We have all seen the headlines & plethora of statistics about the uptick in online shopping over the last twelve months. The boom in eCommerce is incontrovertible, but what is less clear is what the impact the last year will have on traditional high street retailers in the longer-term as ‘new’ consumer behaviour becomes the ‘norm’.
Along with the continuing popularity & convenience of eCommerce, health, hygiene & social distancing will continue to be matters that consumers tackle with wariness, at least for the medium-term. However, in-between the various national lockdowns witnessed in Europe, high street retailers were learning to adapt to the nuances of their new operating backdrops: virtual queueing, curbside pickup, contactless payment options & even using physical stores as mini-fulfilment centres.
Stocks in Stores, Locked in Stores
One of the biggest challenges at the start of the pandemic when stores closed their doors was the issue of in-store goods: lockdown 1.0 saw large volumes of stock trapped in closed high street locations that couldn’t be sold or even reintroduced to the supply chain for eCommerce purposes.
Further down the line, this stock was then forced to be sold at huge discounts once stores could reopen, or in some cases, inventory was arduously & eventually made available for eCommerce fulfilment – great for consumer’s pockets, bad for retailer’s balance sheets.
Looking ahead, having a smaller volume of inventory within stores will ensure retailers avoid this position again. Furthermore, if customers can’t or are unwilling to try on the items they’re looking to buy, is there really any need to have stock in stores at all?
In reality, aside from the safety implications of having multiple customers handle the same item of clothing, the more stock held in a store, the less accessible & less profitable it is.
Back in the late 90s, Argos’ model was regarded as unusual for its approach, using its stores as mini-distribution centres, only having the goods on display with a ticketing system for purchase. Now, however, this approach could actually become the default for many retailers in the future: think virtual queuing systems, increased use of mobile tills to ensure social distancing, and stock used for display purposes only.
The disruption of 2020 has made retailers realise that stock located in the ‘wrong’ place greatly impacts sales, profitability & the customer experience, so why not also use the learnings of the last twelve months as the catalyst to change the whole ‘philosophical’ approach to the physical store?
The face of the high street has been changing for many years now, but the pandemic may well represent the short-term, significant shock needed to kick-start a high street renaissance with brands rethinking the best use of their most valuable assets – the bricks & square footage of their flagship stores.
From Stores to Experience Centers
The next decade will likely see brands look to reinvent their high street store presences in a move towards more experiential brand experiences: rather than (effectively) super-sized showrooms full of products across all sizes & colours, in the not-so-distant future, the traditional shopping trip we once knew may well be completely transformed.
Instead of the multi-coloured array of bags associated with the Nine Streets in Amsterdam, or Gamla Stan in Stockholm, tomorrow’s shopper may well be bag-less.
Racks of clothes could well be replaced by mannequins displaying fashion combinations as shops reduce the levels of goods they hold; smart mirrors will allow shoppers to use virtual/augmented reality to try on clothes in a completely contactless environment; shoppers will be able to avoid queueing, instead of using app-based queuing & mobile point of sale technology through iPads and contactless payments; & while some stock may be available to actually take home there & then, more likely it will be delivered on the same or next day to the customer’s home – in effect, a reverse click & collect!
What Will Happen to the High Street?
Consumer behaviour has changed over the last twelve months, so approaches to retail & how the high street actually operates must adapt too. Once upon a time, out of stock would have meant out of business. However, that may not be the case tomorrow.
Abstract as it might sound, the backdrop that the retail industry is operating against today actually means that the less stock a store physically holds, the better off it might actually be. If retail is to recover & grow again over the coming years, how physical stores are operated & used has to change.
The high street, as we once knew it, isn’t going to return. The important thing is to recognise that this is ok!
With an increased awareness of shifting consumer behaviour, an understanding of the latest applications possible for supply chain & retail technology, & a willingness to think more creatively & innovatively about how best to use valuable floor space, retailers will be able to reinvent the brand experience on offer in their flagship stores, welcoming in a high street renaissance of epic potential.
The future is bright, the future may yet be stockless too…
Alex MacPherson is Director of Consultancy and Account Management at Manhattan Associates
Manhattan Associates is a technology leader in supply chain and omnichannel commerce. We unite information across the enterprise, converging front-end sales with back-end supply chain execution. Our software, platform technology and unmatched experience help drive both top-line growth and bottom-line profitability for our customers.
Manhattan Associates designs, builds, and delivers leading-edge cloud and on-premises solutions so that across the store, through your network or from your fulfilment centre, you are ready to reap the rewards of the omnichannel marketplace.
This blog post is sponsored by Manhattan Associates