Retail - where are we now?

Retail and all that it encompasses is going through arguably one of the biggest changes in its history and how retailers cope with this change will determine the future of their brand and ultimately their company.

Let’s not beat around the bush…the pandemic was “unprecedented” (remember that?!) and world changing, but arguably now the dust has settled a bit from what was unquestionably an absolute catastrophe for us all, not a great deal has changed in retail.

In fact, if we head back to 1849 and listen to French writer Jean-Baptiste Alphonse Karr who wrote “plus ?a change, plus c'est la même chose “ – the more things change, the more they stay the same - I think we’re on the money.

The truth is, turbulent changes do not affect reality on a deeper level other than to cement the status quo - or something high brow and philosophical like that!

So, back to the present day, where we are now and what is happening?

There are people that will blame the disruptors, the businesses that are being created to do something different from the traditional retail models of the past.?These businesses are being assisted in the main by new technology and they are embracing the new opportunities that it gives them.

Other people will blame the internet.?Before that our bricks and mortar shop was doing very well thank you very much!

Ultimately though, the change in retail is being driven by consumers.?The changing generations and the technology they have access to are creating a whole host of opportunities for people to buy differently and consumers are lapping this up.

Let’s be frank.?If consumers didn’t want to shop online or buy things in the way that they buy them then retail would remain as it always has.?

Organisations may come up with different, and sometimes out there, ways to sell things but if people don’t buy then the idea will be dismissed and they will revert to what they were doing previously.?

It is only because consumers enjoy shopping on the internet and having goods delivered to their homes that online retail and all that it involves has become so popular.

In this article let’s explore where retail has moved from in the last 10/15 years, to where it is now, and where it could be going in the future.?

The below gives a summary level detail of my thoughts but I would love to hear your views on the retail industry.

Retail - as it was

Has retail really changed that much?

Multichannel / Omnichannel - there's always been more than one route to market.?The difference is that things that happened before the internet didn't have a fancy name, it was just shopping. These terms aren't particularly helpful.

Pre-internet there were postal businesses.?It was the dot com era in slow motion. Who remembers Kay's catalogue and Littlewoods??These operated from warehouses in Leeds and Liverpool and were very much the precursor to the web businesses that we have today.

Companies that install windows, doors, bedrooms, kitchens, and bathrooms all operate on a similar model to the internet startups of now.?They work on an elongated e-commerce model but instead of ordering over the internet you went into the shop to order or ordered through a salesman who came to your house.

Department stores were a big thing.?A shop that sold many different products and lines under one roof.?It made shopping so much easier and was able to cater for the whole family.?What's not to like.

Supermarkets, big-box stores, and hypermarkets were all inspired by the department store.?Again, a place where you can buy everything in the same place. I bet you can guess who went on to use this idea over the internet!

Retail - as it is

How does it look now?

Everyone is aware of what the internet did for retail.?Things changed to some degree, but looking back was that change as big as we might think?

Now you don't need to leave your house to buy anything.?At the click of a button, you can arrange for everything to be delivered.

We have retail behemoths in Amazon, eBay and the like who were early adopters of the technology available to them and have reaped the benefits.

Other shops and brands have tried, and in some cases, failed to keep up and this has resulted in big brands that were the staple of life 20 years ago disappearing.?

Some of the biggest brands in the UK including Woolworths, MFI, Jane Norman, C&A, Focus, Phones 4U, Blockbuster, Toys R Us and BHS have fallen by the wayside.

Some of these were absorbed within other businesses or came back as online-only offerings. They weren't as prominent as they once were though and this is the point.

Things move on.?The brands that went out of business did so for many different reasons.?Mismanagement, not embracing technology, economic factors beyond their control or not keeping up with changing consumer habits which meant that they fell behind the competition.

Consumer attitudes have changed and so have consumers.

As technology has enabled us to do things differently so consumers have enjoyed this new found opportunity.?

We can now order online and the product or service be delivered to us for little or no additional cost. We can click and collect, reserve online, whatever we want to do is now a click away on a device that we carry in pockets.?Why go out of the house, unless it's for an "experience"?

Consumers are now much more savvy about the world they live in and the way that marketing and retailers work.?

There is no longer a parent-child relationship between the retailer and the consumer with the retailer in the driving seat.?That relationship has changed with the consumer having the power of choice and information available to back this up in terms of comparing price etc. at their fingertips.

The consumer has also become much more conscious of their environment.?We are all for a green world, but this is also counterintuitive with the world we are creating with endless deliveries.?Something that is being considered by some companies who are beginning to use robots and drones to make deliveries rather than Co2 producing vans and lorries.

The changing generations also have a big impact on consumer attitudes.?The baby boomers and Generation X are inclined to prefer bricks and mortar shopping as this what they were brought up with, although more and more now these generations will embrace technology and everything that this brings.?

Generation Y (more commonly defined as Millennials) would count their preference as online consumption and being able to do everything without having to actually talk to anyone; look at the method to now order a takeaway to be delivered, or renew your insurance, or a manner of other things that we once had to do by speaking to someone over the phone or seeing them in person.

Now we have Generation Z who are the first generation that is digitally native and have known the internet since they were born.?Virtual retail is their bread and butter and according to research, they have very particular attributes when compared to other generations.?

Generation Z:

Have higher expectations - their expectations of a retailer are more demanding and higher than any other generation. If the store experience does not deliver, they will walk away. They want a store that embraces technology the way they do, that makes products accessible and easy to test, yet they still desire human interaction.?

They have less patience - if the expectations are not met (or most likely exceeded) then they will move on. They rarely give second chances and when they have a poor experience, they usually share it on social media.?

They are not as price conscious - while other generations were all about the "deal" Generation Z tends to be more about the experience and they are willing to pay for it.

They are influencers - according to a recent study, 70 percent of parents turn to their Generation Z children for help in making a buying decision. So not only are they impacting their own buying decision, but also those of their family.

Retail - as it might be

So what does the future hold?

No one knows for certain but there are some changes happening now that give a good indication.

Generation Z will drive a lot of the future of retail as these are the consumers of the future.

Interestingly Generation Z is more comfortable with personal interaction than Millenials and initial research has revealed that their preference is still for a bricks and mortar shopping experience.?What Generation Z does demand is that the shopping experience is driven by technology.

It's not robot assistance that Generation Z is looking for but knowledgeable and professional salespeople.?The problem is that in most stores they aren't finding this so they will turn to Google and social media for advice.

Generation Z is looking for free WiFi, cashless checkouts, loyalty programs and vouchers and incentives to be passed on automatically through technology.

Whilst technology will continue to evolve and change the retail landscape there will be an even bigger appetite for experience retail.

We can get our basics online without leaving the house so bricks and mortar stores are going to have to offer something to attract people into them. This is where the experience comes in.

Personalisation was already a big topic in 2019, but this too will continue to grow, and as we all know the world is built on date, so the more retailers know about their customers the more they will be able to personalise the experience that they give.

It’s important that retailers don’t forget older generations.?It’s very easy to focus on Generation Z or the upcoming Generation Alpha as the next big consumers but retailers also need to focus on the needs and wants of earlier generations or they risk inadvertently marketing themselves out of reach to a lot of consumer spending power.

Voice technology is deemed to be one of the next big things in retail and through technology that people already embracing in their homes.?Amazon Alexa and Google Assistant, to name the two most popular, will enable consumers to purchase things to be delivered without having to touch anything.?This is a great example of technology being developed to enable a different retail channel and perhaps this is the future?

In Summary

In lots of ways retail is going through an exciting period of change.?Technology is enabling the change and consumers are making it a success by welcoming a new way to purchase.

The real challenge sits with the retailers themselves and decisions need to be made in order to keep up with the constantly evolving retail market.?

Are you as a retail business going to be an early adopter of the new technology, just as Amazon and eBay were in the past, or are you willing to sit tight and hope it’s a passing fad??

At the same time retailers need to be under no illusion that by doing nothing you are effectively going backwards and could ultimately end up as the latest Woolworths or Toys R Us.

There is a middle ground and a lot of retailers will use this to keep ticking along until the retail market settles into a business as usual pattern.?The problem is no one can tell you when and if this will ever happen.

Retail has only one constant, and that is change.?Retailers need to embrace this as much as consumers.

Robin Kiziak

#RobinKiziak is an experienced finance manager with over 18 years experience in the distribution/logistics and retail industries