The Incredible Shrinking Store
Watching retail developments this year, we've seen signs of a fundamental shift in the roles of high street and out of town. On the surface, it may seem that the high street is doomed, with ongoing stories of shop closures and retailers struggling to meet rising rates and rents. Recent research from the Centre for Retail Research (CRR) predicts that one in five retail stores on the high street will close in the next five years – in addition to the ongoing shop vacancy rate of 14.1%. But there's signs that the future doesn't need to be all about reducing store or staff numbers to boost finances. Many retailers are adapting their model to shoppers’ changing habits and desires - taking advantage of technology to improve the instore experience and improve profitability. In doing so, they may be inadvertently reshaping the role of bricks and mortar shops.
In the last few months, Games Workshop has begun to shift to smaller (c.60sq ft) stores with shorter opening hours that can be operated by a single member of staff, servicing just tens of customers a day thereby reducing overheads. This focus on servicing better a smaller number of customers per day, with an average transaction of between £40-£50, is enabling stronger sales growth from a lower cost base.
In Silicon Valley, Nadia Shouraboura, the ex-head of global fulfilment technology for Amazon, has created a store that - given her background - is definitely one to watch. Hointer at first glance is a niche fashion retailer, with stylishly displayed individual pairs of designer jeans. It is, however, a "technology incubator” designed to demonstrate and perfect the logistics platform Shouraboura aims to license to larger retailers. No front of house staff; using an app to select jeans to try on; chutes and micro-warehousing to deliver jeans to changing rooms and card readers to pay, is an exciting taste of the future. As consumers' expectations of retail continue to be shaped by online, this model recreates the simplicity and ease of an online store, within a bricks and mortar environment.
Audi has gone in completely the other direction. Its new smaller store format for city centres has kept the staff but lost the product. Audi's digital dealership, Audi City, in the affluent heart of Piccadilly, contains no cars, but instead uses technology to create an experience arguably more involving and reflective of the brand than a traditional dealershop. The new digital showrooms are designed to fit into an area the size of a regular shop, enabling Audi to get in front of an on-target, city-based audience. Customers use 3D rendering technology to create and view their bespoke car from millions of possible combinations of technology and materials, and then interact with the 3D vehicle using Kinect technology. Tangible objects with RFID tags enable customers to handle materials and paint colours, and view these on their 3D model. For those who want to get their hands on an actual vehicle before purchasing, their configuration is loaded on to a personal USB stick that can be accessed at a traditional showroom, where further revisions can also be made to the spec.
The new Harrogate-based Bathstore foreshadows a time when home improvement projects too may no longer mean a trek out of town to a grey shed. The "spa style" store is almost half the size of a standard Bathstore and has half the number of bathroom sets on display: yet this smaller store, via technology, is able to bring the full range to life for shoppers using in-store screens and 3D designs to show shoppers how their new bathroom would look.
So where will this lead? It's clear that consumers want more from retailers than just the maximum stock on shelves. The internet has given us access to infinity of choice, and an expectation of simplicity of transaction. As retailers perfect their omnichannel offering, we may well see the out of town megastores turning dark, becoming localised warehouses servicing smaller high street shops that provide a tactile experience perfectly integrated with m-commerce. 3D technology will enable interiors stores to deliver a much deeper, as well as broader product range coupled with turnkey service. As long as retailers are prepared to pay attention to consumers, and to dare to take advantage of technology in order to deliver what consumers want, while creating a new type of retail that will get shoppers excited again.