High Street Retail: Down but not out

At first glance, the ONS retail statistics for August painted a rosy picture of the UK retail industry. Headline figures, such as the volume and value of sales increasing 6.2% and 4.1% respectively year-on-year, suggest that there is much cause for celebration for retailers across the country. Dig a little deeper behind these figures, however, and the picture starts to look a little less pretty – especially for the high street.

So where do these positive figures come from? Food stores were actually the main drivers of growth, whereas the outlook for household goods was particularly worrisome. Year-on-year, the volume of goods purchased in-store contracted for the first time since May 2014.

Turning stores into destinations
The key challenge for high street retailers, and electrical retailers in particular, is pulling customers back into stores and encouraging them to spend. In order to do so, we expect to see companies take the initiative and begin offering consumers something that they are not able to get from online shopping: an experience.

Bricks-and-mortar stores offer retailers the opportunity to showcase their products in key ways which online cannot replicate, be it through demonstrations, experiential activities, or simply giving the consumer the chance to get their hands on the product. For example, John Lewis has recently dedicated 1,000 square feet of prime retail space in their Oxford Street branch to the smart home category. This is a long-term investment in an emerging product range, which has driven an increase in sales, and, importantly, increased the percentage of sales in store.

New technologies such as Virtual Reality present a significant opportunity for retailers to turn their shops into destinations. Take the example of AT&T in the US, which launched a Virtual Reality cruise experience across 133 of its stores using Samsung Gear VR. In the UK, EE recently partnered with BT Sport to allow football fans to watch football matches through VR headsets at four of their stores across London. Stunts like this give consumers a reason to visit the high street.

The future role of the high street
Turning high street stores into hubs of activity and showrooms for new products will drive footfall and in turn, sales. Apple’s model may prove a blueprint: it’s no coincidence that Apple’s stellar sales run parallel to bustling Apple Stores where users can try out new products.

For retailers considering abandoning the high street and going online-only, it’s worth noting that a visible high street presence can also drive online sales: when John Lewis opened a department store in Chester, for example, sales in the region climbed 30%. This also might explain why Amazon has started to rollout physical bookstores in the US; at the very least, it reveals the importance of an omnichannel approach to retail.

Omnichannel goes beyond offering the consumer multiple channels to purchase, instead focusing on the importance of delivering a seamless experience across online and in-store. Viewed in this context, a physical presence in the high street offers a vital touch-point for consumers to try products before they buy, regardless of whether that purchase happens in-store or online.

Bricks-and-mortar shops are the most personal point of connection between retailer and consumer – so, far from disappearing, we hope they will play an even greater role in driving brand loyalty and sales across channels in the future. Retailers should begin to take advantage of the unique, experiential opportunities offered by physical stores, viewing them as just one component part of a broader omnichannel strategy, where customer experience is key.

by AS

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Filed under Retail, Retail in CONTEXT, virtual reality

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