OCF review: stores play role beyond simply housing stuff
Despite the torrent of horrific news stories that have been sounding the death knell for retail as we know it, this can be avoided if retailers move beyond operating models based on simply selling more stuff from old school stores.
Speaking at The Retail Bulletin Omnichannel Futures Conference 2020 in central London Peter Pritchard (pictured), group CEO of Pets at Home, told delegates that “boring retail is dead” and that resorting to the latest technology is not the solution.
“The days of just selling stuff are over. A store full of stuff is not exciting. And in isolation cool [technology] solutions won’t save you if you are in existence just to sell more stuff. If you are then I worry for you as you’ll die,” he suggests.
Finding a purpose
He points to the fact many retailers have been trying to find answers to their problems in the likes of omni-channel, artificial intelligence, chatbots and algorithms but believes this is the equivalent of the proverbial “rearranging of the deckchairs”. Instead, Pritchard reckons retailers need to question why they exist, what capabilities make them special and what needs to change in order for them to better serve their customers?
Only then does he believe traditional retailers like Pets at Home can compete with the likes of Amazon, eBay and other online specialists who can invariably sell the same products, more cheaply and most likely more conveniently.
“We realised our job was not to sell stuff but was to help customers. Pet care was the reason people chose us versus Sainsbury’s and the others. Other people did ‘stuff’ better than us. We’d forgotten our focus and this became our primary focus,” he explains.
The company’s objective switched from being ‘the best pet shop in the world’ to ‘the beat pet care business in the world’. “Care gets much more emotion than stuff. Dog food is not engaging but giving your dog a happy life is engaging,” says Pritchard, adding that this prompted a strategy involving the introduction of things like training classes, dog bathing, adoption centres and vet services into the offer in-store and the integration of this into its online proposition.
Bringing emotion into the experience, and shifting away from simply flogging stuff, was also the objective of Mark Dunhill, former CEO of Whittard of Chelsea, who in 2014 was given the task of making the long established retailer relevant again – especially to millennials.
“The first thing was to tell the executive team that everything we sell can be bought in supermarkets or online for a cheaper price. We needed to make our proposition superior or there was no reason to exist. It was not just about selling stuff. We needed an emotional reason, beyond transactional, for customers to shop with us,” he explains.
Like Pets at Home the Whittard business also lends itself to the physical world and Dunhill introduced tastings, educational elements, theatre and fun into the stores that enabled people to become part of the community.
“We’ve gone beyond simple transactions in-store,” he says, adding that the challenge with e-commerce is replicating the brand in the digital space. “We’ve a chat mechanic and commentary by store colleagues online and we’ve personalised it online,” explains Dunhill.
It’s not just about data
Such personalisation requires data and invariably this leads to comparison with the tech-led businesses who are the masters of data crunching and driving insights. Thankfully for retailers this alone is not that appealing to the customer, according to Ken Daly, CEO of JML, who suggests: “I believe we crave something more than the efficiency of an Amazon. We know that data enables the Amazon’s of this world to give us a more tailored offer but real brand loyalty needs a truly experiential strategy.”
For JML this involves the use of video to showcase its products – which it develops in-house. “We use video to convey our products that could be shown via TV advertising, within programmes, short rolls on social media, TV shopping channels, and in-store,” he says.
The latter is proving to be particularly resilient because as retailers take employees out of the stores then the videos become increasingly valuable. “Stores are absolutely fundamental to our model,” says Daly, who cites the success of working with Homebase as its customer base has a great affinity with JML products.
Evaluating physical stores’ true worth
Stores can be fundamental for various reasons – and not just for selling products. Ian McBeth, director of technology at Josh Wood Colour, says certain physical outlets might not be profitable but they have to be considered as playing a much broader role today as a complementary channel to the others that retailers employ. “They might provide an uplift in online sales, provide a marketing opportunity in certain markets, and provide more effect than just spending on advertising,” he says.
James Miller, head of analytics & insight at Intu, very much agrees and suggests stores are also increasingly acting as fulfilment centres to support online – including at H&M – which is part of the reason more pure-plays are choosing to open physical stores.
He is also finding that retailers are increasingly using technology such as Augmented Reality (AR) to link the digital and physical in-store experience for customers. Miller cites Lush as using this capability to overlay virtual packaging onto its products via the customer’s mobile phone. This helps it to further reduce its need for physical packaging.
Apps bringing stores to life
This linking of the channels is one of the exciting areas Michael Langguth, co-founder and COO of app specialist Poq, is involved with and he points to Gucci with its ‘Try on’ solution, which enables shoppers to put their phones over a shoe and the AR then places the virtual item on the shoppers foot. “It gives people an amazing experience,” he says.
Langguth suggests the best way to create these combined store and online experiences is through an app. H&M is active in this area and he says when customers enter a store and go into ‘in-store mode’ within the retailers’ app then “the company knows that they are there and the data the retailer collects from this is priceless.”
The ability to push notifications and loyalty incentives to shoppers while they are in store can be more than valuable enough for shoppers to then be willing to share their data with the merchant. This creates a powerful symbiotic mechanic: “Apps can drive shoppers back to store, provide them with tailored experiences, and help retailers to track them across the channels.”
However, there are some cutting edge developments taking place that are designed purely for the digital environment. They could also be very good for the environment. Kerry Murphy, co-founder of The Fabricant, explains that he is building the technology to create pure digital fashion collections. These are items developed with fashion houses that are only used within a digital sphere – such as within social media and on gaming platforms.
Replacing physical goods with digital
The company is working with the likes of Alexander McQueen, Under Armour, Adidas and Puma to create these items that he says would certainly solve the issue of returns as no physical products are ever shipped.
“We’re a marketplace where you can buy digital clothing – an endless digital wardrobe with zero waste garments. If we can use these [digital] images to enable young people to wear these products virtually and put them on social media then there would be no problem anymore with returns. We can go beyond just physical identifiers,” he explains.
Murphy suggests this is the “next stage” for fashion and it certainly presents a scenario that will be hard for many people to grasp, but such developments will be a part of the ongoing development of brands and retailers in a more digitally progressive future environment. It neatly encapsulates the challenges and opportunities that retailers face right now.
Words by Glynn Davis
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