SumUpBlog

What is the future of retail experience?

The term experiential shopping or ‘retailtainment’ may be relatively new, but the concept has been around longer than you might realise.

Think about it... We all walked into an Abercrombie & Fitch at some point in the past wondering why topless men in skinny jeans were handing out perfume samples to us in what can only be described as a nightclub full of tartan. And yet, we found ourselves going back for more, and purchasing that moose covered shirt never felt as satisfying if you ordered it online. Why?

Because shopping is so much more than the act of buying. As consumers, we need to have a relationship with the brands we buy from — a retail experience.

Shopping has undergone a metamorphosis thanks to E-commerce, new payment processes and shop owners having to keep up with one another in an increasingly competitive and demanding market. So bearing that in mind, how are stores securing their place in the future of retail?

Creating in-house retail experiences

A few years ago, when you entered a high street store like Topshop, that’s all you were doing. Now, when you pay a visit to Topshop on Oxford Street, you’re walking into a nightclub, a hair salon, a cafe, a nail art studio, a piercing bar and a clothing shop. Equipped with everything their customers could ever need, the retail giant has transformed their store into a one-stop shop.

With almost everything being available online and deliverable within a day or two, or even in a few hours with services like Amazon prime, the purpose of physical stores has shifted. When discussing the future of the shopping experience, Starbucks Chairman, Howard Shultz, points out that retailers who are “going to win in this new environment must become an experiential destination. Your product and services, for the most part, cannot be available online and cannot be available on Amazon.”

Following his statement, The New York Times reported that Starbucks had closed its online store to focus on in-person experiences and planned to launch over 1,000 premium, spin-off stores called “Starbucks Reserve” that would focus on a more tailored, high-end approach.

Bringing tech into the equation

The BBC recently profiled brand strategy consultant, Steven Dennis, who claims that thinking of retail “as either online or physical spaces misses the point.”

He envisions a future where “shopping will need to be an amalgamation of both online shopping and physical stores, where customers move seamlessly between the two. Personalised interaction with customers such as intuitive apps and immersive experiences will be fundamental to success.”

While offline retail currently accounts for 93% of sales, it is predicted to fall to 80% by 2025 and Farfetch founder, José Neves caught onto this and found a way to make the two worlds merge.

Farfetch trialled what has been referred to as ‘the retail store of the future’ in 2017. The London-based shop took their traditionally E-commerce platform into the offline realm through touch-screen-enhanced mirrors, sign-in stations and connected clothing racks.

Customers were able to access their purchase history, wish list and account information on screens located in the store, giving sales assistants insight into their individual tastes. The dressing rooms were also equipped with smart-mirrors where clients could request new products and sizes to try on.

Every purchase made was then added to their order history, contributing to more accurate product recommendations in the future — a win-win for both the brand and the consumer.

McDonald’s also found the implementation of Evoke-powered touch screens to add value to the business and the retail experience. According to their CEO, Steve Easterbrook, they found that “when people dwell more, they select more. So there’s a little bit of an average check boost” with customers spending roughly 6% more. The screens also drastically cut down queuing time and provide an all-round smoother experience.

Beyond the screen

Experiential shopping is more than just adding layers and layers of tech to your store, as Vans discovered through the creation of ‘House of Vans’ in New York and London. The free venues create a space for like-minded skaters and BMX riders to come together.

Complete with a skate park, regular workshops and events, the locations are the perfect PR for Van’s, and they create a sense of community for their ideal clientele. It is this sense of belonging and community that gives them a cult-like status worth following amongst their target demographic, which is something that cannot be created in the online world.

Staying true to its premise, while still catering to the new expectations of their shoppers is Warby Parker. In 2010, Warby Parker started offering glasses-wearers affordable, stylish frames that they could try before they buy at home. Sounds simple enough, but they are now valued at over $1 billion so clearly this switch up in how we test out products before purchasing them worked.

They have now opened up multiple locations across North America each offering customers a different experience, where people can still try on frames, but the glasses are still sent out in the post, giving shoppers the certainty of liking a product and a retail experience, while holding onto their roots.

While these are all innovative, interesting ideas on how to engage with the future of retail, you don’t need to break the bank to join the party. Even something as simple as what a lot of makeup brands such as Mac and Charlotte Tilbury offer can do the trick…

What is something you can’t do at home if you order makeup? Try it on. Now if you book in to have your makeup done at multiple shops, you’ll have your makeup applied by a professional, and the cost of the makeover will all go towards products in their shop. The result? A “free” makeover and a newly loyal customer.

How payments can make all the difference

According to a study conducted by Visa, British people spend an average of 6.92 minutes a week queuing with Londoners spending 3 minutes longer in lines. This may not seem like much, but it adds up to 18 hours a year, and 89% of UK residents claim to have left a shop at one point or another rather than waiting in a long queue.

It’s estimated that shop owners miss out on 10% of customers due to long queues and 26% of customers who walk away from a long queue will “discontinue their purchase journey completely.”

One guaranteed way to cut down on queuing? Faster, more affordable payment solutions. According to an ACI Worldwide report, customers are looking for the following when it comes to in-store payment;

  • Faster checkouts

  • Seamless omnichannel experience

  • Payment methods that are easy to understand and use

  • A secure environment to transact

Shopify found that queues cost the UK retail economy £3.4 billion a year, and over 70% of surveyed customers agreed that paying for products in stores was their “biggest pain point.” So why aren’t we doing anything about it?

With the help of portable, affordable payment devices, the possibility of having every member of staff act as a check out station is available. The potential to eliminate queueing altogether is out there, and the data clearly points towards customers wanting this to happen.

Sure, we could use Amazon Go as an example, but it doesn’t need to be that complicated. Apple has pretty much perfected the payment process.

All of their staff are on the floor, ready to help you make a purchase decision. And once you have decided what product you want to walk away with, you can pay for it with your server on their trusty iPad.

Apple has also introduced the ability to pay for their products using your iPhone to scan the barcode of the product you want to buy in-store. They have enabled their customers to forget about queuing totally.

But it isn’t just the big guys like Apple who have the ability to reap the benefits of so-called queue busting; small businesses can too, and we’ve seen this through our merchants at SumUp. Mobile POS solutions like our SumUp Air or SumUp 3G cut down queue time dramatically, and as previously stated, can even get rid of lines altogether.

Our customers know more, but so do we

We’re living in an age where everything can be found online, and that includes reviews. According to a survey conducted by Podium, 93% of shoppers admit to online reviews impacting their purchasing decisions, and 60% of us look at online reviews at least once a week.

What’s interesting is that at least 2 out of 3 of us, are willing to pay 15% more on a product or service if the reviews are higher and a quality experience is assured. This is further proof that the offline and online worlds are equally as significant and omnichannel retail is a sure way of securing success in both realms.

Sara Kleinberg, Head of Ads Research and Insights at Google, writes about how consumers also expect more from retailers in terms of what they deliver;

“Mobile searches for “open” + “now” + “near me” have grown by over 200% in the last two years (for example, “stores open near me right now” and “pharmacy open near me right now”). But “right now” isn’t just about a purchase. It applies to finding information right before the sale and customer service afterwards.”

So, consumers are interested in the quality and the availability of products but are brands delivering on the communication side of things? Apparently not.

60% of consumers “expect brands to provide consumers with information they need when they need it, less than half of them feel that brands are delivering.”

This seems absurd as a certain way to improve online reviews and the overall shopping experience of customers is to communicate. 88% of people prefer brands who keep them in the loop. This means, letting someone know when their order will arrive, keeping your stock list up to date and having an overall strong presence online.

Customers are now able to make informed decisions on where they take their business, but businesses also have a wealth of information at their fingerprints. Access to new data points and demographic insights means shop owners can ensure they are supplying their clientele with precisely what they want, at the price that they want it.

“While product merchandising was once an art, today it is just as much a science. To better reach these empowered shoppers with the right products at the right price, retailers must put insights, not just the product, at the heart of every activity and objective. That means using data to power product merchandising decisions through smarter product assortment and demand-driven sales strategies.” – John McAteer, VP of Sales, Retail, and Technology at Google

Sustainability matters

Finally, one thing all shop owners need to think about if they stand a chance of keeping up with the future of retail is sustainability. How the production of goods impacts the environment has long been under discussion, but it is becoming an increasingly hotter topic.

And consumers are starting to care now more than ever. Fashion company, Lyst, reported a 47% rise in consumers actively seeking out sustainable and ethical fashion through search terms such as “organic cotton” and “vegan leather.”

The Guardian uncovered that roughly 1 out of 8 Britons are now either vegan or vegetarian, and 21% of the country claim to be ‘flexitarian’ opting for a minimal meat diet. It cannot be argued that ethical consumerism isn’t important to the public, as 73% of them claim they would change their shopping habits to reduce their impact on the environment.

Sure, the production of sustainable products are often more expensive than simpler alternatives, but over 41% of the public say they would be happy to pay more for a product that was produced ethically and contains natural ingredients.

And, companies and fashion brands alike are now starting to release transparent reports on the effect they have on the world. Take the H&M sustainability report for example, where the retail company highlights their efforts to become ecologically friendly through updates and facts such as, “today, 57% of the material used by H&M group is recycled or sustainably sourced.”

Small but effective pushes to reduce environmental impact can be seen in the government's recent ban on straws in the UK. These small changes businesses have made have prevented the production of over 8.5 billion plastic straws a year. While this is a baby-step, it shows the effect businesses can have when taking sustainability into consideration and how people are rooting for it. The retail experience is continually evolving, and shop owners will have to keep up to date with trends and stay connected to the needs and concerns of their customers if they want to secure a place in the future of retail. The good news is, the data, tools and processes needed to make this happen are out there. For more advice on how to keep your business in the limelight, visit the SumUp blog or take a look at what we offer merchants here.

twitterfacebooklinkedin

Anna Marie Allgaier