Exclusive: The pandemic showed the limitations of an online-only model, says retail guru
A year of enforced change in buying habits where pretty much everything went online has reverted to ‘the new normal’.
The Covid pandemic accelerated the shift to online; but is the future of retail really digital only?
While in the short to medium term, there will remain some concerns over the logistics of browsing and shopping while maintaining social distancing and health protocols, it is predicted that the vast majority of consumers will return to the High Street, at least in part, simply because we enjoy shopping.
Just as the likes of Arcadia failed because they did not adapt quickly enough and embrace the online, omni-channel retail experience, Russell Loarridge, UK director of customer identity firm ReachFive, discussed with City PM why many pure-play online retailers will fail if they don’t embrace a ‘clicks and mortar’ model that has the needs and desires of the modern consumer at its heart.
“Covid has accelerated the adoption of e-commerce but it has also highlighted the limitations of an online-only model, particularly for non-essential items,” Loarridge said.
The convenience of a slick online experience can be rapidly undermined by the disappointment experienced when the clothes don’t fit or the lamp doesn’t match the online description, he explained, especially when they have to be “time-consumingly returned,” as Loarridge put it.
Bigger ticket items
Many retail analysts believe that online can short-change the purchase experience for bigger ticket items.
Loarridge agreed: “Yes, it is possible to buy a bike online, or a sofa. Even a car. But it’s not the same. Shoppers not only want to touch, feel and gauge the quality of these items, they also value the expertise of those making the sale.”
However good the online experience may be, and with great personalisation that drives loyalty and engagement, that experience can be fantastic, it is not complete, he argued.
Many pure-play digital retailers have great operational models. They know how to meet customer purchase and delivery needs.
Moreover, they have explored social media to create communities; maximised the influence of Insta-stars and YouTubers and invested in innovative interactive technologies in a bid to nudge customers towards the right products.
“But what are they offering the teenagers wanting to hang out on a Saturday afternoon, try on clothes, while sharing a laugh and a latte?” Loarridge wondered.
“Or the cycling aficionados planning to meet up for a Sunday ride at the local bike shop, picking up a coffee, a new pair of gloves and a chance to scope out and discuss the latest models?”
Clicks and mortar
Online is convenient, no argument. But Loarridge pointed out that the past year has reinforced the divide between essential and non-essential retail; the difference between the products people need and the items they enjoy buying.
“And, of course, the competition has escalated. Every retailer is online now and customers have spent a year clicking from one to the other. Where’s the loyalty? Where’s the differentiation?”
After three lockdowns, surveys show that the desire for physical shopping experiences is stronger than ever.
If pure-play retailers cannot add high street engagement to the experience, other retailers will, Loarridge warned. “And that will put a severe dent in the sales uplift enjoyed over the past 12 months.”
“Personal, human communication is a vital part of the engaged customer experience – and without it, pure play retailers will begin to look as out of date and irrelevant as those failed high street retailers of the past that never got a handle on online retail,” he noted.
VIP experience
This is not about recreating past retail models. There is no need for pure-plays to invest in the extensive store estate that created identikit high streets up and down the UK, Loarridge stressed.
“But there is a huge opportunity to think creatively about how, where and when customers can become part of a physical interaction that reinforces the brand experience.”
Pop-ups, for example, could create a destination, with loyal customers invited for time-limited VIP events at their local town, before the pop-up moves on to another location.
The technology is simple, Wi-Fi, tablets and mobile pay solutions can be in place immediately. Loyalty solutions can capture customers both on- and offline. There is no need for a full range of stock; a retailer could opt for a subset – a VIP range, for example – or just sample items that can be tried on in-store, ordered and delivered to the customer the next day.
“Add in screens, virtual mirrors, coffee and a hang out zone and a retailer can create a new customer destination that changes the perception and enhances the brand,” Loarridge explained.
“Or a customer can order items to be waiting at the shop, try them on, leave them or buy them, easing the returns process, for the customer at least,” he continued.
“While they are there, they get a chance to talk to switched on brand ambassadors; have a make-over; get measured; take a make-up quiz – and then test the recommended products. They can have a fun, enjoyable, memorable shopping experience.”
Lifecycle
Adding a physical experience gives pure-plays, such as Boohoo, can create a better chance to retain customers for longer, as they naturally move between brands.
By building a profile for each customer across all the brands, retailers can follow customers as they move through teen fashion for example, and start to look for something more sophisticated.
“Rather than losing customers to the competition at this point, proactive marketing can help to nudge them across the brand portfolio to keep them within the business.”
Russell Loarridge
“Invite post-university students to a pop up store for a ‘first job’ make over; or have a 21st birthday event, with an ‘invite your friends’ offer providing a chance to capture another set of customers,” he added.
“The clever use of physical stores will provide new ways of engaging with customers that completely changes their brand perception and engagement.”
Time is running out
Will the pure-plays react in time though? Just as the traditional high street retailers were baffled by the online model, pure-play retailers have no experience of physical retail.
With the acquisition of the Arcadia brands and Debenhams, Boohoo and ASOS missed the chance to buy this expertise, those individuals with skills in estates management, shop fit and, critically, face to face customer interaction.
“Buying these skills back in, or attempting to develop this expertise internally will take time. But other barriers have vanished,” Loarridge stressed.
He pointed out that retail landlords are agreeing far shorter leases with regular break clauses and companies are actively facilitating pop up shops for retailers.
“Customers like the change, and the fact that high streets are no longer the same up and down the country.”
Russell Loarridge
Loarridge is convinced this change can be achieved as long as pure-plays accept that an efficient, personalised and engaging online retail experience no longer offers differentiation.
“If the pure-play retailers are to avoid the fate of the high street dinosaurs, they need to recognise the shift in customer expectations and attitudes.”
Online footfall alone is not going to keep these retailers in business, he said.
“To create and retain loyal customers, retailers need to be able to combine the efficient, personal online experience with the immersive engagement that is only possible face to face,” Loarridge concluded.