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written by
Christian Nellemann

To survive, retailers have to think different

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Steve Jobs is an over-quoted innovator. But in part that’s because he produced so many wonderfully quotable soundbites.

And when discussing Apple’s approach, he once said ‘everything around you that you call life is made up by people no smarter than you. And you can change it’.

In regards to the multitude of challenges retailers currently face, I’ve been thinking about this quote. Like Apple, retailers need to think different, and turn these challenges into opportunities.  And this is especially true of the physical space.

If people are spending more time online and less time in shops, then shops must change – and change drastically. And some businesses across the globe are already leading the way.

Selling experiences to buy brand loyalty

The physical space is being re-imagined.

Staples in the US is turning huge chunks of their poorly performing stores into low-cost shared office spaces. At home appliance innovator Pirch, you can take a shower or cook a meal in store – taking try before you buy to a whole new level. And brands like Adidas and Vans are opening physical spaces that don’t focus on selling products, and instead use them to offer enriching customer experiences.

Technology is changing the in-store experience too. Click and collect is going from strength to strength, and checkout-free stores like Amazon Go are a sign of what’s to come. Augmented reality, like the virtual mirrors used in Uniqlo, offer convenience with a bit of magic thrown in; while virtual reality is allowing IKEA customers to create kitchens in seconds, and Audi customers to get a closer look at a range of cars within a small showroom.

Perhaps even more innovatively, businesses are creating new physical touchpoints altogether. West Elm is opening boutique hotels in the US primarily as a means of selling its furniture. Tommy Hilfiger runs music festivals at which customers can buy their clothes. And technology like Samsung Bixby is letting customers scan anything they see in the real world, and then buy it.

When all this is happening, it’s hard to sympathise with big retailers who are doing nothing but lamenting drops in footfalls and in-store sales.

Small businesses offer experiences innately

What’s also interesting about retail innovation is that, for small businesses, creating experience comes far more naturally. And while the big boys often have to invest heavily to do something special, independents can actually focus on what they do best.

While high street footfall has suffered across the UK, high streets with high numbers of independent shops continue to buck trends. So what do they offer that chain-dominated promenades don’t? The human touch.

Record and book shops are having a resurgence, often because they host community events. Customers will willingly spend more with them because they value their contribution to their local area. Micro-breweries are thriving while some major breweries are seeing profits dwindle, capitalising on the nation’s thirst for local produce. Again, it isn’t about cost – it’s about experience.

And above all, independent shops provide a type of customer service bigger businesses can’t match. RFID tagging and scan-to-buy can speed things up; VR and AR can create memorable experiences. But nothing beats walking into a shop and discussing what you’re after with someone whose knowledge and passion is unmatched. It’s simple, and timeless.

If physical shops have a future, it will be different from the present. Many will be able to eke out a few more years by cutting staff, store numbers or their prices. But to stand the test of time, they’ll have to think different.

 

 

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  • Christian Nellemann is the Founder and CEO of XLN, a provider of low-cost phone, broadband, energy and card processing services exclusively to small businesses. A serial entrepreneur, he’s a two-time winner of Ernst & Young’s Entrepreneur of the Year award and one of only 17 inductees into their Global Hall of Fame. He is passionate about small businesses, and is a featured columnist for realbusiness.co.uk. Follow him on Twitter @christianxln
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