Boots CMO on retail's return: ‘When people get confident with digital, they stick with it’
Is physical retail due a big comeback, or will a Covid comeback scupper those ambitions? At the Digital Transformation Festival, The Drum caught up with top retail marketers, including Boots CMO Pete Markey, to see where the footfall will land and how the high street has learned a few tricks this last year.
Will the high street every truly return?
Recent news paints the high street in ill health. In the UK, John Lewis store closures threaten up to 1,500 jobs and Debenhams has recently announced similar difficulties. The big chains are pulling out of some high streets and thus lowering their appeal, and magnetism. But in the face of challenges, it seems there's opportunity abound.
Pete Markey, chief marketing officer of Boots UK and Ireland, tells how the pharmaceutical brand faired this last year.
“85% of the UK population lives within 10 minutes of us. So we’re very much everywhere.” As an essential shop, closures were limited in lockdown, and its nationwide proximity saw it benefit from a shop-local trend Markey thinks we’ll see more of going forward.
But on top of that, digital sales were through the roof. “Our digital sales were up 100% year on year, 440 million customers shopped with us last year. So digital is a real growth channel for us.”
Not all of those shoppers will rush back into stores, but it’s up to marketers like Markey to incentivize that. “I found that in banking, the same thing once people growing confidence with digital, they want to stick with digital. But I do think we feel, as a business, [that there] is absolutely [still] a place for the high street.”
There will be a degree of digital, or what some call phygital, in the most successful physical retailers going forward. A mix of apps, online and more can improve the high street shopping experience. Click-and-collect uptake was important at Boots this last year, for example.
“We still need spaces for people to come out and sample and try and experience beauty products in-store, this is very hard to replicate online," says Markey. That’s not stopping brands from trying to take make-up into digital, like Snapchat’s AR lens output.
The retail experience has to offer something a little more than digital if it is to reclaim footfall, it has to be something worth coming to. And to deliver that, Boots needs to know more about its customers. Thankfully, the digital boom has illuminated a lot. Boots is acting on the habits of all those new customers, some whose habits are documenting by the Advantage Card. And these are now feeding into media buys.
“We now know how our customers shop with us, what they buy, where they buy it, and so on. So it’s a real opportunity for us to connect and use the first-party data, we've got to build deeper relationships with our customers, not only through our own channels.”
Around 40% of its media is bought using its first-party data, four times more than just a year ago. That’s partly driven by the coming demise of the third party cookie. Expect more movement in this direction.
Alicia Grimes-Gibson, the marketing director of Dolce & Gabbana beauty, Shiseido Group UK and Ireland, says there’s some optimism ahead for the beauty sector at least. A January study from NPD Group indicated that 51% of respondents will continue to purchase beauty in a physical store in the coming year. That means half will need to be convinced to return, but it appears to be less than Grimes-Gibson could ask for. What other sectors truly benefit from an in-store test, consultation or exploration?
“Stores will need to do more to sustain footfall after the initial post-pandemic burst. They will need to create a really unique enhance retail experience that inspire people to return, or they’ll just revert back to shopping online.”
But if that’s not the case, the high street isn’t dead – just resting. The rise in local shopping may see community businesses furrow out shopfronts and build models that can't be provided online. “There’s been a real sense of community spirit and wanting to support local business," says Grimes-Gibson.
Decades ago, people spoke about top retailers throttling the high street the way that Amazon’s accused now of doing to them. But has this opened an opportunity for new businesses to emerge? And what of the big brands, can they tap into local sentiment. Grimes-Gibson says brands like Waitrose stock with local produce with this in mind.
Bhavesh Unadkat, head of digital marketing, Capgemini Invent, says: “We’ve changed our behaviours into new online channels, we shop less frequently and more locally. Some of those ingrained behaviours won’t go away, either. So I think in a nutshell, the high street is different.”
Brands haven’t quite nailed omnichannel shopping yet. “It is difficult to do it at scale. And it’s difficult to do it in a way that services many because everyone thinks and shops in a very different way.” But it can be solved, Unadkat believes.
Once the connected home and the connected car become more prominent, there will be more ways for brands to reach into the home. There’s more here at play than just the digital being pitted against physical, he concludes.
The panel ran as part of The Drum Digital Transformation Festival, a global online event packed with expert insights and ideas designed to help marketers accelerate their digital strategies. You can watch The Drum’s full panel below.