The demise of high-street retail has often been predicted. However, the sector has proved to be resilient overall, and whilst turnover is growing slowly, it is doing so steadily. That said, there are certainly significant differences between sectors, types of business and the size of retail locations.
Brick-and-mortar shops still play a vital role in the sales process. Retailers who wish to survive in the long term must adapt to changing market conditions. This means investing in their respective locations and adopting a customer-centred approach in all their activities. In contrast, retailers who fail to invest and do not create positive customer experiences will, sooner or later, go out of business.
Changing customer expectations and needs
The competitive landscape for retailers has changed significantly in recent years. Simply displaying goods on the shop floor is no longer enough. Customers have higher expectations of the shopping experience than they used to and have become more impatient. They also want to receive much more information about products and be able to identify with the company in question.
Digitalisation is the biggest driver behind the transformation of the high-street retail sector. Many retailers are already using digital technologies to boost customer satisfaction, improve the customer experience and reduce costs. These include real-time footfall analytics, digital price labelling systems, shopping apps, in-store navigation, digital displays, stock availability information, digital loyalty schemes, smart mirrors and mobile payments. However, additional services and personalised sales advice are also becoming increasingly important.
It is important for retailers to gather, evaluate and test ideas, and to implement them on a permanent basis if they prove successful. Retailers who fail to clear their backlog of investment will come under increasing financial pressure. Conversely, retail businesses stand to benefit if they adapt to the changing expectations and needs of their target audience. The following five examples illustrate innovative solutions from high-street retailers.
1. In-store navigation
Some customers know exactly what they want to buy. However, in large retail spaces, customers can quickly lose their bearings and waste a lot of time searching for the products they want. In-store navigation via smartphone helps customers find their way directly to the products or product categories they are looking for. The electronics retailer MediaMarkt extensively tested in-store navigation in some of its branches as early as 2019. Above all, this sort of in-store navigation takes the pressure off sales assistants; furthermore, it can provide support with stock-taking and processing picking lists for click-and-collect orders.
2. Augmented reality applications
Some retailers are incorporating augmented reality applications into their interactions with customers. For example, the outdoor clothing manufacturer Timberland is using AR terminals as part of its shop window displays. At these AR terminals, passers-by can virtually try on the new collection. The AR terminal also provides additional product information. Retailers can use such augmented reality applications to attract passers-by into the shop, for example. Lego also offers an AR application at the point of sale in its shops, where customers can scan a product’s barcode at a terminal and then view a presentation of the model once it has been assembled.
3. Showroom in the flagship store
Retailers do not always need to rent oversized retail spaces to showcase their entire product range. H&M has taken a different approach at its flagship store in Berlin: in a relatively small showroom with an adjoining café, only curated fashion and the latest trends are on display. Customers can use digital tools in-store to access the full product range. The small retail space allows for direct engagement with the target audience. The store concept is complemented by regular events, workshops and talks, which help to build customer loyalty.
4. Services tailored to specific topics
Positive customer experiences are created through special services. For example, the cosmetics chain Sephora offers its customers free cosmetics-related services in its branches. These include a make-up experience, a skin analysis, a skincare routine, personalised engraving and a gift-wrapping service. In addition, customers can take part in 30-minute beauty classes. In this way, Sephora strengthens brand loyalty and creates authentic customer experiences.
5. Innovative retail design
Adapting a store concept to meet customers’ changing needs and expectations is a key factor in long-term success. The Breuninger department store group, for example, has created an innovative, modular shopping environment at its Ludwigsburg site. The retail space can therefore be flexibly adapted to events, branding campaigns, new collections or product displays. Digital elements are integrated throughout the entire shopping experience to break down the barriers between the offline and online worlds.
The retail sector will only die if it stands still
Which measures are appropriate for a particular store depends on individual factors. Managers should seek inspiration from a wide range of sources: industry information, sector events and by keeping an eye on the competition. Following an analysis of a shop’s specific situation and the expectations and needs of its target audience, retailers can develop suitable solutions and then put them to the test. Once the trial phase has been successfully completed, the measure can be implemented on a permanent basis and rolled out to other branches. This innovation process must be regularly reinvigorated in order for retailers to continue to develop and avoid becoming obsolete.
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