With UK retailers reopening in the wake of the latest coronavirus lockdown, Agile Retail looks at what has changed in the last 12 months and questions how the industry will evolve and survive in the future. They have compiled their findings in their first Industry Briefing, titled, Fixing Retail Stores: 2021 and Beyond.
The past year has had a significant impact on the retail industry – with fluctuating fortunes between online stores and their physical counterparts. Whilst supermarkets and e-tailers have posted record profits, traditional retailers and high street brands have suffered greatly; losing vital footfall and struggling to get a foothold online against more established competitors.
This has resulted in serious concerns about the future of the physical retail industry and its value in the market. Even after COVID-19, will consumers want to return?
That is the question that Agile Retail is aiming to answer. As a product of established experiential marketing agency iD, Agile Retail was set up to help retailers create more flexible, efficient stores. With a focus on short leasing and scalability, the Agile Retail proposition has been developed organically into a solution-led, semi-permanent model that is designed to help brands and retailers evolve in the new industry landscape.
On Agile Retail’s mission, Marcus Fox, Group Managing Director of iD, said, “Agile Retail has been designed to solve the big problems plaguing physical retail today – a total lack of relevance and inspiration, and legacy structures and ways of operating that stifle innovation and adaptation. We are changing that.
Fox continues, “Agile Retail gives businesses the opportunity to create an amazing, inspiring retail experience which we know will resonate with today’s consumer, whilst providing staffing, operations, and property solutions that enable nimbleness, and fleetness of foot, to adapt, test and pivot at a much faster pace.”
In an effort to support the retail industry, and to help it find its feet post-COVID, Agile Retail have created a new report that outlines how the role of retail stores can be redefined – and why they need to change or risk becoming irrelevant.
Changing the Role of Stores Beyond the Sale
Agile Retail’s report highlights that the very purpose of physical stores has shifted. Not just during COVID, but over many years, as online competition has grown. Stores are no longer solely about acquiring sales from consumers; they are now part of a wider, multi-channel offering that exists in tandem with one another.
Retail stores have undergone a seismic shift from a place of sales to a point of service. Customers want to have the option to make a purchase in a store but that may not be their only or even primary objective; they may also expect to experience products, have their senses stimulated, process a return or collect an order made through a different channel.
Are In-Store Experiences the Answer?
In the majority of cases this has resulted in experiential stores, pop-ups and marketing events which are designed to elevate the brand, introduce new and existing customers to products, and in some cases deliver ROI. And it’s been a successful model. According to research by leading electronics retailer, Epson, 65% of UK consumers would change their shopping habits if outlets were more experiential.
Expectations of today’s customers differ wildly across a whole range of demographics. Crucially over 72% of millennials and Gen Z’s are prepared to spend more on an experience than a product. The average dwell time for an experience is 13 minutes, which is 300 times longer than the same for a social advertisement, it increases even further when you consider the additional one-time purchase conversion or longer-term brand advocate.
And this isn’t anything new; as Agile Retail identifies, some of the most profitable retail stores are based on the premise of ‘experience’. This includes Lush Cosmetics, Sweaty Betty, and the Disney Store – among others.
Agile Retails Industry Briefing sets out very clearly that for physical retail to survive post-COVID, it needs to evolve and incorporate more experiences in order to continue to attract customers.
Introducing ‘Agile Retail’ Properties
In response to the disruption to retail during the COVID-19 pandemic, Agile Retail have developed an entirely new solution for creating physical stores. One that disregards prime location and long-term leasing for localism, convenience and environment.
The basis of this approach is that property that was once considered premium is no longer as tenable. Brands must be able to pivot their strategy to be where their customers want them to be. According to Gartner over 40% of workers are likely to work remotely at least some of the time, meaning huge numbers of people simply won’t be returning to city-centres.
This will severely impact retailers that usually take out long-term leases on their properties – forcing them to become flexible.
As the UK emerges from COVID, it will no longer be practical or affordable for brands to commit to long-term leases with little opportunity for exit. There is a world of opportunity open to those who can think differently about their physical retail estate.
A pop-up store format could be in a seasonal holiday destination as part of a brand promotion, or within a larger multi-brand space in collaboration with like-minded brands within your customers ecosystem. Savvy brand partnerships or sub-leasing opportunities take advantage of existing footfall to an area or product that already attracts target customers.
It is important for retailers to acknowledge that building a successful physical presence isn’t just about marketing, it is a far more strategic mix – even brands with an established footprint of physical retails stores should be thinking about portfolio diversification in favour of some additional, agile, or responsive spaces. Incumbency and reluctance to unbalancing an existing estate is no reason to accept inflexibility for the future. And this could be the decision that sees more retailers fade into obscurity.
By providing a platform for business owners to reduce the heavy commercial overheads, high capex spend, and commitments that come with running a large retail team, Agile Retail is helping to reinvent the future of retail and give it a survival option post-COVID.
On the future of retail, Agile Retail’s Retail Transformation Advisor, Rick Murray, opined:
“Retail itself is not dead. But brands that succeed post-COVID will need to be agile and innovative to survive. They will need to connect directly with customers for the long term and be transparent about their products and how they operate. We will see them pop up on our high streets or wherever they are in the most demand. Connecting with customers and gaining their loyalty is the most important thing retailers will need to focus on in 2021 and beyond.”
For more information on the transformation of physical retail, download Agile Retail’s Industry Briefing: Fixing Retail Stores: 20201 and Beyond.