According to the Oxford English Dictionary the definition of shopping is: the action or activity of buying goods from shops. In 2017 this seems an inadequate description of a pastime that is now as much about how we choose to relax and enjoy our leisure time as it is about purchasing an item and carrying it from a store.
Looking back, predicting the changes in consumer behaviour over the last 10 years would have been pretty challenging. Demographics have shifted significantly in this period; the rise of the millennials, the changing pattern of disposable income and future pensioners to name few. Can we do any better now as we look forward and beyond 2017? Talking to our retail client base there are 3 key themes and these have interesting implications for retail talent:
The end of the space race?
BIG, in terms of square footage, was at one point best. In 2017 however, the drive to have more and more stores to demonstrate position and influence is in decline. In fact the indications are that space can be more of a hindrance than a help for many of the really large retail operators. Those retailers with extensive store networks have the contractual challenge of how to change the shape of their business. In a market that requires agility, restrictive property agreements can be critical to whether the required changes and innovations are possible. Food and essentials retail businesses are seeing an increasing number of their transactions occurring online, yet these businesses have extensive and expensive store locations with increasingly less footfall. Collaboration and diversification is one solution. The Sainsbury’s acquisition of Argos was a strategic move to enable them to change their store spaces and create more reasons for customers to visit; a strategic step to create versatility. Will all our existing large and well established retail businesses be able to change the way they manage and use their space to make it profitable? Or will an inability to do so see more and more stories like that of the decline of BHS?
Beyond the changing customer mission, there is also the inevitable hike in business rates that must lead to retailers questioning the space they have traditionally taken. Following a delay in revaluation by Government in 2015, a significant increase is surely due and it will be an immediate factor as businesses consider where they should be selling from in the short term.
The changing expectation of space?
It’s no longer all about the amount of space. How it looks and feels for customers is what counts. Think about your own retail habits and what you expect and enjoy when you are out. Think about the increased use of technology and sensory ways to engage with brands, you visit stores to look and experience as much as to buy. Customers now demand a retail experience that brings the brand and the product together. Good merchandising is no longer enough and this puts pressure on retailers to build an experience instore and online that is powerful and memorable. A coming together of instore and digital is something that will be increasingly evident on the High Street. Customers see the benefit of doing all the research they are able to do online but in the same ‘space’ as where they can touch and ultimately commit (pay and take away).
Specialist retail businesses will have fewer physical stores and the stores they do have will be more personal and will be complimented by more impressive websites. Both experiences will create a unique interaction with the customer to increase interest and engagement with the brand. The stores will be more interesting and customers will want to visit them, therefore they may well be prepared to travel much further to visit them; destination stores.
There is also a real possibility that many city centres will become less about shopping and more about living space, leisure space and easy access to essentials but not all brands. The High Street may decline more but could this be an opportunity for our town centres given the broader social challenges in the UK? We should caveat this decline and bear in mind the power of ‘en-route’ retailing satisfying the time poor customers who need to ‘grab and go’ creating a specific retail demand in certain parts of cities.
Store and online environments that are fresh, agile and adaptable are going to be key. It is important to have the ability to refresh stores frequently and affordably, maximising property assets, reducing property occupancy costs and ruthlessly retiring space if it doesn’t pay its way and/or drive on-line business.
The brand experience and how this transcends store and channel space
Consumers want choice and ease when searching for and purchasing a product. If you are buying a significant item, which isn’t dictated by price, you want the look and feel of the product and service to be synchronised. For example someone buying a premier brand bike; it’s a significant purchase but it also has a practical value. They want to look online and get a sense of the value and quality of the item; want to understand how it can be made perfect and personal to their needs; they want to go to see the bike in a space that is inspiring and engaging that will make them like the bike more; they may even visit a store in the UK and then a store in Europe; they want the feel of the environment and the product to be connected and have some elements in common; they then want to order it with ease and be 100% clear on when it will arrive. All this consumer demand seems reasonable to the shopper but it challenging for the retailer, the cost implications of staying ahead of consumer demand have never been more pressing. The consequence of failing to meet these demands have never been more serious.
So what is likely to happen to opportunities and jobs in our sector?
A reduction in the amount of stores and the move to increase minimum wage will result in more automation of processes and fewer employment opportunities in customer facing positions in the essential and volume retail businesses. However in the specialist brand space, where there will be fewer stores but with increased focus on service and standards, there will be a requirement for talented sales people of a very high caliber.
In head offices there will be more significant changes to the types of talent required. We will move away from terminology like multichannel and Omni-channel as the channel becomes less relevant to the customer. What will matter will influence the scale and shape of roles; less Heads of Buying, more Heads of Product, less generic marketing positions, more customer experience remits, less Retail Directors more Chief Customer Officers and so on. Functional areas will also see a change with more roles in Store Development and Design, more leadership roles with European and Global accountabilities and more connections between service providers rather than fighting for customer share; the opportunities will still be significant and the pace of change no less demanding.
Categories: Real Estate Recruitment, Retail & Hospitality Recruitment, Property, Infrastructure & Place Recruitment, Government Recruitment