Brick-and-mortar retailers have been disappearing for years. In the first six months of 2017, retailers in the United States announced more than 3200 store closures, and Credit Suisse analysts forecasted that number to grow to more than 8600 for the full calendar year. By comparison, 6163 stores shut down in 2008, which had previously held the record as the retail sector’s worst year. It is department stores that have felt the pinch most, with the likes of Macy’s, Sears, and JCPenney having shed nearly half a million jobs between 2001 and 2017. Retailers across the UK and Australia experienced similar trends.
Looking at the flow-on effect of this trend, analysts predicted that 40% of major shopping malls in the United States would close by the early 2020s, despite the attempts of these malls to make up for lost retail tenancies with food, entertainment and services such as doctors’ surgeries and gyms.
What these analysts did not foresee was the event at the turn of the decade that would accelerate these trends beyond prediction. When lockdown hit in 2020, the world of retail took an unprecedented blow. In Great Britain, one of the hardest hit in the Western world, the high streets saw a net closure of 9877 stores in 2020, which marked a 33% increase from 2019. Interestingly though, annual net closures in retail was a trend that had been steadily increasing for years before.
Resulting from this is a major transformation of what we understand to be the typical shopping trip. Here are 3 retail experiences that will replace it.
1. The Online Experience
Perhaps the most obvious of responses to these retail trends is the move to online. Free of the queues and stresses of physical stores, this retail option has been on a steady rise for years as it grants customers access and efficiency in their shopping.
In 2020, existing online businesses and e-commerce options understandably saw extreme leaps in sales while hybrid services struggled to keep up with the increase in online demand. One online grocery store in New York jumped 60% in online activity in March 2020 compared to March 2019. While online retail sites and delivery services had been an option for years, the sudden need to use them proved to many customers their viability and efficiency.
The clothing retailer, Zara, is among those that are accelerating their online strategies and fully embracing the digital age. Despite already owning multiple online clothing giants, Zara’s parent company, Inditex, plans to have 25% of its sales occurring online by 2022.
2. The Boutique Experience
While the in-person shopping experience is very unlikely to return to its former capacity, it is also very unlikely to disappear altogether. Even before COVID, the falling rates of brick-and-mortar success called for a new drawcard for the physical store, and this is where the idea of the boutique experience comes in.
Successful physical retailers of the future will provide customers with an experience that can not be paralleled by online retailers or dominant department stores. Retailers will need to create a multisensory experience that is worth raving about. Customers will be able to access service that makes them feel unique and important, and products that are customised for their individual interests. Rather than having stores packed with inventory, retailers in the years to come will have shopfronts that may have only one item of each style and size for customers to try on. Once shoppers have made a purchasing decision, the item will be dispatched from a third-party location and delivered to their home or office within hours. Thus, the store becomes a showroom rather than a storeroom on display.
This boutique experience extends beyond the customer service element of shopping and into the fundamental product development of retailers. Smart retailers are recognising that simply stocking third-party brands that everyone else sells will leave you especially exposed to price wars. Having unique private-label products will allow you to compete on features and benefits rather than just price.
3. The Augmented Experience
The online and boutique shopping experiences are both emerging as viable solutions to a changing retail world. However, cutting-edge technology is now offering an entirely new option for shopping that integrates elements of both of these experiences and takes us into a version of shopping that seems to be straight from the future.
In February of this year, luggage retailer Tumi uncovered a virtual store which uses augmented reality in creating a 360-degree space, allowing customers to explore the environment and test augmented life-sized products in their home. With features on Instagram and WeChat, this move marks a new era in the shopping experience that is placed entirely in the virtual world.
Charlotte Tilbury similarly opened a virtual store in November of last year, in which an avatar acts a guide for customers exploring the rooms and products. Customers can try on makeup and access video tutorials with augmented reality.
Futuristic and technological as it may seem, this vision of shopping offers an experience that is customisable and accessible – more so than any retail we have seen in the past. Offering a unique experience to the individual customer, as well maximising cost and time-efficiency and utilising the capabilities of emerging technology, this futuristic vision may soon become an everyday reality.
While the idea of ‘going shopping’ may be somewhat outdated, the experiences replacing it create new kinds of destinations for our shopping that are more accessible, luxurious and futuristic than ever. Technology and the accelerating effects of COVID are seeing these new versions of shopping arrive sooner than expected, and their viability for the modern age almost guarantees that they are here to stay.
Michael McQueen is a trends forecaster, business strategist and award-winning conference speaker.
He features regularly as a commentator on TV and radio and is a bestselling author of 8 books. To order Michael's latest book "The Case for Character", click here.
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