Experiential retail may be the high street’s only hope, says NetDespatch’s Matthew Robertson.
When you’re involved in delivery you can sometimes feel like a small, but of course very important, cog in a large ecosystem. And just like any ecosystem, impacts on one part of it often ripple through and have effects on many others. So, it has been with great interest that I’m following the turbulent times being experienced on the UK high street. We are all part of the retail ecosystem and it’s important to understand the bigger picture around what’s happening in the industry and what it might mean for our part of it.
Effectively, the high street is being assailed by the swiftly changing preferences of the powerful millennial and generation Z shopper demographic. They’re a digital-savvy bunch accustomed to multi-channel shopping, but nevertheless they still appreciate an in-store experience. This is leaving some high street stalwarts stuck in a situation of trying to please everyone, but actually satisfying no one. House of Fraser is the latest to announce large numbers of store closures, while Debenhams, M&S and New Look have repeated profit warnings. For high street brand aggregators such as Debenhams and House of Fraser, it seems that they are simply unable to compete with the fact that the same products are available online. One millennial told the Huffington Post that as the same brands are available elsewhere, they have “no need to visit the store.” This is leaving retailers with a lot of costly, underperforming real estate.
So, should the high street accept that its days are numbered or are there other ways to tempt fickle millennials through the doors? Some commentators have pointed to the renaissance of independent and artisan stores as a sign that the millennial generation is more than prepared to shop – and pay a premium – when the experience amounts to “more than a store”. This experience-driven mindset values quality and uniqueness and wants retailers to use their personal data to create tailored offers and advice. This is where converging the online and in-store experience has a chance of success.
Despite the fact that Accenture research shows that 41% of millennials “showroom” in a store – trying out products and then using their mobile to go online and buy the same thing cheaper – the I-AM 2018 Retail Sector Report states that a mobile-augmented in-store experience could now be the key to drawing more customers in.
Apparently 51% of millennials would love to navigate, get information and pay using their phone in-store, while 49% say that their favourite part of the in-store experience is touching and trying things out. There’s an interesting twist on click-and-collect, too: while most still prefer home delivery, 56% would like a click and collect point that also offered them a chance to try on their purchases and make immediate returns. This offers a ray of hope for all that high street retail estate.
Leveraging customer data is another key aspect of improving shopper experience. Online, retailers collect a wealth of “basket data” on preferences and previous purchases, so they can make recommendations and offer customer-specific discounts. Bringing that in-store with discounts pushed to mobiles while the customer is on the shop floor, with the added bonus of instant purchase gratification, will bring the in-store experience up to the online.
Innovations around in-store technology will also add to that customer experience. Here fashion label Zara is ahead of the game and reaping the rewards by operating an integrated store and online model. In-store it is using interactive fitting rooms that automatically recognise RFID tags and spin up the inventory of that product so a different size can be requested at the touch of a button. RFID mirrors analyse fit and take photos that can be shared with friends for their input, which is great, because it seems millennials don’t want to ask store assistants for their opinion –and only want to see assistants only at pay points, or some say not at all. This kind of innovation is creating a digital experience in store and offering the sort of personalised service a new generation of shopper seeks.
So, what does all this mean for delivery? It really comes down to creating quality consistently personalised experiences and doubling down on flexibility. Millennials demand seamless multichannel customer experiences whether they step instore or go online. They want numerous options and they have no tolerance for clunky processes or poorly performing technology. They are aware of the amount of data that they make available about themselves and expect retailers to use it to offer exemplary buying experiences. This means that delivery and returns processes need to be slick and straightforward – and preferably free. Retailers need to be obsessive about analysing user preferences and be proactive about pushing new delivery options that might appeal to that customer.
Speed continues to be crucial, with same-day options appealing to millennials. Lower rates of car ownership in this demographic also generate demand for fast home delivery of bulkier items purchased in-store. This will require automation in the delivery process to make sure that products are quickly picked, packed and delivered with pinpoint accuracy. Loyalty is quickly lost if the delivery doesn’t live up to expectations in the same way that in-store loyalty drops if the experience doesn’t delight the customer – it’s all part of the same user experience.
Fundamentally, what millennials want is a new level of extreme customer-centricity that delivers a fantastic experience, great visibility into their shipments, parcels being shipped exactly when they want it, through the channel they prefer, whether that’s in-store or online. As the ripples of the high street revolution continue to spread through the industry, we all need to work to make sure that the experience we are providing in whichever part of the retail cycle we operate in lives up to those new heights of expectation. Getting it right is well worth it as it will reap the reward of unlocking the enormous spending power of the millennial generation.
Published: 11 July 2018 on Real Business By Matthew Robertson