In our latest insights piece, Hannah examines the powerful impact that technological innovation is having on our high-streets and shopping habits . . .
As the post-Christmas, Black Friday and Cyber Monday shopping madness settles, it occurred to me just how much shopping habits have changed since the pre-internet days of putting on a warm coat, a decent pair of shoes and braving the winter weather to trawl round high-street shops looking for those festive gifts for loved ones. One thing I love about real-world shopping is that those efforts can be rewarded with a much-needed hot chocolate and piece of cake to recharge the batteries!
However, it’s become instinctive to turn to Amazon or Google the moment we need anything, click and purchase and then wait patiently for when it arrives. I’m a fan of both online shopping and real shops - for different reasons - so it’s no coincidence that this year was my most organised year yet, with homemade gifts prepared well in advance, some items bought locally and the rest of my gift-list ordered online and on its way to greet me at my front door.
On the internet we can read about the latest products, check peer reviews and - through links to sites such as Amazon – order the item all in the space of ten minutes. With the convenience of being able to shop around at our fingertips, we can easily find the best bargains from the comfort of your own home (and why wouldn’t you?).
But are we in danger of losing some of the magic of shopping on the high street and being able to interact with tangible products - and people - as part of the purchasing process? As our preference for online shopping increases, might we one day no-longer have buzzing high-street stores to visit in person, instead will we be stepping into a Virtual Reality (VR) station at home and be instantly transported into a world of virtual retail outlets?
Where are we now?
The impact that the internet has had on the retail industry reached a tipping point in 2015 when online shopping sales exceeded those of brick-and-mortar stores in the UK for the first time.
Many of the most successful online retailers began with no physical high-street presence, with online giant Amazon paving the way for the likes of ASOS, Sports Direct and many more. In terms of economics and the exchange of goods and services, purely online businesses have significant advantages over their physical competitors. Removing physical retail outlets reduces overheads such as rent, building maintenance, labour and transportation costs. This allows online stores to offer goods far cheaper whilst also providing a much greater range.
Online shopping is changing the way communities and shoppers use the high-street, with big stores such as John Lewis and Next reporting record low sales figures in-store at the start of 2016. However in 2017, defying the high street gloom and doom, Marks & Spencer is reporting its first increase in clothing sales at Christmas for six years.
Apps and Internet of Things
Amazon is a company which will crop up in any conversation about the digital transformation of shopping and for good reason. Their effective business strategy soon put them at the top as a go-to retailer for just about anything you might need. Just as we’ve now coined the phrase ‘Google it’ when we need information, if you want to buy something without heading to the high-street most of us go to Amazon. What makes Amazon so popular is their commitment to technology and innovation.
In 2015 Amazon announced their Dash Button. One click of a conveniently-placed button and you can re-order in seconds a number of big name household products. Nearly two years on, we are yet to see a significant take-on of this product’s service, but Amazon are persevering by offering 250 of these buttons to date from their original 50 at launch. Meanwhile, there has been a lot of talk about Amazon’s desire to introduce a delivery system using drones, improving delivery to remote locations and the speedy arrival of your order (hopefully still in one piece!).
Their most ‘out there’ concept yet is the Amazon Go store, a cashier-free grocery store making its debut in Seattle. Amazon Go allows customers to walk in and out of the building without queuing to pay, by using sensors and an App to detect when items are removed from shelves. Your Amazon account is charged; all of your shopping done - without having to talk to a single soul: it’s literally grab and go!
Through smartphones, convenience is at our fingertips in other ways. We no longer have to carry our purses and wallets around with us as mobile payment apps like Zapper and Square allow us to pay for our meals, and collect points for our latest coffee purchase through our phones. Even brick-and-mortar businesses are adapting how they interact with customers with a rise in iPads and other tablets being used in place on standard checkouts. These devices open up businesses to digital payment processing, customer self-service and improving experiences within the retail environment as stores can give more information about products, online availability and demos to enhance the sales process.
Consumers may be more empowered and informed these days, but so are retailers. By collecting data from our instore and online transactions, marketing software can help retailers record our habits and preferences and then suggest personal, relevant buying suggestions combined with offers and discounts that may be harder to resist as they are so personalised. No longer will we need to ‘shop around’ experiencing the excitement (or sore feet) of running around the high street – retailers will be able to tell us what we need, order it at the click of a button and have it delivered straight to our door.
An example of location-based services in retail is iBeacon, a device which allows stores to target shoppers who are within a certain proximity via their mobiles, and use previous transaction information (gathered online and in store) to send special offers and promotions tailored to their personalised interests.
And ladies - Google and H&M have just announced that later in 2017 they will make you a dress based on your Smartphone data through an app called The Data Dress. This app will collect information on you such as your location, physical activity and the weather and collate this through an algorithm which generates a unique and personalised garment. This example alone shows how closely retailers can now react to and interact with shoppers – even those who don’t physically step through their doorways.
Where is technology taking us and what future do we see for ourselves?
The internet and smartphones certainly have changed how and where we shop, but the truth is we’re not quite ready to say goodbye to physical shops just yet. The reason Amazon began opening physical stores in 2015 was with an aim to complement online shopping, reduce shipping costs and widen their consumer market. Meanwhile, online sofa and furniture company Made.com opened showrooms around the UK as a way to connect customers with their products, allowing consumers to feel textures and test for comfort.
Hotel Chocolat, which started life as one of the first online-only retailers in 1997, soon saw the importance of investing in physical stores back in 2001 to heighten the shopping experience, allowing consumers to taste their products before purchase and overall enhancing their status as a luxury brand – something which couldn’t be achieved to the same extent online.
In comparison to online shopping, visiting a physical store takes consumers to another level in certain aspects of the shopping experience which online just can’t complete with (at least for now). It is recognised that we wear different lenses depending on where we shop – online we seek out familiar, trusted items and requires low effort. In store, however, as we’ve invested more time and effort to get there, we demand a better experience in terms of surrounding, displays and customer service.
Personally, I’m not ready to say goodbye to the high street shopping experience just yet – but, I wouldn’t complain if a new wardrobe of clothes manages to find its wat to my front door!