Our new report in partnership with Springwise considers the shape of retail in the next decade. Drapers brought together retailers to debate how the industry can redefine itself.
With just a few months left of this decade – one of the most tumultuous in history for retail – the industry’s collective thoughts are turning to the future. Why, where and how customers choose to shop is changing. Consumers themselves are radically different to their counterparts browsing the high street 15, 10 or even five years ago. Experience, ease and emotion are rocketing their way to the top of shoppers’ wishlists.
To help retailers adapt to the ever-changing landscape, New West End Company, a partnership that seeks to improve the experience of businesses and visitors in London’s Mayfair and West End, has collaborated with global innovation agency Springwise on a new report, Redefining Retail Beyond 2020. The report attempts to forecast the future of bricks-and-mortar retail, consumer disruption, trends, challenges and opportunities.
“The pace of change is increasing. It will never be slower than it is today and that can be a difficult world to navigate,” explains James Bidwell, Springwise chair and co-founder of innovation agency Re_Set. “We’re living in an exponential age now, fuelled by technological changes. There’s the whole concept of the Netflix generation, who are used to getting what they want, when they want it, how they want, via whatever channel. Retailers need to become much more agile and shift their cultures to keep up with the opportunities.”
Jace Tyrrell, chief executive of New West End Company, adds: “One challenge retail faces is effectively using customer data. Some are doing it well and some are doing it superficially. You’ve really got to embed data into your business.
“However, for me, the biggest disruption facing retail is sustainability. New West End Company recognises how important this is to businesses and the millions of visitors coming to our area each month. We have a £50m strategy over the next five years that will cover all areas of sustainability: environmental, social and economic.”
The report was discussed by a room full of retailers over breakfast at Drapers Fashion Forum ealier this month at London’s County Hall. Chief among the discussion points was how to create agile working environments, the changing relationship between retailers and landlords, and how the industry can better work together. Sustainability was also a hot topic, not least because campaigners from environmental campaign group Extinction Rebellion were out in force on nearby Westminster Bridge.
The Redefining Retail report stresses the importance of building emotional relationships with shoppers, who want to feel more connected to the brands they use. It explores how stores of the future will need to focus less on transactions and more on building that relationship. Product alone is not enough to drive customers from the comfort of their sofas into bricks-and-mortar stores.
As the amount of choice at consumers’ fingertips explodes, Redefining Retail points to the increasing importance of curation. Stores that cater to a specific segment of consumers, such as Nike’s Melrose store in Los Angeles, where the items stocked are based on the data of local shoppers, are a growing trend.
Retailers at the discussion agreed, arguing that businesses need to treat shoppers as individuals and think carefully about how their customers wants to be made to feel. Data can be a useful tool in understanding exactly what shoppers are looking at, they said, and there are imaginative ways of driving consumers into stores – whether that is through experiences or services, such as offering to repair well-loved products.
However, retailers present also stressed the importance of creating experiences that are relevant and useful to their specific customer base, warning that shoppers will simply “switch off” from experiences that do not have any meaning for them. Retailers at the discussion also argued that truly excellent customer service is at the heart of in-store experience. A one-on-one interaction with a knowledgeable, friendly expert is the reason many shoppers still shun ecommerce for their local high street.
To build a better future, retailers present argued that the sector needs to foster a spirit of collaboration. New West End Company, for example, has encouraged retailers to share data, which was then analysed by PwC to provide vital insights on the different visitors to the area.
“We have hundreds of retailers in our district, from Prada to Primark,” adds Tyrrell. “We’ve now got data on everything from dwell time to where shoppers are coming from. Retailers can take that and use it in their own businesses to benchmark their performance. That is extremely valuable.”
The consensus at the Redefining Retail discussion was that retailers would be better off working together, particularly in business-critical areas such as sustainability. They praised retailers in other sectors – notably Swedish furniture giant Ikea, which holds an annual bootcamp for start-ups from around the world – suggesting this is one way of learning from the next generation of young entrepreneurs.
Strategic partnerships between retailers, brands, landlords, the public and policy makers is crucial for the future success of retail, the Redefining Retail report argues. Retailers agreed, particularly when it came to their interactions with landlords. Although some landlords have responded to the changing needs of the sector, change is not happening fast enough. Business leaders called for further disruption to the dynamic between retailers and landlords. In today’s culture, they said, where start-ups such as AirBnB and Uber have changed attitudes towards ownership, long leases are outdated.
“There is massive real estate disruption for legacy retailers, who have too much space,” explains Springwise’s Bidwell. “There needs to be more collaboration between retailers and landlords. Currently, the relationship is very transactional, and the danger is that everyone fails.”
Change can bring opportunities as well as challenge. Retailers need to remain agile and open to new possibilities if they are to stay relevant to customers over the decades to come.
“The future of the high street will include ideas we haven’t even heard of yet,” concludes New West End Company’s Tyrrell. “Technology is moving so fast that there are things we haven’t even thought of yet that will be on our high streets. The challenge is keeping up with that rapid pace of change.”