Distribution & Retailing

A sector facing radical upheaval: is the demise of high-street stores inevitable? 

For a number of years, operators and observers in the retail industry have witnessed the irresistible rise of Internet in consumer habits. Internet affects the entire customer journey: the search for information (a vast majority of consumers prepare their purchases online), the act of purchase itself and the subsequent sharing of opinion and comments on social networks.

Act II of this surge (which impacts will probably be even more conspicuous) has emerged with the explosive spread of mobility tools: the Internet is now evermore at the consumer’s fingertips.

Physical and online retail are two worlds that do not apply the same codes and face the same constraints, but are linked by the consumer experience: customers wish to purchase online and immediatly share news of their purchase, follow their order on their smartphone, collect it from a store (‘click and collect’) and, if necessary, return their item to the retailer’s shops.

Redesigning the customer itinerary: what should the response be to consumer 3.0 expectations?

To manage the boom in digitization, retailing operators must implement an omnichannel customer itinerary. E/m-commerce has become a channel that complements rather than competes with stores. The main issue is to enable a continuous experience for customers with increasingly complex cross-channel and multi-device itineraries.

In this omnichannel strategy, retailers must precisely determine the role of each channel in the customer 3.0 itinerary and, therefore, question the store’s business model. Stores are not doomed to a future of ‘showrooming’ or even extinction! The return of the local shop and the development of new concepts such as drive, pop-up stores, concept stores, etc., are proof of this; retailers are still primarily shopkeepers.

Redesigning the store experience: how can stores convey an enhanced promise of value?

Today, stores can no longer settle for simply selling products. New possibilities are emerging, which have the potential to revive the ‘enchantment’ of points of sale and offer new experiences to consumers. High-street retail must refocus on the individual and human emotions, appeal to their senses and fuel their imagination, while ensuring brand consistency across the different channels.

Points of sale must also introduce digital technology to adapt to new 3.0 modes of consumption and provide access to information in the store: deployment of terminals, sales assistants trained and equipped with tablets allowing them to check customer records for the entire retail chain, regardless of the channel.

At the same time, retailers must also work on Social Commerce (management of net-user opinions on the site, deployment of commercial links to social networks) to upgrade their website from self-service positioning to choice guidance, as in a high-street store.

Revising organizational models: what are the issues involved in the transformation of operational models?

Beyond the changes perceived by the customer, all these developments result in a need for retailers to question their operational models on several points including the following: improved stock selection and replenishment, implementation of a cross-channel logistics master plan, modification of headquarters-network organizations, cultural transformation, HR, etc. This will happen against a background of very tight cost control to tackle increased international competition.