The reinvention of retail – death of bricks and mortar or reimagining your core asset?
The penny has started to drop, and fast. Retail, particularly Supermarket differentiation, is no longer about price, premium vs. budget or product variety vs. availability wars. It’s about being smart and savvy with core, tangible assets as a way of enticing customers. It’s about reimagining for commercial gain what a few years ago the naysayer analysts were calling the death of bricks and mortar retail.
Whether stroke of genius or knee jerk reaction to generate extra cash, the very notion of Tesco, Morrisons, Sainsburys and Co-op renting out hundreds of parking spaces to non-customers via partnership with a Parking Space App surely taps into a sub-strand of the fast-evolving circular economy.
Renting unused spaces at a time where parking availability, particularly in City-Centres and in and around Commuter Train Stations is limited, would seem sensible. So would other consumer convenience initiatives such as Tesco installing free EV charging points across many of its UK stores. The revenue likely to be generated from such initiatives is in the millions, so why wouldn’t you want to try and monetise your largest asset other than your store, not least when sophisticated technology and real time data analytics allows you to flex pricing based on supply and demand? Moreover, if people are parking at your store without the intention of popping in, a cheeky personalised digital promotion, even a good old- fashioned windscreen wiper flyer or voucher to tempt you on your way home for that top up purchase could just boost some incremental sales.
But it’s not just the car park that’s rife for reimagination and reinvention. Whether its plastic free food dispensers, in store holograms, in-store community events, retail tie ups and partnerships such as Asda and Greggs On the Go or even Fresh Pizza ovens, the internal fabric of the remaining bricks and mortar retailers is set to evolve and diversify further.
Key High Street Stores such as Apple have always been “destination stores”. Rarely have Supermarkets been described thus. Even in the novelty days when Supermarkets first introduced clothing ranges and reimagined aisles leveraging all things market stall and fresh, through to opening banks, hairdressers, dry cleaners and cafes etc. in store, the potential for in-store differentiation, thanks to technology has never been so marked.
Whether its Asda opening its Warehouse outlets through to its recent “you buy one, we give one” highly successful initiative, all strategies point to a push for standout and differentiation that’s a step above, or, at least outside of, the “me-too” or you do then we copy (but cheaper) category modus operandi that has essentially dominated Supermarket evolution over the past decade or so.
It’s not difficult to see why those who have failed to innovate for the sake of differentiation rather than innovation for innovations sake or, (worst case) no innovation whatsoever due to inertia or complacency, are failing. John Lewis, Marks & Spencer, Sainsburys and Morrisons all received less than glowing city commentary about their Christmas performance for example.
At the other end of the spectrum, we see retailers such as Greggs awarding staff unprecedented bonuses and we see the likes of Lidl and Aldi recording their highest-ever combined Christmas market share.
By way of most facile analysis, such brands continue their upward trajectory because they offer something different, conveniently located and at price points the average consumer is prepared to pay.
It’s hardly a surprise that a brand opening 100+ new stores in 2019 (Greggs), not least when strategically and competitively located offering products not easily and comparably available elsewhere (Hot Vegan Sausage roll and hot Vegetarian Steak Bakes etc.) at a competitive price point, will see at least short-term sales success.
While the retaliation is not necessarily the “me too” or copycat tactics already referred to e.g. every food to go outlet should offer a cheaper, pastry based vegan product with new stores strategically opened to cannibalise competitor footfall, there is something to be said for smarter analysis of what competitors in sector (or adjacent sectors) are doing and planning for outsmarting with next level success. That’s the difference between thinking five chess moves ahead or just the one tactical quick win, which, arguably is where the retail sector has been hitherto, particularly with an incessant focus on price wars as the default knee jerk reaction to Discounter growth.
We know for sure that the Supermarket/retail outlet of the future will look very different to today’s format that has, with the exception of checkout and self-scan evolution, been largely consistent for 40+ years.
We are already experiencing a return to the artisan, to provenance, to the need for human connection in an ever- automated world. I suggest we will increasingly see more Pizza Ovens, more homage to health and wholesome in-store, coupled with cleverer thought applied to using large retail units as shared, social purpose spaces that goes beyond the café. Weekly keep fit class in aisle 3 anyone?
Alongside the Warehouse model, we’ll continue to see the small, nimble top up convenience retailers emerge, particularly in urban populations. We’ll also see the interactive Smartphone App as key in-store feature. Large retailers will continue with the slow but sure acknowledgement that spending millions promoting specials with outdated above the line TV buying models will be better replaced with personalised technology experiences based on individual buying patterns and preferences.
The use of AR and VR instore will continue apace. What better than to lead shoppers to a relevant recipe and related ingredients. Beacon, sensor and all things geo-location will also work as the new push notification method to entice consumers to a particular retailer or in store. The loyalty card or discount related email will become obsolete. Everything will be in App or somehow QR/Mobile Wallet/Smart Watch or Smart device related.
The Uber shopper model will also prevail. It will become commonplace to expect a tube of toothpaste or a bottle of Champagne delivered to your door within minutes, whether that’s by drone, bike, courier or other certifiable green means, depending on personal attitudes to Net Zero by 2050 etc.
All in all, the death of bricks and mortar retail is nowhere nigh. A radically reimagined asset, however, is inevitable for its long-term survival.