Is The Retail Industry Really Doom & Gloom Or Are We Seeing The Future In Front Of Us?

By 28th April 2017Retail Outlet
retail industry

Whilst retailers are living in a period of transition, those who invest in design, layout and customer experience by making accessible spaces for people are seeing the reward.

Over the past month or so, the picture painted by established brands is one where a bleak future is on the horizon.

One of the most recently noted examples has been Next, where they have reported their first half fall in annual profits for eight years. The main challenges were highlighted as, “a sectorial shift away from spending on clothing, price inflation as a result of sterling’s devaluation and potentially weaker growth in real incomes in the wider economy.”

Even the analysts are predicting a bleak future. A recent report from business advisory firm, Deloitte’s in The Retail Profitability Challenge, highlight a drop in profit margins by three to five per cent.

The results are coming in. Hugo Boss announced during April that whilst sales have grown, profits have dropped 9% during 2016.

 

The Way We’ve Always Been

If one of the reasons, as Next highlighted, is people spending less on clothing and more on experiences i.e. eating out and one off events, then does this mean that it is getting harder to persuade people to purchase goods?

Not at all. We are all driven by a human need to consume more than we actually want.

It becomes harder to convince people to purchase goods when what you have to share is formulaic. People will always like stuff, which is why the whole retail experience has to be centered on an audience, where original design makes a store more exciting.

In the recent World Retail Conference (in Dubai), the focus was primarily on taking retail back to basics. This means bringing creativity to stores and understanding how to create personal interactions with consumers. A retailer has to be emotionally engaged with someone else, to create a meaningful brand.

 

Putting Others At The Heart

The opposite side of the coin is when a brand puts someone at the heart of their world, as opposed to highlighting a shift in behaviour.

A good example of tuning into an audience is what bookstore Foyles have recently achieved with a ten-fold increase in pre-tax profits. Chief Executive, Paul Currie highlighted, “It is testament to the work being done across the business to enhance our customer service, modernise the business, manage our costs and engage with readers.” This has included the inclusion of coffee shops, the in store digital ordering system, and in store events, such as the Roald Dahl ‘George’s Marvelous Medicine’ experience in March. Does this mean that we now look forward to a simpler shopping life, where technology is forcing retailers to create shops that behave as shops (but with a digital underlay)?

Whilst there will always be the headlines of noticeable slumps in profits, the formula for future retail resurgence (as highlighted in the World Retail Conference) may not be as complex as it needs to be. Have a belief, invest in original design and create exciting and convenient spaces to shop, is the mantra being adopted by successful retail brands.

Even our cities are making a stand. Toronto is one of the latest locations that are exploring limiting chain stores to retain the character of neighbourhoods. The most famous city being San Francisco who adopted policies to limit stores known as ‘formula retail.’

 

Design Led Experiences

When it comes to design, furniture retailer Made.com have curated a product in a design led way and disrupted the old perceptions of how furniture should be sold. There are currently three showrooms within the UK. Visitors are able to see the products, in person, but if they want to order, it is via a Mac and not a till. Head of Showrooms, Rebecca Ruddle highlighted, “We are not going to have a showroom in every town on every high street, we just want a few throughout the countries we are in, for customers to come and see the bigger purchase items.”

Creating spaces where people want to come and feel welcome is being championed by Debenhams who are looking to turn their stores into destinations. Dwell time has been encouraged by the brand adding a number of Patisserie Valerie, Costa and Joe and The Juice cafes to their stores. It was announced in April, that the new Debenhams boss, Sergio Bucher, will unveil plans to overhaul the chain’s 165 stores.

 

Lets Conclude

Progressive retailers will not be those who hanker to the past, but can join up the areas of technology, brand ethos and relevance to encourage customers to lead a more connected life where a retailer has a role to play.

The brands that are off the pace are the ones who don’t see the world through their customer’s eyes. Whilst the negative news makes the headlines, there are brands that are recognising the role they serve and the designed spaces they occupy.