The high street is dead. Long live the high street
Despite 2020 being the worst ever year for retail sales growth due to the Covid-19 pandemic, there’s optimism that the roll out of the vaccine and a lifting of restrictions will lead to British high streets reopening.
Yet while footfall may one day return to somewhat ‘normal’ levels, there’s no denying that the way retailers operate has changed for good. As we re-emerge into a new world with shifting behaviours, are we about to see the digital habits we’ve adopted during lockdown overwhelm the physical shopping experience?
Put bluntly: the high street has fundamentally changed forever. Enter a new look, unified high street – the digital and physical coming together – creating a harmonious retail environment out of a time of turmoil.
Looking back to move forward
Before we consider how tomorrow will look, it’s useful to first assess where we’ve been and where we are.
Helen Dickinson, Chief Executive at the British Retail Consortium, states: “Physical non-food stores – including all of ‘non-essential’ retail – saw sales drop by c.25% compared with 2019. Christmas offered little respite for these retailers, as many shops were forced to shut during the peak trading period.”
A bounce back for stores could be on the cards, however. “As more people become immunised from Covid-19 and restrictions start to ease in the spring, they will look forward to a return to physical stores for discovery and impulse buying shopping experiences they’ve missed,” predicts Brian Flesk, Head of Retail at Hitachi Capital.
If, as we all hope, this is the case in the near future, some big questions remain. Chiefly: what will this retail experience look like? And what part will technology play?
The online uptake and ‘dark stores’
With many stores closed throughout the 2020 lockdowns, it’s little surprise that many of us, in-between Zoom calls and baking bread, gravitated online to make purchases. The IMRG Capgemini Online Retail Index revealing online retail sales grew by 36% in 2020, the highest growth since 2007.
This growth in demand saw many retailers adopt a more flexible approach to shipping goods. Metapak CRO Bruce Fair reports retailers, including Holland & Barrett, invested heavily in their ability to ship from stores instead of warehouses. Ted Baker, meanwhile, has fulfilled an extra 101,000 online orders in one year following an initiative that sees a proportion of orders packed and shipped by stores.
This trend of converting traditional retail stores to local fulfilment centres, somewhat ominously labelled as ‘dark stores’, is an ever-increasing occurrence. It enables retailers to utilise existing store space to provide local delivery and click and collect services, providing convenience for the shopper, but without the costs and processes required to allow customers into the shop itself.
Retailers are also turning to Amazon Shipping, a service which allows businesses not trading on the Amazon UK platform to ship parcels through the Amazon network to manage online spikes.
Combine this repurposing of outlets and fresh investment in tech with the high street’s rising rent debt – reaching a shocking £2.2bn by the end of 2020 – and the future for physical stores buzzing with assistants and shoppers looks bleaker than perhaps many of us would like to admit.
Speaking to The Grocer, BRC Property Policy Advisor Dominic Curran warned: “The latest lockdown is making it even more challenging, and without action, rent debt could cause the collapse of a number of businesses, costing thousands of jobs and creating ghost high streets across the UK.”
Evolving systems for new habits
Other tech-based models are also anticipated to maintain the prominence they gained as we stayed home. Click and collect provided a lifeline to non-essential retailers during the pandemic. And it’s one that, along with the rise of ‘scan, pay and go’ app technology, many expect to continue and evolve to meet both shopper and retailer needs as the high street slowly switches its lights back on.
This habitual change feeds into a wider reliance on other digital channels: we can expect delivery, curbside pickup and e-commerce to remain part of our everyday lives. A shift that only further reduces the time we’ll spend in-store. A concern when you consider that, to begin with at least, stores will have to regulate the number of customers permitted inside, with smart queuing systems and social distancing measures set to continue.
Embracing more digital methods extends to the returns process too. InPost is already streamlining the returns experience for brands including Missguided, Boohoo and JD Sports, with the rollout of digital receipts across its UK network.
The one thing all these technologies have in common is the ability to streamline operations while boosting sales. Yet while this sounds like the perfect win-win solution, risk still exists. Without the right technical foundations and infrastructures, system complexity can be massively increased. Not handled properly, costs could spiral, and profits will suffer.
Don’t forget the customer
While these models are already proving their value, there’s a significant drawback that shouldn’t be overlooked: the lack of human interaction. They, at present, don’t deliver the rewarding and consistent brand experience that walking into a shop and speaking to a colleague, or the uniqueness of a particular brand’s stores, offers. This could result in all retailers becoming, in essence, ‘the same’. Distinguishing yourself becomes a more difficult task.
Retailers need to come up with ways to ensure they can maintain brand recognition, differentiation and, ultimately, loyalty, while still meeting the new shopping habits formed in 2020.
Is virtual shopping the answer?
Virtual shopping and AR (Augmented Reality), especially in fashion retail, are poised to come increasingly to the fore. This emerging tech enables retailers to provide a personalised experience in a safe and comfortable environment.
Ian McGarrigle, chairman at World Retail Congress, claims fashion retail will change radically in a post pandemic world. Digitally enabled purchases will represent up to 50% of sales in 2025, which questions the purpose of the store in the customer’s journey, McGarrigle says.
Larger retailers are already creating more personal e-commerce experiences, as store closures and social distancing rules impact store traffic. AR is also allowing retailers to digitally recreate the traditional shopping experience so they can engage with customers as if they were present in the store.
Ciaran Bollard, CEO of global e-commerce platform, Kooomo, explains: “It’s no surprise that Gartner has included AR as one of the top 10 strategic technologies expected to ‘drive significant disruption and opportunity over the next five to 10 years. This is especially pertinent with the ongoing coronavirus restrictions, as retailers need to try new methods to entice and interact with customers.”
A balancing act
It’s become a cliché to talk of uncertainty in these times. But if the last 12 months has proven anything, it’s that the more agile models and businesses, those who can react to change with efficiency and purpose to change, are the ones who gain the competitive edge.
In the face of irregular customer behaviours and ever emerging tech, there’s no doubt a more unified approach to retail will be required to reflect a shift in our habits and expectations – physical and digital channels must combine to provide a multi-channel service.
But the key to success will be placing customers, not technology, at the heart of the experience. It’s the only way that brands can be protected, and businesses can distinguish themselves in such a crowded sector.
Looking forward: if that sweet spot where the digital experience and the customer experience meet can be found, we can start to picture our high streets remaining a vital part of our community with some optimism. And we could all use some of that.