The number of ways shoppers can make a purchase continues to increase, and with it the role of physical stores is changing to suit the needs of the modern consumer.
If ecommerce was expected to result in fewer stores in a Select number of high-profile locations, then omnichannel retail has, in fact, created a far more complex picture.
Digital and physical store environments are continuing to merge, largely due to the explosion in mobile devices being used as a shopping channel and the need for greater in-store engagement, while fashion retailers are not only realigning their portfolios but rethinking the stores themselves, as showroom, storeroom and even billboard.
“We have undoubtedly seen consolidation across the retail market in the number of stores that retailers require to reach consumers,” says Graham Barr, head of retail tenant representation at CBRE. “However, due to the trend for retailers requiring larger footprints to accommodate a broader product range most retailers’ total square footage has increased despite a rationalisation of their portfolio.
“What will be interesting to see going forward is how retailers use the opportunity to further rationalise with the forthcoming spike in lease expiries.”
Nick Martel, chief operating officer and head of retail strategy at CBRE, notes a difference between domestic retailers, who still seek to achieve national store coverage with around 200 stores, compared to niche overseas retailers, who tend to aim at 30 to 60 stores, and larger international multiple which aim for 80 to 120 stores across the country. “The importance of the store in driving transactions has never been more important, but the transaction may not be completed in store,” he points out.
Examples include House of Fraser’s dedicated click-and-collect stores in Aberdeen and Liverpool. One of the most advanced examples is general merchandiser Argos. John Walden, chief executive of parent Home Retail Group, says of the retailer’s recently launched ‘digital’ stores: “We stepped back to have a different look at inventory, especially looking at fulfilling faster. We are establishing a hub and spoke system, whereby our hub stores have two to three times more product and will deliver out to the spoke stores multiple times a day.”
Argos is also extending its collection point trial with eBay, so eBay purchases can be collected in Argos stores, and is testing express delivery options, including using hub stores for home delivery. “The use of stores will be different, they will play a more strategic role,” says Walden. “They are very important as collection points and also for human interaction.”
Fashion retailers are now looking at how they can better join up their offline and online sales.
The store estate is crucial to footwear retailer Schuh’s omnichannel strategy. “In all, 25% of our orders are fulfilled from stores - they are essential both in terms of freeing up inventory but also for picking locations closer to the customer,” says Sean McKee, head of ecommerce. “We also find that store pick-up is very convenient for customers and continue to see growth in that.”
Paul Langston, head of insight at destination analyst CACI, notes shoppers often prefer to collect from nearby or smaller centres because of the perceived inconvenience of travelling to a major, destination mall for a pre-ordered product, thus providing an opportunity for stores on smaller schemes, high streets and out-of-town retail parks.
CBRE’s head of UK retail research, Mark Teale, says the siting of click-and-collect facilities tends to follow the same rules as store location: volume and accessibility. “The continuing concentration of retailing into fewer larger retail markets is encouraging the siting of click-and-collect facilities in the most heavily trafficked and most accessible shopping locations. For some retailers that means out-of-town shopping facilities first, because they are easy for catchment residents to reach by car, and parking is easy too” he notes. “The key thing with click-and-collect is convenience - a message for local authorities with overly zealous high street parking restrictions.”
‘The use of stores will be different, they are important as collection points and for human interaction’
John Walden, chief executive, Home Retail Group
Ibrahim Ibrahim, managing director of retail design consultancy Portland, says click-and-collect presents opportunities to engage with customers, so retailers could see this offer as creating the heart of the store, rather than it being purely functional. “It could be a place where you also get customised offers and added services such as demonstrations, a convivial, hybrid space with some food and beverage and maybe areas where brands can exhibit,” he says. “To date click-and-collect has been delivered as an adjunct, not a core component.”
CACI believes retailers and landlords need to work together to create stores that suit both their brand and their customers’ behaviour, especially for premium brands. Peter Williams, founder of Jack Wills, concurs and says of his company’s approach to store selection: “Authenticity is crucial, the environment you sell the product in must absolutely underpin your brand. Part of that is choosing your locations. In our case it has been about siting stores in places where our customer base likes to shop and we like interesting old buildings, with some heritage and some faded grandeur.”
Dave Abbott, retail omnichannel manager at footwear business Dune Group, says: “Continued investment in technology has enabled us to provide ways for customers to shop and engage with the brand. Customers expect a parallel experience when shopping online or in store, and our multichannel shopping and a single view of stock capabilities support this.
“There’s a real opportunity for click-and-collect to become fully ingrained into the retail experience as a great additional touch point for customer interaction, rather than just a brief collection.”
Some pure-play etailers or home-shopping specialists are seeing the benefits of a physical presence. N Brown began with a trial of seven Simply Be and Jacamo stores to give it a multichannel proposition in 2011. Rather than viewing these shops simply as profit centres, evaluation of the stores has increased brand awareness.
‘How consumers are using technology when shopping is focused on having control and efficiency’
Myf Ryan, marketing director, Westfield
As a result, Guy Price was appointed last December as property acquisitions manager to help with the store expansion programme for its Simply Be and Jacamo brands in the next 12 months, to add an additional 15 to 20 stores to their current nine joint fascias. “Demand from our customers
for stores is high and having a retail presence helps to support the wider business,” he says.
However, Martin Summerscales, lead consultant, retail consultancy at CBRE, points out that the model upon which most pure players are based makes opening stores highly complicated: “The reality is that it’s very tough, and that’s why we have seen so many collaborations with retailers. Online eyewear retailer Warby Parker in New York has made the transition and now has around 20 stores on the east Coast of the US, but in the UK I think we’re more likely to see pop-ups and concessions, certainly for the foreseeable future.”
The other area for development is customer service within digitally enhanced stores. Research by shopping centre operator Westfield, based on more than 8,000 consumer responses, revealed almost half of shoppers decide where to shop based either on the quality of mobile signal or the availability of Wi-Fi in store, while a third of under-24s have walked out of a shop because it had no mobile signal.
“How consumers are using technology when shopping is focused on having control and efficiency,” says Westfield marketing director Myf Ryan.
Indeed, the research shows shoppers are increasingly relying on technology for service, from click-and-collect to self-service tills, and from online price checking to touchscreen ordering kiosks. In all, 63% of respondents said they preferred self-service to staff service unless they were looking for in-depth advice.
Karen Maxwell, director of retail design agency Four by Two, designer of Dune’s ‘catwalk’ store concept on Oxford Street, which includes a catwalk on the ceiling, says with the use of technology it is important not to undermine a more personal service and quality of the in-store shopping experience. “Design has a role to play in the integration of customers who are using technology to avoid a two-tier customer experience,” she says. “Convenience shouldn’t mean the loss of service; nor should technology dehumanise the experience, reducing shopping to a process. It’s the customer experience in store that keeps people coming back.”
This is also apparent in shopping centres, with more centre managers having a retail background as their job has aligned more with a traditional retailer skill set of marketing, sales and event management. Davinder Jhamat, head of research and education at the British Council of Shopping Centres, expects this trend to continue “as the emphasis relies so much more on the provision of experiences, integrated etail and bricks-and-mortar marketing and ‘old-fashioned’ customer service.”
Essentially, the consumer is now in the driving seat and store formats are changing to reflect that.