At the end of November, Household attended the fascinating Wired Retail Conference in Canary Wharf, London, to hear what the technovators and retailers themselves had to say about everything from fashion ecommerce to how the simple act of buying something will become hyper convenient for customers.
Here’s what we heard:
Shops are where we shop
Incredibly, only 10% of retail sales in the Western world take place online – and even less globally. Yes, that’s right: 90% of purchases are still made in stores. Several speakers also emphasised that retail is still retail and shouldn’t always be looked at through the omni-channel lens.
Why? Because, as J Skyler Fernandes of Simon Venture Group told, conversion rates in stores are 20 to 30%, where those online are more like 3%. This is because customers will buy more on impulse in store, and because online is more hyper-targeted, with customers often knowing what they want before they open their browser.
Ross Bailey, MD of Appear Here, told of how 77% of 16- to 24-year-olds prefer shopping on the high street to online – and that 50% said they’d open a real shop than a digital one. However, this ever-coveted group (the millennials) continues to frustrate retailers, admitting that it enjoys shops for ‘learning, playing and sharing’ – but not necessarily for buying.
The future is a tech-amped version of the now
Brian David Johnson, Futurust at Intel Corporation said that we often look at the future uncomfortably, assuming it’ll lose its humanity and become streamlined and droid-driven.
Not so. According to Johnson it’ll be as it is now, just augmented by technology. With the reduction of a chip to 0, absolutely anything will be able to be a computer, and devices and algorithms will communicate without us – some without screens.
This sounds pretty robotic, but the development of widespread artificial intelligence still relies heavily on the imagination of people (which Johnson remarks is the only thing that holds us back) to reach its full potential.
Experience is ever important
Even in the future, physical shops will have a stronghold. The high street has already adapted to how important experience is to customers – if they’re not going for the convenience of online, they’ll want something in exchange for it: an experience that can’t be achieved in the virtual world.
Pop-ups have been an important part of this for retailers – they can test the water on ideas, and do something that matches today’s short attention spans.
Scott Malkin of Value Retail perfectly summed this up, saying: “retail is about experience that makes memories”, and that “Value Retail thinks about retail as destinations – as you would in tourism and hospitality – where the experience is central.”
He explained that while many online brands are opening real life stores to define and communicate who they are, conversely some are closing physical shops to focus on ecommerce, and finding they’re failing at it because they are not online companies.
The key, says Malkin, is adopting a “long-haul resort hospitality model”, plus constant reinvention of the experience to differentiate yourself from copycats.
People still matter
A clutch of fashion apps – proof of the way in which online is being superseded by mobile (i.e. fast, and with style) – is paving the way for mobile social commerce.
Rather than slickening out its experience with FAQs and automated this and that, Etsy has always put people first. In fact, even on its product pages, Etsy places ‘Ask a Question’ before its ‘Add to Cart’ buttons.
People love the provenance of what they buy from Etsy and the community feeling there, and they’re willing to pay more for it – a fact reflected by retail buyers such as Liberty sourcing from the site for their stores.
So a story counts. ‘Real’ counts. And Etsy isn’t the only place where this is in evidence. Depop is a fashion app that’s about ‘buying and selling with the excitement of social networking’.
Likened in the media to “Ebay and Instagram having a baby”, it puts the social element back into shopping. Emulating real markets, where the reputation of a seller is of the utmost importance, here too, it’s all about people.
Insta-delivery (well, almost) is crucial
Delivery times were a big discussion point and any retailers failing to address and offer short delivery options will alienate their customers. Before too long, it’s not going to be enough to offer click & collect.
But how to do something faster? It’s down to courier companies such as Shutl (acquired by Ebay last year), which are already springing up – especially in the States.
Sending their guys to physically go and buy the item you want from a store, they can get what you want to your home far faster than a warehouse-based, logistics-heavy online retailer – however slick the latter might be.
Two points to consider here:
1) This way of shopping will massively impact online sales
2) Valuable customer data will be transferred to the hands of the couriers, because customers won’t be doing the shopping themselves.
There was a lot of talk around the Block Chain, which enables Bitcoin and other ‘value exchange protocols’. This would universalise online shopping, because it’s about open-source payments (to get to grips with this, think about how expensive it used to be to build a website until open-source software was launched that allows anyone to do it themselves).
Brock Pierce of Crypto Currency Partners claimed that “the block chain will have a bigger impact than the Internet” because it requires no bank or card – and because currently only 25% of the world can shop online.
But it’s peer-to-peer and is not government owned – and whether governments would approve it is another matter.
While retail’s technological innovations were obviously the focus, the Wired Retail conference also managed to reinforce our view of the overarching importance of customer experience in ALL channels. Increasingly, customers aren’t thinking about individual channels – and retailers shouldn’t be either.
Convenience is becoming more important than ever to retail – and it’s going beyond click & collect, towards shorter delivery times and more instantaneous fulfilment. Brands will have to pay close attention to this curve to stay ahead of it.
But the most important takeaway from this techno feast of insight, is that the idea that physical retail is dying is a myth. It’s changing, but it’s not only still here, it’s still highly relevant.