Escape Zoom 5 – As lockdown begins to unwind, how can retailers in Britain make the most of the return to physical retail and shopping? And what can be learned from current consumer behaviours online?

Propeller Group chairman and Escape Zoom host Martin Loat assembled a forum of experts from across the retail spectrum to explore the implications of the reopening of physical stores and what insight might be useful from current consumer behaviour online. An interesting vision for the future of the physical retail space – the “shop” – emerged.

Escape Zoom 5

Participants in the latest Escape Zoom included: 

Ivan Mazour, CEO and Founder, Ometria

Mike Tristram, Senior Strategist, Checkland Kindleysides

Sandra Perriot, Retail Strategy Director, Cheil 

Gaston Tourn, CMO, Appear Here

Jamie Powell-Tuck, Chief Commercial Officer, ZigZag Global

Charles Webb, Partner, agilityDigital

Nick Noble, Head of Strategy, Acoustic 

Aron Cody-Boutcher, CCO, Colateral 

Dom Robertson, RPM, Managing Director 

Here’s what they had to say.

Ivan Mazour, CEO and Founder, Ometria

This crisis has highlighted the importance of the relationship between retailer and consumer.

We have over 200 million consumers profiled in our data sets, which has given us an incredibly clear view of how consumer behaviours are changing. Our data shows us that the decreased reliance on physical retail isn’t temporary; it is here to stay. We expect to see anywhere between a 20%-50% drop in footfall to physical stores become a permanent fixture of the post-pandemic retail landscape. 

Those brands who have been reliant on physical retail will undoubtedly have to reimagine old bricks-and-mortar competitive advantages – such as store location, big in-store promotion days and other key footfall drivers – for a world where commerce happens primarily online. 

That said, physical retail won’t disappear from our lives completely. The retailers that survive this crisis will be the ones that quickly capitalise on digital transformation, and who focus on the customer experience. Such retailers will refocus their physical stores on brand relationship building – seeing them as a ‘real-world’ extension of the online customer experience. This will also include investing in technology to collect and ‘join up’ the customer experience offline and online. 

Customer experience is the new competitive advantage. Retailers will need to think carefully about how they can manage the end-to-end experience for consumers in their digital interactions to capture commerce and drive brand loyalty. 

“Stores can’t be viewed as only the main point of sale – instead they need to become a meeting point for a brand and a consumer. Customers still need to see the human face of a brand and touch the product.” 

– Sandra Perriot

Mike Tristram, Senior Strategist, Checkland Kindleysides

There has been a clear shift towards online sales – particularly in emerging markets. In the Middle East, omnichannel retail was very much still in its infancy 12 weeks ago. One of our clients has seen their online sales explode from less than 1%, to over 20% of sales for last year in a matter of weeks.

But we shouldn’t view this pandemic as a catalyst just to shift online – it is a catalyst for innovation. Footfall to stores, even before COVID, was shifting away from sales and becoming more focused on experience. The desire from consumers for these physical experiences will only be greater post-COVID. 

Retail spaces are transforming to facilitate non-transactional engagement. In many ways, retail brands are viewing them as media space. The cultural programming of a store can change with region, day or time. We worked with Adidas to create a store which moves from being a radio station, to an art gallery, to a community hub, all whilst being a retail space. 

Much like media, retail stores of the future will need to respond at the speed of culture. 

We have produced a Post-Lockdown Store Design Guide which you can read here. 

Sandra Perriot, Retail Strategy Director, Cheil 

The role of the high street and its stores is changing. Brands and retailers need to rethink their footprint as physical stores simply cannot compete with online for convenience. 

Stores can’t be viewed as only the main point of sale – instead they need to become a meeting point for a brand and a consumer. Customers still need to see the human face of a brand and touch the product. 

Although online has surged through lockdown, lets not forget that a lot of people will have experienced problems, such as with returns. Not everyone is set up to have a smooth and seamless experience online. 

Some stores will serve as an extension of the online experience – for returns as an example. We will also see a rise in flexible-retail stores – where brands identify where they need to be and when and use pop-up stores to engage consumers with a physical presence. 

Retailers that will make the most of the return to physical are the retailers that took time to rethink their retail proposition and accelerate their retail transformation. People are digitalized and open to changes, now.

“Brands will increasingly view physical stores like media space, strategically choosing when to use them to deliver a message that they otherwise wouldn’t be able to communicate.” 

– Gaston Tourn

Martin Loat, Founder, Propeller Group 

We can see an interesting picture emerging where the physical retail space is evolving from its roots as a hub of commerce and a key point of sale, to become a place of community where brands can ‘meet’ consumers and deliver highly-crafted, finely-tuned experiences.

It seems we are moving to a landscape where retailers use digital channels, with their omnipresent availability, to drive sales and physical stores to craft experiences and cement brand storytelling. 

Gaston Tourn, CMO, Appear Here

There is lot of discussion around how physical retail will disappear and online will take over. But in truth the internet will save the high street.

I can see clear parallels with my experience working in media. Every time a new platform or channel emerges, the discussion immediately focuses on how this new technology will kill the previous one.

This is not the case. Instead, we see a kind of ‘mediamorphosis’ – as coined by the communications theorist Roger Fidler – in which when a new technology emerges, the previously dominant technology evolves its role to remain relevant.

This is exactly what will happen with physical retail. Its role will be transformed by online. Brands will increasingly view physical stores like media space, strategically choosing when to use them to deliver a message that they otherwise wouldn’t be able to communicate.

Jamie Powell-Tuck, Chief Operating Officer, ZigZag Global

We have the best brains in a world trying to develop a vaccine. If that vaccine comes out – how will it change our mindsets as consumers? Will we revert to old habits – or stick with our new ones? 

My parents would have never dreamed of using online grocery delivery – until they had no choice. Will they now want to go back into a supermarket? Or will they have been converted by the convenience of online grocery delivery?

On the fashion side, we could see an initial pullback of online orders when COVID first hit. This quickly faded and we then saw huge purchase spikes in sectors like loungewear. Ecommerce was growing at around 12.5% – this has accelerated to 25%. 

The returns side is a key issue for retailers – especially with the new 120 day returns window. What will they do with backlogged stock? How will it affect fashion seasons? It is a real conundrum that will likely result in massive sales and of-loading of stock. 

Charles Webb, Partner, agilityDigital and former technology transformation expert for Waitrose

As we locked down people rushed to go online to shop. Those that had already invested in digital capabilities have fared well whilst those that have not invested have struggled.

Waitrose online grocery has doubled over the last 10 weeks. Pre-COVID about 7% of total grocery sales came online, which is actually really quite low. Having been boosted it is unlikely to fall back. Indeed, I think it will continue to grow as people have become comfortable with online, even if not every experience has been positive. Waitrose is in the fortunate position to have the right technology in place which has enabled it to scale and meet this demand. 

It’s perfectly possible to buy everything you need online. More than this, it’s possible for retailers (especially grocers where you shop regularly) to predict exactly what you need and when. But they still want you to go into the store – because inevitably you end up spending more. If the online side covers the practical necessities of 60-70% of a shop – the physical branch needs to deliver an exceptional experience of some kind to maximise the value of that extra 30% or so.

People do still want to go to stores. It’s a social and experiential thing. Research from the US finds that 80% of 18-24 year old shoppers still want to go in stores – with 74% of US consumers thinking experience is more important than product. So whilst the High Street faces serious structural and economic challenges it will not go away.

Curiously, digital could become the saviour of the high street if retailers use it properly and are thoughtful how they integrate and combine the online and bricks & mortar experience. Omnichannel has been discussed for years but nobody has yet seamlessly merged the shopping journey and experience and here is great opportunity.

“It’s all part of service. Service-based marketing and service-based retail is the future. Technology is there to serve the human experience. You can’t think it’s all about email, or in-store, or ecommerce. It’s about all of it coming together to deliver a complete experience.”

Nick Noble

Ben Titchmarsh, Head of Media and Marketing, Propeller

The holy grail for retailers has always been to give customers the best possible end-to-end experience, from the first marketing and advertising elements a consumer sees to getting their card out at the till.

But I am always shocked by how few fashion brands try to capture my data when I interact with them at physical points of sale. No mobile number, no email address. 

I’ve always felt this was a missed opportunity to be able to get me in the CRM and engage me with personalised offers. 

Nick Noble, Head of Strategy, Acoustic 

I think it’s important to note that ‘personalisation’ is about much more than CRM. It’s about being genuine and personable in each interaction. You may go to a restaurant 10 times without ever giving them your name or details – but they can recognise you as a local and remember your preferences.

It’s all part of service. Service-based marketing and service-based retail is the future. Technology is there to serve the human experience. You can’t think it’s all about email, or in-store, or ecommerce. It’s about all of it coming together to deliver a complete experience. 

As Gary Kasparov said, “human and machine beats human or machine, everytime”.  Humans and technology are meant to work together. And they are both better when they do so.

Aron Cody-Boutcher, Retail CCO

We could see a rapid change in consumer behaviour, which naturally varies with geography and each country’s experience with COVID. But overall I don’t feel it is a total death knell for the high street.

I worked with Falmouth university to understand how Millenials and Gen-Z expect and experience the world – and how it influences how they shop. I set the task to a class of Gen-Z graduate students to develop an entry strategy for taking a retailer into an entirely new market and 26 out of 27 students incorporated pop-up stores in their strategy as opposed to a permanent physical location. This underlines how these generations view the changing purpose of retail stores. 

My conversations with retailers are now always about achieving operational excellence. For example Iceland personalise their communication based on availability of delivery slots, alerting and encouraging customers to secure a delivery slot when it becomes available. This is something that would not have happened prior to lockdown.

Dom Robertson, RPM, Managing Director 

It is fascinating to hear how 5G technology is being incorporated into retail experiences to finally allowing physical and digital retail strategies to merge and deliver seamless experiences between the real and virtual world where people can connect between within both worlds – such as in this new mall in Camberley. 

A lot of the discussion today has been on how the high street is transforming from a commercial space to a more experience-led space, becoming a community hub, celebrating local produce, an outpost for more centralised stores, ultimately making the high street a destination.  We’re also seeing demand for the ‘in-home’ experience and how retailers / brands can deliver this. We are working with a number of clients who are looking to create a really immersive in home experience such as a ‘cocktail evening’ .  These are lucrative while we are in lockdown scenarios – but I believe they will remain popular with consumers post-COVID as some consumers will have anxieties about returning to ‘normal’ life. Research from China shows that around a third of consumers are still reluctant to leave their homes.