As Britain’s ‘non-essential’ retailers prepare to reopen their doors in the coming weeks, one of the biggest challenges they face will be convincing shoppers to walk through the door. And, no, I don’t just mean from a safety perspective; I’m talking about the additional friction that shoppers will inevitably encounter.
Will customers queue up to enter a department store? Will they want to pop in to a clothing store if they can’t try stuff on? Will they accept less choice on shelves as retailers make space for social distancing measures? If they have picked up a book off the shelf, will they remember to then place it on the special quarantine cart? This might all be worth the hassle – if there was no such thing called the internet.
Don’t get me wrong. Bricks & mortar retailers should get a much-needed initial boost when they reopen. These are uncharted waters, but pent-up demand must be a given when consumers themselves are pent up for months. We are social creatures, and the notion of ‘going shopping’ is inherently a leisure activity. The high street retailers that have thus far survived the so-called ‘retail apocalypse’ are those that focus on all the things shoppers can’t get online – inspiration, discovery, curation, community, experience.
In my latest for Forbes, I explore how this will look in a post-COVID world. Has ‘experiential retail’ finally been relegated to the buzzword archives? Has a pandemic killed the art of browsing? You can read the full article here.
Picture this – a radical new grocery concept designed to revolutionize how Americans shop. The store is much smaller than your typical supermarket, around 10,000 square feet and stocking an edited range of just several thousand products. The store doesn’t feature banks of traditional checkouts; instead it’s a heavily automated and efficiency-driven experience. There are no bakeries, butchers, or any of the counter services you’d find in most supermarkets.
Nope, I’m not talking about Amazon’s latest cashierless grocery format, Amazon Go Grocery, which launched in Seattle this week. I’m talking about the now defunct Fresh & Easy, Tesco’s failed attempt to crack the US grocery market.
In my latest piece for Forbes, I explore 3 key learnings for Amazon:
What’s in store for the retail sector in 2020? First, let’s be clear about what’snotchanging. We’ll continue to see a bifurcation of winners and losers as the industry sheds itself of status quo retailers (translation: brace yourself for more doom and gloom). The ubiquitously connected ‘on-my-terms’ shopper is here to stay. We’ll see a continuation of the convergence of physical and digital retail. The race to stamp out friction and inefficiencies will only accelerate, and reinvention of the physical store will remain top of the boardroom agenda.
Now the fun stuff. In my latest piece for Forbes, I’ve highlighted 8 retail predictions for 2020. You can read more here.
The final whitepaper in our series with Red Ant explores how bricks & mortar stores must evolve to become genuine hubs for fulfilment.
The most successful retailers today are those that view their stores as assets not liabilities. As contradictory as it may sound, they understand that the key to growing e-commerce sales is leveraging their physical infrastructure.
These retailers also recognise that traditional metrics for success are no longer valid in today’s omnichannel world; the future of retail isn’t solely online or in-store but a blend of both channels. A OnePoll survey shows that nearly 40% of shoppers use online and store channels equally.
So, the store estate is actually an asset, but problems arise if they are not fit for their new purpose. As 20% of UK retail sales now take place online, less physical shelf space is required. Instead retailers need to dedicate more space on the shop floor to fulfilment services.
Store fulfilment plus points
When asked what types of experiences they would like when in store, the top three answers from shoppers all related to fulfilment:
48% want simple returns of online purchases
42% want click & collect
35% want to be able to order online while in store when items are out of stock
There’s no denying that the rise in online shopping has come at the expense of physical retail sales, but we can’t overlook the many opportunities it has also created for those retailers willing to evolve.
One of the main draws of click & collect is the ability for customers to ensure product availability before heading in-store, as 40% of shoppers surveyed say that knowing what you want is in stock is a factor in choosing one retailer over another.
Over half (51%) cite not having to wait for deliveries as a reason to shop in store versus online. Customers coming home to the dreaded “sorry we missed you” note adds a lot of friction to an experience that is intended to be anything but.
Holistic customer experience
Click & collect is, therefore, a no-brainer for retailers, and many have been quick to recognise that in-store collection and returns can improve footfall and consequently incremental spend. Countless studies have shown that shoppers often purchase something else once in store and herein lies the opportunity: retailers must engage with shoppers at the point of collection in a bid to cross-sell or upsell based on the items that have been reserved.
Making the most of this, however, depends on equipping store associates with the right technology. The aim should be to establish staff as trusted shopping companions rather than simply someone who gives the customer their order and ticks it off on a list.
The data is there, but retailers need to connect the dots to offer that holistic customer experience.
In the second of a three-part whitepaper series fromRed AntandNBK Retail, we explore the rise of the experiential store, why retailers must adopt an ‘admission fee’ mentality, and how customer experience is fast becoming the new currency in retail.
Despite the high-profile casualties we’ve seen on the high street, it’s clear that shoppers still crave the experience of visiting stores. But the service they receive in store must surpass what they would find online. We’re currently in a moment of transition, where the physical store is shifting from transactional to experiential.
Kill the friction, not the experience
Today, there’s still a sense of novelty when shoppers encounter a frictionless store experience, but in the future, digitally enabled store experiences will become the norm.
The option to bypass the checkout, for example, will simply become an expectation. This will be ‘basic hygiene’ that retailers must follow to remain relevant to their customers.
While it’s essential to invest in the right technology to facilitate a seamless in-store experience, retailers must also ensure ‘seamless’ doesn’t translate as ‘soulless’.
Retailers are experimenting with a plethora of technologies to enhance their environments and to finally bring the physical store into the 21st century. However, they must guarantee that it’s friction that they’re killing, and not the experience.
Democratising the white glove service
Just as the role of the store must evolve, so must the role of the store associate. They must be able to demonstrate genuine expertise, offering advice and personal recommendations to become a ‘trusted shopping companion’.
“29% of consumers said they would spend more money if a sales associate recommended something to complement their purchase”
In the future, what was once considered a VIP service will be democratised as more mainstream retailers recognise the benefits of providing concierge-level service.
John Lewis has already begun sending staff to theatrical training to improve customer experience, and the department store chain is also giving employees a voice by allowing them to directly engage on social media.
Retailers must aim to provide that white glove service because customer-led clienteling pays. Being able to provide a one-to-one, face-to-face personalised service has the power to increase sales and drive loyalty.
In our own OnePoll survey, 27% of consumers said that having an expert to talk to would make going into a shop worth their while.
And 29% of respondents agreed that they would spend more money if a sales associate recommended something to complement their purchase (based on what they had previously bought or had on their wish list).
The value of human interaction
At the end of the day, the most important rule in retail is being relevant to your customers.
Technology can help retailers augment the human touch, allowing them to adapt and thrive in the digital world. Today’s consumers may be hyper-informed and accustomed to shopping on their terms, but they still value human interaction – particularly when it comes to advice and inspiration.
“Employees are retailers’ most valuable resource”
With so much change afoot, it may be overwhelming for retailers to know where exactly to begin but they should start with their most valuable resource – their employees.
Retailers can democratise the VIP experience by equipping staff with the technology they need to offer specialist, personalised advice and information.
Consumers are no longer tolerant of mediocre service, so retailers must raise their game if they want to differentiate from online rivals and survive in this digital era. Clienteling and consultancy should not be beyond the reach of any retailer that wants to build an experience.
How can retailers compete with Amazon? This is the question that my co-author Miya Knights and I get asked most since publishing our book earlier this year.
First, let’s address the myth that Amazon is a retailer. It’s not.
Amazon is a technology company with deep pockets, an appetite for disruption, and a constant dissatisfaction with the status quo. Amazon is a fierce competitor not only because it is infatuated with its customers, but also because it has the advantage of playing by its own rules, shunning short-termism and other traditional constraints faced by public retailers.
From a CX perspective, Amazon has made online shopping completely and utterly effortless. The ability to access millions of products and have them magically turn up on your doorstep the same or next day is pretty powerful, and Amazon has gone to great lengths to ensure that the experience is as seamless as possible. They continue to reduce friction by shortening the path to purchase – this will be a key focus in the future as Amazon relies more heavily on its own devices to funnel purchases through to its platform.
Ultimately, it’s the ease of buying through Amazon or, as Miya often says, it’s how Amazon sells rather than what it sells that distinguishes them from their peers.
Amazon is the ultimate friction killer, but that inherently makes them somewhat of an experience killer. Amazon is functional, it’s transactional. It’s great for ‘buying’, but pretty awful for ‘shopping’. So how can retailers remain relevant in the age of Amazon?
Firstly, there is an element of keeping up with the Joneses. Most of Amazon’s innovations catch competitors on the back foot, leaving them in the undesirable position of reacting to rather than leading change. Ceaseless innovation from Amazon raises customer expectations which in turn leads competitors to raise their game and ultimately results in a better experience for the shopper. What would retail look like if Amazon didn’t exist? In a nutshell, customers would be far more tolerant of mediocre service.
No one can out-Amazon Amazon, but retailers must prioritise investment in the areas where Amazon is genuinely disrupting customer expectations – frictionless e-commerce experience, delivery speed and choice, voice shopping, auto-replenishment, checkout-free stores and, increasingly, a digitally enabled instore experience.
That’s just basic hygiene. The real opportunity for bricks & mortar retailers is to focus on WACD – What Amazon Can’t Do. That’s experience, curation, discovery, inspiration, human touch, community. It’s time to inject some personality and soul back into stores, to make them desirable places to visit, places worth ditching our screens for.
Amazon taken the touch and feel out of shopping and there is a massive opportunity for retailers to distance themselves from this by offering customers an immersive, memorable experience that simply can’t be replicated online. But this requires a titanic cultural shift and an entirely new set of skills from store associates who must transition to become genuine brand ambassadors. Stores must go well beyond the product, beyond the transaction. They must become places to eat, play, work, discover, learn and even rent stuff. In the future, retail space will be less about retail.
In summary, there is no single formula for competing with Amazon but retailers can take lessons from the tech giant itself by starting with the customer and working backwards. Think of your stores as assets and not liabilities. Reposition them as fulfilment hubs to cater to growing demand for same-day delivery and instore collections, while potentially beating Amazon to the chase by addressing the ticking time bomb that is returns. The instore experience must be frictionless to emulate the convenience of buying online, but also experiential to differentiate from Amazon’s transactional nature. The rise of Amazon will also make for strange bedfellows – collaboration, in some cases with Amazon itself, should be viewed as an essential component of retail strategy in a bid to stay relevant to customers.
This post originally featured on RingCentral’s blog.
We all know it’s only a matter of time beforeAmazon Go reaches UK shores. Trademarks have long been registered, the rumours have been flying and, havingdebuted in New York Citylast month, it’s fair to say that Amazon has an appetite for urban expansion.
This explainsSainsbury’s recent scramble to open the first till-free store in the UK, a PR coup ahead ofAmazon’s inevitable incursion.
And they’re not alone – pretty much every grocer from Tesco to Marks & Spencer is trialling scan-and-go technology, self-ordering kiosks are now the norm at McDonald’s and Argosquietly launched its first self-service digital store last month. Time is the new currency.
Checkout-free shopping will particularly cater to busy city workers on their lunch break and it will undoubtedly hit travel retail hard – till-free will become the norm in airports and train stations five years from now. But is this really the future of retail?
The customer experience is paramount, but today ‘frictionless’ often translates as ‘soulless’. Most shoppersstill value human interaction in-storeand, as we’ve witnessed with self-checkout, there will be resistance among some shoppers to do the heavy lifting themselves.
Source: Sainsburys
Take the new Sainsbury’s trial, for example: for a store that’s all about reducing friction, there’s certainly a lot of it initially as shoppers have to download the app and get used to scanning QR codes.
Let’s not forget that, a few years ago,Morrisonsscaled back its self-checkout ambitions in response to customer feedback. There has been a lot of hype about automation, but when it comes to responding to disruption, retailers must not lose the human touch.
Defending cash
Checkout-free stores can be controversial. Not only because they will accelerate the number of retail job losses (according to the Office for National Statistics, 25% of supermarket checkout jobs disappeared between 2011 and 2017), but also because going cashless can be seen as discriminatory towards customers without bank accounts or smartphones.
This summer, Philadelphia will be the first US city to prohibit cashless stores, and a growing number of cities are considering a similar ban. Amazon has had little choice but to begrudgingly adapt, and its shiny new Manhattan store is the first Go branch to accept cash.
Lastly, we must acknowledge the elephant in the room: theft. Today, it feels unnatural to bypass the checkout, and Amazon says it takes customers several visits before they no longer feel like they’re shoplifting.
But theft is a genuine concern and was one of the reasons Walmart shelved its scan-and-go programme in the US last year, with a former executive joking that the scheme should have been simply called “‘go’ because the customers can’t seem to ‘scan’ anything”.
The biggest retailer in the world is now embracing a mobile point-of-sale solution. Equipping more staff with handheld devices so shoppers can pay on the spot is a solid compromise – you still provide a frictionless checkout experience while taking the onus off the customer and alleviating concerns over shrinkage.
I don’t doubt that the digital store is the future of retail or that checkout-free shopping will appeal to certain customers and shopping missions. But consumer adoption will be slow, and they will never replace manned checkouts entirely, which is why the hysteria over till-free stores is unwarranted.
Automation is coming but, in the process, retailers must ensure they don’t kill the experience they are working so hard to improve.
I’m so excited to launch, in partnership with retail technology leader Red Ant, the first of a three-part series of whitepapers to explore how the retail industry will have to embrace the digital store and seamless shopping to survive, from frictionless checkout to hyper-personalisation and clienteling. There’s no doubt that the industry has undergone seismic change in the last few years, and it’s not over yet.
Why the
store is not dead
Over the past decade, we’ve witnessed the birth of the
‘on-my-terms’ shopper and the seemingly unstoppable rise of e-commerce. Today’s
ubiquitously connected shoppers are firmly in the driving seat, and retailers
are scrambling to keep up with dramatic shifts in both customer behaviour and
expectations.
It’s clear that not all retailers have been equipped to deal with
the accelerated pace of change facing the industry. As such, we’ve seen
high-profile casualties on the high street as well as record numbers of job
losses and store closures. And we should be bracing ourselves for more short-term
pain as the industry reconfigures for the digital age. Although it’s not quite
a retail apocalypse, there are a couple of important points that we must
acknowledge:
We have an oversupply of retail space. According to the Office for National Statistics, online sales accounted for less than 5% of UK retail sales in 2009. Fast forward to 2019 – a whopping 20% of retail sales now take place online. Although e-commerce shouldn’t be viewed as the death knell for the high street, retailers must streamline their store portfolios to better reflect consumer demand. The future is fewer, more impactful stores.
There is no room for mediocre retail. In today’s climate, you have to be on top of your game. The retailers that are struggling right now share some common traits – they lack agility, differentiation, relevance. They try to be all things to all people. They don’t have a compelling purpose. And having an iconic brand doesn’t make you immune to the broader challenges facing the high street. This is retail Darwinisim – put simply, you evolve or die. But, for those brands willing to adapt, this is a fantastically exciting time to be in retail.
Stores will undoubtedly continue to play a critical role in retail
for decades to come, but, in a nutshell, customers will expect to shop on their terms, not the terms dictated to
them by the retailer. This means that high street retailers need to ensure
they’re saving customers’ time or enhancing it. There is no longer a middle
ground. We believe that stores of the future will be:
Frictionless
– to keep up with online retail
Experiential
– to distance themselves from online
retail
Ahub for fulfilment – to bridge the gap between online and
offline worlds
Those retailers who use the right
digital platform to transform and tailor in-store experiences will be able to
ensure differentiation from rivals and relevance to customers.
The phrase ‘the Amazon effect’ brings to mind images of boarded-up shops and retail bankruptcies.
We think of the 2,700 stores that shut or the 80,000 retail jobs that disappeared in the UK in the first half of 2018 alone. E-commerce, and Amazon in particular, is often positioned as the death knell for the high street.
I don’t buy into the ‘retail apocalypse’ narrative, but it must be acknowledged that this is a period of unprecedented change and naturally as spending shifts online, fewer stores are needed.
This isn’t rocket science, it is just about following the customer. Over the past five years, online sales of non-food products in the UK have doubled. Now, nearly 20% of all retail sales take place online. Today, people are ubiquitously connected. They live online. They have access to billions of products right at their fingertips that turn up on doorsteps, often free of charge, the very next day.
Online shopping has become utterly effortless, and that has shaken bricks-and-mortar retail to its core. 2018 was the year that retail chief executives finally pulled their heads out of the sand and acknowledged that there is an oversupply of retail space and there is retail space that is no longer fit for purpose.
Blaming Amazon
Amazon is an easy scapegoat. After all, it’s thought that around a third of UK e-commerce sales go through Amazon’s platform (in the US, it’s closer to the 50% mark).
And, after years of chipping away at the high street, Amazon is now among the top five retailers in the UK. Not many retailers can match ‘the everything store’ on range, convenience and, perhaps to a lesser extent, price. Not many retailers have 100 million customers around the globe willing to fork out roughly $100 annually just for the privilege of shopping with them. Not many have embedded themselves into the shopper’s life – and physical home – in the way that Amazon has; a testament to the strength of its ecosystem.
But it is also true that not many retailers have deep pockets like Amazon – it spends more on R&D than any other American company. It is able to constantly throw ideas against the wall because it has been afforded the luxury of long-term thinking – and not paying a whole lot of tax hasn’t hurt. Business rates account for less than 1% of its sales (for comparison, Debenhams’ bill as a percentage of sales is almost 4 times that amount). The playing field has been tilted in Amazon’s favour since day one and I believe retailers are right to call for legislation to be rewritten for the digital age.
High street woes go beyond Amazon
But the industry’s problems run deeper than Amazon. Retailers continue to grapple with the dangerous combination of rising costs and soft demand which has created considerable pressure and particularly exposed some of the weaker retailers with underlying issues, such as Toys R Us.
Real disposable income growth has been weak for a good decade and now the big unknown that is Brexit is added to the mix. In a similar vein to the weather, Brexit may be a convenient excuse for retailers reporting weak results, but it’s clear that shoppers will rein in spending during times of political and economic uncertainty.
What else is behind the high street’s woes? Although ‘the Amazon effect’ is often cited, what about ‘the Aldi effect’ or ‘the Primark effect’? There are a handful of very agile bricks-and-mortar disruptors that are weeding out the complacent incumbents.
We are at the beginning of quite a fundamental shift in consumer values, as shoppers prioritise spending on experiences over simply acquiring more material goods. Are we perhaps nearing ‘peak stuff’?
In any case, it’s clear we are at the intersection of major technological, economic and societal changes that are profoundly reshaping the retail sector.
So it’s not all Amazon’s fault. In fact, in many ways Amazon has been a force for good. It has stamped out complacency and made everyone raise their game, all to the benefit of the customer.
What would retail look like if Amazon didn’t exist? In a nutshell, consumers would be more tolerant of mediocre service.
Amazon’s technology roots and passion for invention are what sets it distantly apart from rivals. Many of Amazon’s past innovations can, in fact, be easily forgotten because they have simply become today’s normal. Think back to the late 1990s: online shopping used to be quite a laborious process. Amazon cut the friction out by launching one-click shopping, personalised product recommendations and user-generated ratings and reviews.
Delivery, meanwhile, wasn’t always fast and free. Prime significantly raised customer expectations, leaving competitors with little choice but to invest in their own fulfilment capabilities. Amazon went on to tackle one of the biggest barriers to online shopping – missed deliveries – with the 2011 launch of Amazon Lockers. Today, virtually every major Western retailer offers click-and-collect (though Argos was perhaps unknowingly ahead of its time).
Most of Amazon’s innovations catch competitors on the back foot, leaving them in the undesirable position of reacting to rather than leading change. So what is ‘the Amazon effect’, really?
It’s Tesco rolling out same-day delivery nationwide.
It’s M&S trialling scan-and-go technology, allowing shoppers to skip checkout queues ahead of an impending Amazon Go launch in London.
It’s Waitrose delivering groceries directly into your fridge.
It’s Asos allowing shoppers to ‘try before they buy’.
It’s Zara shoppers collecting their online orders through automated pick-up points in-store.
And this is a global battle. ‘The Amazon effect’ is Ocado finally securing a string of international deals, as the Amazon-Whole Foods acquisition accelerates demand for online grocery shopping.
It’s Carrefour partnering with Google to launch Lea – its answer to Amazon’s Alexa voice assistant. In the US, Walmart offers customers a far superior experience today thanks to Amazon breathing down its neck. The retailer has even had a name change: after nearly half a century as Wal-Mart Stores, in 2018 the world’s largest retailer dropped Stores from its legal name to reflect the new digital era.
Amazon has impacted all aspects of retail, and now everyone is scrambling to either keep up with or distance themselves from the online behemoth. The link may be slightly more tenuous but it could even be argued that ‘the Amazon effect’ is Debenhams adding gyms and beauty bars to its stores. It’s John Lewis sending staff to theatre training and democratising personal shopping. It’s Next putting hair salons and Prosecco bars in its shops.
The opportunity
High street retailers are recognising that for all its perks, shopping on Amazon is still quite a functional, transactional experience. It has taken the touch and feel out of shopping and there is a massive opportunity for retailers to distance themselves from Amazon’s utilitarian image.
There is an opportunity to inject some personality and soul back into their stores, providing an immersive, memorable experience that simply can’t be replicated online. It’s about WACD: What Amazon Can’t Do.
This is why in the future, stores won’t just be a place to buy but also a place to eat, play, work, discover, learn and even borrow stuff. Retail space will be less about retail.
In summary, Amazon is almost singlehandedly redefining retail, at least in the Western world. Yes, there have been casualties and the industry should brace itself for more short-term pain as it reconfigures itself for the digital age.
But this is retail Darwinism, it’s survival of the fittest. It’s evolve or die. Amazon’s existence has weeded out those underperforming retailers who can’t deliver on the basic principles of being relevant to their customers or standing out from rivals. But those left standing will be stronger for having reinvented themselves in the age of Amazon.
This week I’ve taken part in the Retail Week Tech Race. Using only chip and pin, I had to spend as little as possible on: a home assistant, Asos branded clothing, 500 penny sweets, original Nintendo Game Boy, personalised item, £5 scratch card and a build your own robot arm.
The aim of the race was to demonstrate the importance of payments as a frictionless part of the customer experience.
Team Contactless – Andrew Busby, Founder & CEO, Retail Reflections
Team Crypto – Peter McCormack, Cryptocurrency Trader, Miner, Blogger and Advisor, What Bitcoin Did
Team Mobile – Rachel Arthur, Chief Intelligence Officer at The Current Daily
Team Chip and Pin: Key takeaways
1) Shopping habits have evolved, payments not so much.
My initial reaction to being assigned chip and pin? NO. ONLINE. SHOPPING.
That alone was going to be a challenge for me. And that’s not because I don’t shop in stores, but when faced with a long list of disparate items – some of which are near impossible to find in a bricks & mortar shop – my first instinct is to get online.
Having to physically trek around individual stores (in 32 degree heat no less) in the hope of some very specific items being in stock was a stark reminder of just how spoiled for choice we are today. We have access to millions of products right at our fingertips – and they turn up on our doorsteps the same or next day!
Even if I attempted to use click & collect, I would have had to pay for the item online which ruled out using chip and pin. Argos was an exception here, so reserve and collect (ie. pay at the store) came in handy. I even resorted to calling a few stores to see if items were in stock – very 2003!
2) With low-value items, cash is still king.
Bearing in mind that the goal was not only to source all items on the list but to do it as cheaply as possible, I ran into some issues when trying to purchase low-value items like the £5 scratch card and personalised item. Retailers would charge an additional (50p) fee or simply wouldn’t accept card payment. It was a reminder that, in some instances, cash is still king.
3) Less choice on the high street further limited my options with chip and pin.
This year’s high-profile collapses of Maplin and Toys R Us made it more difficult to source some of the more peculiar items on the list – ie. build your own robot arm. The superstores I visited also, unsurprisingly, had a much-reduced electronics section as this category has largely shifted online.
In the end, I managed to purchase 5 out of 7 items on the list using chip and pin – all but the Asos-branded item of clothing and original Nintendo Game Boy. It was only at the very end that I had a lightbulb moment – I could have saved myself a ton of time and energy by using Amazon Top Up!
Main takeaway of the race? Consumers demand to be able to shop on their own terms and they expect that experience to be completely and utterly seamless. But when it comes to payments, there’s still a whole lot of friction.
You can hear all about the #RWTechRace in our session at the Retail Week Tech conference, 12-13 September, and for video updates of the race check out the NBK Retail YouTube channel.
I don’t buy into the ‘retail apocalypse’ narrative, but it must be acknowledged that this is a period of unprecedented change and naturally as spending shifts online, fewer stores are needed.
This year’s high-profile collapses of Maplin and Toys R Us made it more difficult to source some of the more peculiar items on the list – ie. build your own robot arm. The superstores I visited also, unsurprisingly, had a much-reduced electronics section as this category has largely shifted online.