Retail Insider held its latest Breakfast Event this week with Gillian Drakeford, country manager for UK & Ireland at IKEA, and Bertrand Bodson, chief digital officer at Home Retail Group, who discussed the future of the physical store.
Senior executives from John Lewis, The White Stuff, TM Lewin, The Entertainer, Cook and Farfetch were among those gathered to hear how these two major retailers are adapting their store-based businesses to deliver value in an increasingly digital world.
He described how the company has developed around 60 digital stores, which have tablets instead of laminated catalogues and service counters combined with till points. Argos has also been experimenting with smaller stores – at as little as 650 sq ft in Cannon Street Tube station versus the regular 15,000 sq ft – and taking space in some Sainsbury’s as well as its Homebase outlets.
This need to re-engineer the use of physical space is also recognised by Drakeford who revealed much experimentation was taking place at IKEA and that the UK was at the centre of its digital investigations.
“The UK is the transformational pilot. We’ve only 18 stores and so the customers say we are not accessible so it’s clear to us we need to build a portfolio of stores but with a multi-channel approach because there are now opportunities to think about new formats and different touch-points,” she says.
Highlighting how things have changed, Drakeford says as many as 30% of goods are now delivered to customer’s homes and that such changes are driving a different way in which consumers use the physical IKEA stores: “We want to improve the store experience as there are now a lot of things customers can do online.”
It has therefore been looking at how it can add value to the experience through holding events in-store such as sharing home furnishing knowledge and there is a big opportunity to build out the food category. In the UK it accounts for 6% of sales and Drakeford says it could be more like the 10% level that is has reached in other developed markets.
Such changes are leading IKEA to consider adapting the fulfilment and warehousing aspect of its business and a hub-and-spoke type system is up for discussion. This is certainly being taken seriously by Argos that has assigned 150 of its stores in the UK as hubs and it distributes goods from these units to spoke stores (including smaller outlets) to help it fulfil click & collect orders more efficiently.
Such a beneficial use of its stores base has enabled it to ensure goods ordered online before 1pm are available for collection at a store of the customer’s choice by 4pm. And orders before midnight will be available first thing the next morning.
While both Bodson and Drakeford highlighted some of the challenges involved in making their stores a coherent part of their digital strategies it was clear that there is a great advantage in them having a physical presence and they are working hard to leverage this asset to the full.
Retail Insider would very much like to thank Bertrand Bodson and Gillian Drakeford as well as the sponsors PCMS Group, Bond Dickinson, and K3 Retail. Without their much appreciated this event would not have been possible.