This year has been particularly difficult for the high street, with many of the well-known giants experiencing major profit challenges and an uncertain future ahead.
With business rates high and much of the retail sector continuously relying on the archaic high street lease model for stores, it is difficult to stay positive about the long-term viability of the high street. However, we are also starting to see some positives signs of innovation in this area.
One of the most thrilling aspects of this industry is its ability to be flexible and continuously reinvent itself. We are seeing retailers who have built their success solely online begin to harness the power of their brand recognition to set up physical stores.
It’s important to recognise that these new physical stores from online giants are not always long-term initiatives, with the retailers delving into the options of pop-up stores or short-term leases. By avoiding outdated long-term leases, retailers are able to pick up significant spaces at competitive prices, meaning more profit is sent back to the etailer with smaller cost margins.
The pop-up shop and shorter lease model could potentially be the answer to the future of the high street. It would certainly be interesting to visit your local high street and not know what to expect from the shops or the modern technologies they are investing in, such as virtual reality concepts and AI.
Concepts like Amazon Go’s check-out-free store are already helping businesses drive brand recognition, but it is vital to clarify that these investments come with significant overheads. These shops are not the vanity projects that they first appear to be – with stores targeted to offer brand experiences to customers through their specific targeted services, to drive long-term loyalty.
Moving customers from the digital to the physical can be seen as an extension of the current multi-channel communications trend.
The retailers which manage to correctly get the journey from their digital to their physical offering right are producing a streamlined omnichannel approach for their customers and enabling synergy between the online and high street worlds.
When making the transition between physical and digital, it is vital that the data between these two outlets are seamless and easily accessible. Key insights needed include customer demand, product preferences, sales planning and inventory figures. This critical information will allow retailers to specifically predict future sales trends in store to ensure the physical stores are well stocked with the right products and services, so that the upfront investment is worthwhile.
To make the move to physical, online retailers need to ensure they have up-to-date data insights. Physical stores can be costly, even with short-term leases, and so the decision to open one should be informed and considered. The products and services in-store must be tailored to individual customers. Accurate data analytics can be used to predict spending habits, display customer preferences and trends, and more.
Without proper insights into the data behind the scenes, it is incredibly difficult for the online giants to create a seamless and memorable customer experience. Therefore, data must underpin every retail strategy to ensure pop-up and short-term leases drive sales, excites customers and propels brand loyalty for the long term.
Nick Felton is SVP at MHR Analytics.