The future of retailing: reinventing customer experience
Retail is a huge employment sector, especially in the developed world. The retail sector is coming under increasing pressure from digital disruption, with consequent impact on how we live and work. I recently caught up with Erich Hugo, founder and director at BAS ITG, to discuss the future of retailing, resulting design implications and how both will affect us all.
What does consumer experience really mean from a design perspective?
Consumer experience is becoming key to survival in retail, largely because of digitalisation. Digital platforms are a great equaliser, by which I mean that companies cannot rely on their products to distinguish them anymore. Instead, they have to find something else to differentiate themselves, and that it turning out to be consumer experience. The company that offers the best consumer experience will be the one that succeeds in attracting and retaining customers. For designers, this means incorporating real time information where available into the definition of the product or service. It adds a completely new dimension to the discipline of design.
Hasn’t this always been the case?
To some extent, yes, but it has become more important with new business models emerging in retail, based around the sharing economy, a curated subscription model, on-demand, and service provision. Customers can now access products in different ways, wrapped around in different levels of experience. These models are changing the way that retailers have to operate, because physical stores are becoming a smaller part of the equation. So stores are getting smaller, and also closing in many areas.
This has implications for communities, as well as retailers. Are there ways that this can be managed?
Yes, closing stores will have a big impact on communities. The job losses are a big issue, especially because they will probably happen in the areas where stores are least profitable, which by definition tend to be areas which are already rather poorer. But local governments will also lose out on sales tax, where this applies, and having stores lying vacant is never good for an area, because they can become targets for vandalism. There are some good examples of old retail spaces being repositioned as community centres, though, with shared spaces for offices, recreation, skateboard or basketball parks, for instance, day centres for older people and similar.
How does automation play into this?
There are likely to be efficiencies in retail jobs, and also knock-on effects on the haulage industry. It’s not hard to see a future where a lot of long-haul transport is done by automated vehicles, with less need for human drivers. So automation is a big deal for the haulage industry, where it is expected to help both safety and efficiency. But it will also have a direct impact on retail: a lot of what is currently done by people, such as stock management, or cashier work, is expected to be automated. We are already seeing these moves in, for example, self-checkouts at supermarkets, but this will put a lot of jobs at risk.
But surely none of us wants to interact only with robots and computers in shops? There should still be a place for some staff!
I think staff will have a key role as experts. As customers, we will be able to gather a lot of information online. So when we go to the store, it will be to see the products, and to learn from the expertise of sales staff. They will need to be very savvy about the products, and also perceptive about customer needs. They will also need to be very good communicators, able to point us towards something that may provide a better solution, but which we hadn’t appreciated existed. There will be some challenges for retailers to make sure that staff have these skills.
I can see an impact on the environment from changes in delivery patterns too
That ‘last mile’ delivery is crucial. Retailers, and suppliers, have spent years optimising their delivery schedules to reduce environmental impact and cost, and now this is all being put at risk. Large volumes of goods will never need to go to the store, but instead move direct from factory to customer. Customers will make multiple visits to store, to look, and then want goods delivered. It’s not just the fuel and CO2 impact, either, but also packaging. I think there is an issue about making consumers aware of the impact of their actions, but also a societal responsibility to develop solutions. Online choices have real-world impacts, and we all need to understand this and help to address it.