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Using technology to diversify the bricks and mortar experience

Diversification to manage risk has to be an essential tool for any retailer in the current difficult trading conditions. Done right it can enhance a retailer’s competitive position but done wrong it could severely impact the brand and the business.

As retailers are seeking to secure customer engagement and increase sales, offering an enhanced customer experience seems obvious. This can range from giving out freebies to the use of sophisticated technology to provide a customised product. Ultimately it is a way to differentiate from competitors and engage with the customer.

The shift in consumer shopping in preference of online sales has created two market places, the in-store and online. Recently online sales have risen at meteoric pace with in-store sales declining. At what point does a traditional bricks and mortar retailer without an online presence decide it’s time to diversify to include eCommerce? The most obvious red flag is a persistent decline in sales but arguably this is too late: the damage has been done and the retailer is simply playing catch up. Launching an online store takes time, investment and resourcing. Sometimes the investment required cannot seem worth it, with large volume, low cost retailers such as Tiger and Primark avoiding online sales and instead simply operating websites showcasing their products.

The convenience of online shopping

Physical stores often struggle to meet the simple convenience of online shopping, the wider choice of inventory selection and ease of fulfilment that online retailers offer. Some retailers have used their online store to drive footfall to their physical stores by offering discounts for click & collect seeing an increase in store sales as a result.

It is premature to forecast the death of the traditional store. Many consumers enjoy the in-store experience which can play a vital part in shaping customers’ connection to brands. Physical stores offer a tactile experience that an online retailer simply cannot, and for some (particularly luxury brands) this is enough to prevent them selling online as the customer experience would be very different. Physical stores are also better placed to offer that fun, experiential element to engage the customer. The technology to back this up is readily available, including touch-screens for browsing and Wi-Fi with customer email required to sign-in for profiling purposes and customisation tools.

Data protection law

Data is key in the use of technology in stores and online so retailers should consider data protection law implications before introducing new technology. A legal basis is required to process personal data such as consent or legitimate interests. In order to rely on legitimate interests, retailers need to ask themselves, would the consumer reasonably expect us to use their personal data in this way? Consumers must also be kept informed about the use of their personal data.

Slow load times

Consumers are demanding with little patience to wait for a site that is slow to load, or sluggish delivery times. Selling goods online without having a fit-for-purpose website and the necessary infrastructure is a false economy. Given the integral role of websites, website development contracts are critical. Retailers should pay special attention to intellectual property rights to ensure that they own key rights and that liability to third parties for website content or intellectual property infringement is minimised. There should be appropriate service level agreements to provide the ongoing support with appropriate termination rights included to avoid being locked into an agreement with an IT supplier who is unable to accommodate the needs of the business.

Fulfilment

The fulfilment of orders is critical; failure to supply on time is one of the quickest ways to annoy a customer. To ensure fulfilment during peak periods there is an increasing reliance by retailers who wish to offer a home delivery option on third party suppliers and in particular digital platforms such as Amazon and HubBox. Robust contracts with suppliers and continuity plans are important to tackle potential failure of logistics suppliers to perform. Alignment with the brand is essential here, particularly with the trend of the socially conscious consumer who cares about the working practices of the retailer’s supply chain.

International expansion

Retailers wishing to expand globally may look to technology to facilitate their expansion. Payment solution providers offer the ability for retailers to reach customers internationally, enabling them to pay on the retailer’s website in their local currency with the payment solution provider fulfilling the order. The likes of Marks & Spencer’s have used this system successfully. However, these contracts need to be reviewed carefully to establish exactly where the liability lies.  

Technology can assist diversification but, whatever strategy a retailer takes, it should stay true to its brand to avoid alienating its customers. In the meantime, there is the ever-present threat of large e-retailers such as Amazon seeking to capture both markets by establishing a physical presence through pop ups and acquisition, providing an omnichannel approach.

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