‘New Look may close 100 stores’ ran the headline in the Financial Times recently, highlighting an increasingly common story of major retail chains off-loading stores as the internet continues to impact on revenues from their physical units.
Just one of numerous store closure headlines.
But it would be far too simplistic to think that rationalising store estates is the catch-all solution for every retailer. We are in an increasingly multi-channel world and there has to be a major re-appraisal of the role that stores now play in cross-channel shopping experiences.
Ten, or maybe even five years ago, the store portfolio for the majority of retailers could be managed as a distinct entity, with decisions on design and ranging being made according to store location and customer segmentation. Today the store is just one of the channels and such decisions need to be made by retailers from the viewpoint of the varying roles the store plays in a multi-channel estate. It would be a costly mistake to think that we can continue as we have always done so, with just a bit of tweaking, or to believe that the answer is just shutting stores.
The demands on a store can be very different depending on the category and whether customers have a need to visit outlets for brand, service and product familiarisation or whether their need for physical contact is low. Where the latter is the case, stores can still play a valuable role in hosting Click & Collect-type services. Argos has seen rapid growth in Click & Collect sales because of the benefit to customers of online ordering matched to freedom to collect from store when it suits.
Vital component of any multi-channel retailer.
Although a range of other “dropbox” solutions are emerging, direct pickup from store has advantages for customers who can get any queries or issues addressed immediately. We should expect to see more Click & Collect-only stores in the portfolio, like those being opened by House of Fraser.
For other categories where expert advice is as much a part of the shopping experience as feeling and trying out the products, the store has an altogether different role. This is why the likes of online-only retailer Wiggle plan to add stores to the mix. As a bike retailer these will be monster-sized stores housing a huge range of products and will particularly appeal to first-time buyers who need educating and require a personal service that pure play online retailers cannot provide.
There is a further important role of stores in projecting the brand values and allowing customers to familiarise themselves with the offer prior to moving to online ordering. Clothing is an example of this, where customers will become familiar with brand, size and fit in-store and then order online, but with the confidence that it is easy to return products to store if they want to. This change in behaviour is reflected in the increasing online dominance of multichannel retailers at the expense of pure-plays.
The successful multi-channel brands will be those with store estates that are designed to reflect the multiple roles that stores will play for customers, where they can start their shopping experience in one channel and move between channels with ease, supported by technology. For example, using the likes of mobile QR codes, kiosks and iPads along with cutting-edge initiatives such as the ‘magic mirror’ employed in N. Brown’s trial Simply Be stores.
Simply Be: recognising the new role of the store.
This is a great example of in-store and on-line integration. The magic mirror takes photos of customers wearing their selected clothes in the changing room and lets them send these to their friends via the likes of Facebook, for instant feedback. Many of these emerging technology solutions will be allowing customers to bring the responsiveness and personalisation of the virtual online world to their physical shopping experience.
Even today, youngsters toting smart-phones in-store should not be seen as disengaged with a retailers’ proposition. It could be quite the opposite, as these internet natives increasingly blur the channels by using technology to enhance their in-store experience. Offering free wi-fi in-store is a first step for retailers to embrace the changing role of the store.
A failure to recognise how these new technologies are affecting the customer shopping journey and how the physical outlet’s role is therefore changing will likely lead to more, potentially unnecessary, store closure headlines. Stores will change in size and purpose and play multiple cross-channel roles, but will remain an essential part of the retailer’s strategy.
Sue Grist is owner of consultancy Egremont Group