itim insights | Stores of the future

The future role of stores

Ali Athar

Oh no, not stores again. I thought we were all looking to get rid of stores. I just met up with the largest retail landlord in the country, and they told me that they thought there was somewhere between 20-50% excess retail store capacity, based on their trends for e-commerce.

If they are right, the retail landscape will look very different in five years.

At the same time, if you had listened to John Lewis CEO, Andy Street, on Radio 4’s Today programme, he declared that 53% of all e-commerce sales were for click and collect. So we do have a role for stores. Of course, click and collect at John Lewis is really collecting your purchases at the back door. Its value in providing opportunities for upselling are minimal.

In the same breadth, Andy also said that the stores of the future would look very different indeed, without articulating too much detail. So let me try and do so for him.

At the start of the boom, I was not surprised about the growth in internet sales, ‘in spite of the inconvenience of the internet’. The inconvenience being that we had to browse through endless pages of websites, trying to find what we wanted, then wait 2 days for it to arrive, at a time we could not control, only to find we did not really want it (now some 50% of the time). In most cases, we would be charged for delivery, and the cost of returns.

How did we come to like that experience? Well the answer is obvious. In the 20 years of the last century, retailers made a huge effort to take service out of stores, ushering in the self-service era, with dumbed down staff, being paid less and less.

Consumers finally caught on; if they were going to get no service in stores, they might as well suffer the minimum service of the internet at home!

Without question the internet is more convenient if you are far from a good urban area. But only because retailers such as Amazon have set an unrealistic bar for the costs of service (free), and for the profit they want to make (minimal), which few shareholder-driven businesses can afford.

In fact, it is getting worse. Just recently I witnessed a daughter of a friend of mine look to order a dress from ASOS for an upcoming ball. Except that she ordered five, knowing that she could return for free four dresses within 30 days. I just cannot see how the cost of that will not catch up somewhere. The mail order business knew the perils and pitfalls years ago. This is not new.

Of course, the answer for stores in the future is not ‘more self-checkout’. But old-fashioned service. It will be possible with the technology we are now providing to treat every customer who walks into a store like a VIP. When we do, I feel the role of the internet will change. Instead of shopping online, we will reserve five dresses, drop in and try them on, and have the alterations done in time for the party. Shop staff will not only provide service but act as curators.

It may not be true for the 18-year-old who lives in Fife in Scotland, but certainly for the 18-year-old who lives in London.

Yes, stores will change but we will need the same amount of space, not for stock, but for service, which we will charge for – either by having it back in the price or by being explicit about it.

After all, most stores on the high street today are service shops. So why aren’t retailers going that way?

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