The retail power war: offline vs. online

According to Google’s Consumer Insights “84 per cent of Americans are shopping for something at any given time and in up to six different categories” and, with so much brand and product choice, as well as options for where to buy from, the Insights team suggests that shoppers are “becoming overwhelmed”.

The Insights also identifies that “nearly nine out of 10 shoppers are not absolutely certain of the brand they want to buy when they begin looking for information” – searches to discover new or trending brands have risen, suggesting that shoppers are keen to be inspired by brands they are not already familiar with.

Department stores and supermarkets that offer the greatest variety should, then, be perfectly positioned to capitalise on market trends, yet some of our most well-established department store chains are not thriving. In fact, the Telegraph unveiled in July that UK high streets had seen an estimated 1,334 shops close or be earmarked for closure between January and June 2018 – including retail giants Marks & Spencer, the John Lewis Partnership, and House of Fraser, which collapsed owing nearly £1bn to creditors.

It is a commonly held belief that the growth in online sales is the reason for such closures, however ecommerce still only accounts for 15 per cent of UK retail sales and physical bricks and mortar outlets remain the major pathway to purchase. But times are certainly changing and department stores and supermarkets can no longer claim to offer the greatest convenience or breadth of choice, as they once did. So what is the role for these retailers in the Internet age, when visiting in-person becomes a rarity rather than the norm? And how can these retail giants stand out and provide something unique, to entice and engage shoppers to spend time in-store?  

It may not always be in the retailer’s interests to maintain a physical presence in every town or every shopping centre anyway. Closures are not always a sign of failure. In some instances, they are simply a sign that chains are strengthening their portfolios, by focusing instead on the locations they have that work well. The money saved can then be invested in improving experiences in the flagship stores and, with the USP of physical retail remaining unchanged and unchallenged – that consumers can truly experience products with all of their senses – these savings can be poured into enhancing this element in-store.

Only when shopping in person can consumers truly have confidence in choosing a particular piece of fruit, item of clothing, scent of perfume, or colour of foundation, for example, which goes some way to explain why, according to a 2016 PWC retail report, physical shops still boast a “position of strength” despite footfall slowing. So, building on the USP of trialling products and selecting the perfect one, we predict that more and more department stores and supermarkets will incorporate elements of indulging the senses as part of their sales funnel; enhancing senses-focused approaches to emphasise the distinction between in-store and online experiences.

As Mandeep Singh, Co-founder and CEO of Trouva, an online marketplace for independent brands with small bricks and mortar stores, recently predicted, “offline will become just like a marketing channel, just like taking a billboard or spending money on Facebook”. In the same way as marketers tailor their messaging and offers in their e-newsletters, direct mail, magazines or on social media, retailers will be able to craft in-store experiences tailored to the products or services in question, and to their customers.

What’s more, if the frequency of people visiting shopping centres and high streets continues to decrease, the key to long-term success for department stores and supermarkets will be to ensure that the experiences shoppers have on these less frequent visits are positive enough to leave them with an affiliation for the retailer or brand that will linger – until the next time they want to spend time browsing in-store, or until they are driven to find the retailer or brand online.

Recognising this shift to experiential retail, Sainsbury’s recently announced the rollout of in-store beauty advisors to support the sales of beauty products. This human interaction with experts and advisors is another element that is unique to in-person shopping experiences. Retailers up and down the high street have been incorporating human interaction or many years, from music stores helping shoppers to buy the right instrument, banks offering free of charge financial advice by appointment, and sports shops guiding shoppers on the right footwear or equipment. Recently, EE introduced ‘help hubs’ at the forefront of its stores, as the brand refocused, choosing to emphasise services over sales. Reed Krakoff of Tiffany & Co explained the brand’s new approach to experiential retail – with customers being able to add design elements of their own to products, to have styling sessions and even attend performances in store: “It’s not so much of a hard sell in stores… People want to be entertained to some extent; they want to be enriched at the same time and not just shop”. In the coming years we expect to see many more examples of retailers creating valuable interactions in store, enhancing the in-person experiences for customers.

But the challenge goes both ways. We don’t only expect physical retailers competing with online counterparts to up their game – the opposite is also true and retailers that have seen success online will not be resting on their laurels. As ASOS continues to grow, for example, we can expect to see the brand taking a holistic approach to the online vs. offline dichotomy by entering the physical retail space. However successful it may be online, ASOS can always add greater value for customers through the creation of physical touchpoints. Whether ASOS chooses to offer the best elements of experiential retail via pop-up boutiques, or travelling sales-pods, or offer collection and delivery points to simplify engagements with the online process, or even host regular events to showcase new collections where customers could indulge their senses in what the brand has to offer – the opportunities to create unforgettable or ultra-convenient experiences through physical retail should not to be dismissed.

Tesla offers a fantastic example of a retailer embracing the benefits of physical retail – while the manufacturer doesn’t need to rent a central shopping centre or town centre space to house its full product catalogue, showcasing a particular new model or two in a busy shopping mall is a recipe for success. To hook people in, Tesla enables shoppers to indulge their senses in everything the products have to offer, something which can’t be achieved via a website and which only a small number of shoppers would experience if left to decide to visit the out-of-town forecourt.

So we predict that closures of some individual stores within bigger name chains will continue, and that entire department stores and supermarket chains may fold too, if they do not adapt quickly enough to the need to redefine their USP for the Internet age. But we’re optimistic about the future of physical retail none the less because, in a time of fast-paced change, we see on a daily basis the innovative ideas and creative reinvention of experiential retail, and we know that what is coming next will be better than what has gone before. With a rise in senses-focused and personal interactions, those shoppers who do venture to the shops will be met with more rewarding, useful and enjoyable experiences, which simply can’t be equalled online.

Contributor: Mark Howell, Creative Director at Play, a strategic retail design agency specialising in omnichannel retail solutions.
Play has recently worked on a project for OPI – world’s first digital nail trial.