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Stores of the future: A physical and digital experience
by Tom Jenkins

In a delayed and typically jargonistic announcement on 31 October, UK Prime Minister Boris Johnson once again announced a rack of draconian lockdown measures for November, notably criminalising going to shops, restaurants and churches. Of course, it was rather hard to hear any of his announcement over the sound of Jeff Bezos rubbing his hands with glee. With Christmas just weeks away, the new measures are undoubtedly music to the ears of digital retailers.

Black Friday is cancelled for the high street this year as non-essential retail has once again been forced to close. Thankfully, the UK-wide measures are rather more sensible than those that had been introduced in Wales weeks prior, which resulted in ‘essential retailers’ – supermarkets – having to remove ‘non-essential items’ from shelves such as clothes, home wear and electric goods. Of course, online retailers could continue selling them and, alongside the breaks they get with reduced business rates and taxes, were further able to pull ahead of physical stores this year.

So, what can we expect now? Is Amazon going to continue its expansion to the point where the entire population of Tilbury winds up living and working at the fulfilment centre there? Will wealth and clicks continue to consolidate behind the digital giants or will physical stores continue to adapt to the online experience and offer something unique? Here, we look at the technologies and companies that are evolving physical stores and enhancing online experiences:

  • Self-learning websites

Retailers have been using sales data from their tills for decades, but in an online environment they can do much more with their bestsellers. Amazon, with its A9 product ranking system, automatically decides how products are listed, bumping items with higher sales and sell-through rates up the list. With 77% of retailers planning to deploy AI by 2021 according to Gartner, using these tools could be what gives retailers the edge in years to come.

There’s also cost savings to be made through intelligent deployment of data. Retailers can reduce returns of items like clothing by automatically applying the sizes that customers bought previously to help them get a better fit first time.

  • Going beyond the gimmicks

Augmented and virtual reality have been the dominion of retail ‘thought leaders’ and ‘gurus’ for years now, but the dramatic shift to online shopping has prompted retailers to take serious steps forward in these areas and provide solutions that are more than just a novelty.

Walmart is the most recent retailer to announce investments in this area, with plans to turn four stores into ‘Technology Test Centers’. According to SVP of associate product and next-generation stores John Crecelius, the purpose of these stores is to flex and meet the needs of online shoppers.

The company’s latest app speeds up time to get items from the backroom to the sales floor. It eradicates the need for employees to scan each box individually, instead using augmented reality to highlight the boxes that are ready to go.

  • Creating flexible assets

B&Q and Screwfix might be famous in the UK for their gargantuan retail spaces, but despite the plummet in footfall brought about by ongoing coronavirus restrictions, their stores are still hives of activity. Speaking to the FT, CEO of parent company Kingfisher, Thierry Garnier, explains that to meet the trend towards click-and-collect and fast home delivery, “you need a store”.

Within the group, online sales have grown from 7% to 19% but four in five sales are collected from its shops. In click-and-collect, this is enabling B&Q to pick orders for collection within an hour. The benefits of this approach is that there is no need to construct a separate fulfilment centre and staff can double up on working on the shop floor or picking whenever there is demand.

  • Connecting and collaborating

Online retailers can offer a broader range of goods that a physical store never could, unless these physical stores work together. With delivery apps like Deliveroo and Just Eat helping restaurants and takeaways reach new customers, the door has been opened for other types of businesses to work together on a shared platform in that way.

US-based has recently unveiled plans to sweep the UK. The platform positions itself as a socially conscious alternative to Amazon, giving customers the option of buying books from independent booksellers. As a B corporation, it ticks the box for consumers that want to support companies that benefit society.

Part of the attraction of visiting independent stores is to find new and niche products, if this journey of discovery can be replicated online then retailers can drive sales.

  • Stick to your guns

While the vast majority of retailers have an established or emerging online presence, retailers should remember that investing online isn’t the only path to a successful business. Ahead of the UK’s second national lockdown, Primark has once again publicly double-downed on its decision to not launch an online platform. The company has always said that selling online is not economically viable due to the price of its products, and the lockdown has resulted in a 63% plummet in profits.  However, since reopening, Primark has racked up £2bn of sales. “I think Covid has more demonstrated the strength of Primark rather than the weakness,” says owner AB Foods chief executive George Weston.

The convergence between online and physical retail stores is only set to continue. The physical retailers that can make their existing assets as flexible as possible and employ intelligent use of data to work out what is needed and when will be the ones that will stay ahead.

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