The Future of the High-Street Shopping Experience
With e-commerce now accounting for nearly one fifth of the UK’s total retail sales (Statista, 2020), one of the biggest challenges that high-street retailers have faced in recent years is the loss of popularity among consumers, in favour of online shopping. This has led to worries about the future of brick-and-mortar stores as due to declining footfall and sales, we are seeing well-known shops closing down and businesses going into administration. Most recently Debenhams and Arcadia Group who own Topshop, Topman, Miss Selfridge, Evans and more have gone into administration. Research undertaken by ABC Finance in 2018 found that customers aren’t finding value in the high-street anymore and 38% of people surveyed stated that they do most or all of their shopping online.
The COVID-19 pandemic has only exacerbated the problems that high-street retailers are facing. Due to lockdown, store closures and rapid changes in consumer behaviour, customers more than ever are becoming comfortable and competent with online ordering and at home delivery.
The old model for retail relied heavily on driving consumers down the purchase funnel into physical stores to purchase goods, however brick-and-mortar stores are no longer the final point in the purchase funnel. Instead, brick-and-mortar stores now provide a space where brands can physically draw consumers into their brand story, provide an immersive brand and product experience, and ultimately strengthen their relationship with their customers, which can then live across multiple buying channels. A report written by the Centre for Retail Research showed that what people actually want from their high-street visit is a more social and experience-driven outing. Bill Grimsey, author of the Build Back Better report, argues the pandemic is “the perfect opportunity to repair the high street’s neglected social fabric” through a renewed focus on community. An example of brands utilising their high-street retail space to foster community is outdoor clothing brand Patagonia. Pre-Covid, Patagonia planned to use their flagship store in Bristol as a hub for activist and outdoor sports communities in the city, as well as to host regular community events such as film screenings, public talks and to feature work from local artists.
Even before the COVID-19 pandemic, we saw large high-street retailers slowly moving away from transaction-based environments to experience-led environments. Brands are redefining the role that their physical stores play in consumers lives. Phygital is taking the best parts of the digital retail experience such as immediacy, immersion and speedand pairing it with the experience that you get from a physical brick-and-mortar store such as the opportunity to interact with people and the product. Phygital experiences are being implemented in-store to help design frictionless customer journeys, to better satisfy a more demanding and hyper-connected consumer. An example of this is Zara's flagship store in Westfield, Stratford, which was the first in the world to offer a dedicated area for purchasing and collecting online orders, homing two automated online order collection points. This is currently a very relevant feature as due to COVID-19 customers need to get in and out of a store as quickly and safely as possible, which has led to growth in consumers trying omni-channel features such as Buy Online Pickup In-Store. Zara’s flagship store also features interactive mirrors equipped with Radio-frequency identification technology which is able to detect what item of clothing a customer is holding, offer more information on the item and choices of what a complete outfit could look like. Zara’s store employees work with iPads to advise customers on product selections and can accept payments on the spot while customers also have the option to pay via the app, at a self-checkout or at a traditional checkout desk.
Other examples of engaging experiences in retail include virtual testers, augmented reality, geo-localized offers, gamification, hospitality and co-creation areas. These features transform stores into more intuitive environments and support a more customised experience that serves and delights consumers, building an emotional connection between people and the brand.
Experiences have become the new currency for a generation of consumers who document every meaningful life experience online through social media. Doug Stephens, founder of The Retail Prophet, argues that experiences have become the product and the actual products have become the souvenir. Doug also argues that we’ve become obsessed with segmenting consumers into personas and focussing on their nuanced differences, and that it would instead be wiser for retailers to “build their value proposition to address deeper, more universal human needs” such as the need for security, recognition, belonging, entertainment, inspiration, purpose and respect etc, which every human wants and needs.
Supporting this, research has found that Millennials and Gen-Z prefer to spend on experiences with family and friends, rather than products. This also supports a shift in retailers moving into new territories such as luxury goods conglomerate LVMH who are getting deeper into the hospitality sector through their Belmond acquisition.
In summary, it’s no longer enough for the UK’s high-street retailers to just stock what people are looking for. Brands need to encourage people to head in-store by utilising their physical spaces to provide seamless, more engaging and social experiences which fulfil peoples wants and needs in ways that online channels can’t. Online-only stores can also benefit from pop-up spaces where consumers have the opportunity to engage with the brand in new and exciting ways, as well as interact with the products before purchasing them, providing them with the peace of mind that online reviews can’t quite satisfy. Pop up’s and temporary installations can also create social spaces where, post-pandemic, people can gather to enjoy a range of experiences, creating a community atmosphere.