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Digital retailers are not unbeatable: why physical stores are the future

February 13, 2020


There’s a misconception among the general public that the world of retail is moving inexorably to a fully digital experience, with city centres destined to become empty museums haunted by the ghosts of what we used to call ‘customers’.


Doubtless, the rise of quick and easy online shopping and cheap delivery, twinned with the financial pressures of increased living costs have led  to a slew of high-profile victims over the last decade. These were by no means unpreventable retail deaths; Woolworths, Staples and Maplin were flawed by their inability to innovate, cut costs or amalgamate, rather than an inevitable technological tide eroding their otherwise thriving businesses. I accept that hindsight is a wonderful thing, but I think anyone can see that Blockbuster could have been at the forefront of digital entertainment had it moved in time.


The numbers back this up. While many of us order items online, 80% of UK retail purchases happen in store; the US is even higher at 89%. It’s clear that the actual shopping experience is still valued by the consumer, but what is less clear is how the retail sector is stepping up to take advantage of this key differentiator in order to stay above the rising digital tide.


What I would love to see in this space is the kind of innovation that creates a whole new psychological connection with shopping. At the moment, discussions around retail, and the retail experience itself, fall into a dichotomy of being in store with the convenience of trying and sizing the product versus online with the convenience of saving time and travel costs. The problem with such a binary view is that it vastly oversimplifies the relationship between shopper and store, reducing it to a single transaction and failing to take other factors into account, such as brand loyalty, customer experience and more. 

"By encouraging people to share, collect and compete when shopping, we are seeing new aspects of social interaction and reward feedbacks crediting the shopping experience."

The advantage of having a physical space is that shops are able to incorporate new technological experiences. Apps already exist which use augmented reality on your smartphone to show you in-store offers in real time. For the next generation of shoppers, there has definitely been a ‘gamification’ in how they use their smartphones to enjoy the retail experience. By encouraging people to share, collect and compete when shopping, we are seeing new aspects of social interaction and reward feedbacks crediting the shopping experience. 


Likewise, we have apps and push notifications that tell us where and when we should be if we want to get a free sample or get a unique brand experience. I suspect we will also begin to see consumers coming to the store off the back of a digital purchase which has given them a physical call to action. The shop might just be trying to get its window display on social media, or it might be trying to show off a regional exclusive – either way, it’s putting a premium on a personal interaction and giving a credence to its brand: ‘come round, we’re thinking of you’. That’s going to go a lot further than sending out an infinite number of personalised emails.


This is the crucial mental barrier to break down: retailers that transform purchases into an experience rather than a transaction or a chore will always win. The customer experience should go  beyond simply taking something off a shelf and paying for it. Digital technology is the vehicle which will bring the physical store back to the forefront of the consumer’s mind. You might not recall the last time you genuinely got excited about a store opening, but you may remember the next. 


This isn’t just another disconnected theory on retail success. We’ve already seen digital giant Amazon open physical stores in the US, proof that online and offline retail aren’t inherently opposed; they’re inherently complementary. Or Jeff Bezos knows something that others do not. But make no mistake, today’s top retail players will have to focus on service, experience and innovation to get people through their doors – and to the tils. They may well have to work together. They may also have to streamline and strategise. The things worth doing most in business are often the most challenging, but if retailers get it right, we could see a welcome re-energisation of city centres that shows consumers and providers alike that online and offline work best when they work together.


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