The best way to compete with online retailers is to act like them
It is a fact of modern life that high streets are changing. Depending on who you speak to, you might even think they’re dying out altogether due to internet retail and new technologies. Perhaps, the future of shopping doesn’t belong to the drones and artificial intelligence. Rather, it belongs to the retailers who can employ data to turn their stores into personalised experiences consumers are willing to travel to the high street for. Today’s high streets need to rewind 150 years and go back to the market trader mindset of putting personal service first. This time, however, they can use big data to deliver this same experience at scale.
At the height of the Victorian era, the high street emerged from the progress of the Industrial Revolution. The rail network now spanning Britain meant even the smallest towns could have access to butchers, grocers and convenience stores with a steady supply of goods.
This new access to goods accelerated urbanisation and saw more and more market traders become shopkeepers with fixed prices, real estate and a growing host of services. As cars became part of everyday life shopping centres became prevalent and moved further afield, seeking the cheaper land prices far removed from the congestion emerging in cities. This doughnut effect was, thereby, the first nail in the coffin for the high street.
Now, internet shopping is on the rise with more and more consumer spending power shifting from high street spending to online commerce. This age of convenience is the second nail in the coffin for the high street as more consumers demand the expediency of “one click” online retail.
As more people turn to on-demand shopping, logistics has become the name of the game with more companies trying to understand and optimise delivery routes and schedules. The last mile of deliveries is often the most expensive and hardest to optimise, accounting for up to 50 per cent or more of the total cost according to McKinsey’s research on the future of the last mile.
UPS, the logistics giant, has seen significant cost savings by turning to geographic information systems
UPS, the logistics giant, has seen significant cost savings by turning to geographic information systems, algorithms and smart mapping to guide drivers on their routes. Alone, this system reduced journeys by up to 100 million miles a year. Despite the importance of this optimisation, however, the impact of all these delivery vehicles on Britain’s roads is harming the environment – and human health as less people walk to the shops.
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But what does the future hold for the high street? McKinsey’s annual consumer sentiment survey has shown that global consumers are feeling more secure about their purchasing power compared to recent years. That said, consumers are thriftier than ever, hunting for bargains and trading down more often than not. Empowered by greater access to products through online retail, this trend is set to continue.
Moving beyond demographics and looking to understand the psychographics, culture and beliefs of consumers is starting to pay dividends
As the digital and physical worlds around us continue to integrate, convenience and experience are rapidly evolving as top differentiators. The best way to compete with the online experience is to act like it. Moving beyond demographics and looking to understand the psychographics, culture and beliefs of consumers is starting to pay dividends. The Shopping Centre Group, a leading US real estate group, has seen 30 per cent revenue growth by using this market intelligence.
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As digital-savvy retailers come to utilise the advantages this data gives them in understanding their consumers, do retailers have the opportunity to become that last mile of the delivery chain? By offering experiential destinations, consumers are more likely be willing to take that short walk back to the high street.