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The high street: phoenix from the ashes

On my travels recently to a conference in The Netherlands the founder and CEO of a major electrical retailer BAS Group suggested merchants without physical stores do not have a future.

The inference being that the pure-plays out there need to get themselves a bricks and mortar presence – and quickly. If he is right – and many people think so – then what a turnaround this represents.

It is not too long ago that the pure-play model was seen as the way to go. It was deemed to be lean, cost efficient, operationally advantageous, and involved no messy physical stores with their ludicrously long leases. Dealing with employees on the shop floor was also a thing of the past.

There was also no need to be shipping goods from warehouses to stores – and back again if they didn’t sell. In some cases such as with eBay, Alibaba, and Amazon’s Marketplace the online-only operators didn’t even have to dirty their hands touching physical stock.

But things have taken a turn in favour of the physical store. They have made a return on the back of giving retailers a presence and profile in the market, an opportunity to service customers to a high standard, and providing instant gratification.

Stores also enable retailers to give that personal touch, which simply cannot be conveyed online. Personalisation online is an algorithm, whereas in the physical store it might be recognising that the customer is over 70 years old and helping them carry their goods to the checkout.

Such has been the reassessment of stores that the online-only players have been looking to graft on physical space such as the eBay tie-up with Argos for collection in stores, Amazon has set up lockers, and deals have been done with the likes of Collect+ and Doddle.

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Bringing physical attributes to virtual shopping

With this new found recognition of the role of the store there is now a need for retailers to follow the John Lewis road of retailing with super engaged, super informed employees. Store visits need to be a memorable experience.

The challenge here is that shoppers are now more connected and knowledgeable than the sales assistants. There is therefore a need to enhance their capabilities through technology – equipping them with tablets, and mobile Points-of-sale maybe.

Such devices enable retailers to do much more than just sell goods. They help create improved engagement that keeps the customers coming back for more. The technology companies (Apple and Google included) have done a superb job of creating ‘eco-systems’ that effectively ‘lock-in’ customers and create a strong bond/loyalty.

Amazon Prime is a component of the online behemoth’s eco-system and its free video streaming component has been a big draw for young shoppers in the US. It has resulted in 50% of teenagers in the States now buying goods on Amazon compared with only 30% before streaming was a part of the Prime offer. It is clear evidence of a move away from pure selling sites like eBay.

Multi-channel retailers need to create similar ways of keeping shoppers returning to the ‘store’. Rich content is one way. Marks & Spencer has taken this route with its new website and it has created more than just an online selling experience.

Combining rich experiences online with the physical store estate is where the multi-channel retailers have their big opportunity against pure-plays. It’s not easy by any means but at least they are no longer dealing with a store estate that was previously seen as a millstone around their necks. They are now an asset of great value. It could just be the future in fact.

Guy (online only)Guy Chiswick, Managing Director, Webloyalty Northern Europe (@webloyalty_Guy)