such as 3D and AR, that give them the confidence to buy.
The scarcity of products and lack of in-store variety has driven many consumers to try new brands, switching due to proximity, availability, and health considerations. This has caused many shoppers to break their tried and tested consumer habits - perhaps opting for cheaper and more convenient products and services or purchasing from disruptors to the traditional retail experience, such as Amazon, Facebook Marketplace and Ebay. Luxury brands with tactile products will have experienced a marked change in consumer habits, as the brand discovery experienced through the demonstration of quality and provenance of a product is challenging to adapt to a digital experience. This threat to traditional brand loyalty and adoption means that many brands will have to embark on winning back customers and prove their value once again. It’s important to reinforce the core values and show that the brand is adapting to the changing consumer needs, new retail landscape and is offering a unique shopping experience.
Marriage of E-Commerce and Health & Safety
Health and safety concerns have never been more important in public environments - as stores and workplace reopen - retailers have a duty of care to protect both customers and employees from contracting or spreading COVID-19. In an increasingly health-conscious and convenience-driven world, businesses who have adopted the use of touch-free automation in their warehouses and stores will have a clear competitive advantage as they pose a lower risk to all store visitors.
Health concerns aren’t the only thing driving in-store innovation. Demand for the online retail experience has soared in recent years, with buyers becoming accustomed to a quick, efficient path to purchase and a world of choice, not limited by location. Retailers should see this as an opportunity to transform physical stores into a showcase space where shoppers can explore as freely as they do online. Zara executed this model effectively in 2018 with their pop-up store in Westfield Stratford to continue trading whilst their 2-story shop was refitted. Shifting away from traditional bricks and mortar locations and into a hybrid physical/digital experience means that driving in-store experiences will be critical in order to attract customers and differentiate from competitors.
Technology has been vital to the smooth running of many businesses during the COVID-19 pandemic, and has the potential to elevate retail experiences and cater to changing customer needs, way beyond the special circumstances of the pandemic. Many retailers, particularly those in Asia who have bounced back from the pandemic, have accelerated their adoption of automation systems for not only convenience but also health and safety purposes - limiting contact between humans. BingoBox, the unmanned convenience store concept, has already opened over 500 locations and is growing fast.
We also see that traditional digital signage for stores will experience an uptick in demand with the development of dynamic digital displays which are in-line with the need for stores to provide more self-serve information to customers. Prior to the pandemic, customers would naturally speak with salespeople, or place orders in person, however, in compliance with new social interaction guidelines, customers will rely on more live, displayed information and more technologies to understand and interact with businesses and services. Examples include; providing live inventory visibility and relevant promotional messages to enhance the customer experience and to also manage store capacity, which is particularly relevant given possible supply limitations and staff shortages due to COVID-19 recovery strategies.
Alternatives to tactile technologies such as gesture control, voice activation or facial recognition may also begin to emerge as the desire for interactivity and customised experience continue to grow, despite the hiatus in usual shopper experiences. At Swarm, we believe that the customer journey should be front and centre for any activation, therefore - if new technologies are promising touch-free, personalised services, but the user experience has not been fully developed - the experience will fall flat - underwhelming the customer, and undermining the brand message. As the capabilities of data capture and analytics become increasingly richer for understanding consumer behaviour and planning strategic activities, we hope that the methods of interacting will also evolve to match.
Partnerships with disruptors in the industry can lead to the sharing of technology and expertise; Morrison’s recently increased its home delivery capabilities through Deliveroo and Amazon, and Costcutter teamed up with Compass to open stores in hospitals.
As retail emerges from the world of lockdown and social distancing measures, we will see a renewed ardour for experience and personalisation in the live retail environment. From creating experiences to reignite brand relationships to enabling ‘touch-free’ interactions and creating blended digital/physical experiences through technology and partnerships, the shopper experience will never be the same again - evolving at a rapid pace. Customers who are reentering the retail space deserve to be reminded about the emotional connection between brand and customer and should be wowed and rewarded in equal measure to reinforce the thrill of the shopping experience.