The High Street has changed in the last five years driven by the rise of internet shopping coupled with the recession. But the continuing battle for retailers is how to adapt to changing consumer shopping habits and the technology that is enabling new ways to shop. High streets are at a cross roads that could determine their future; do they adapt or die. Here are some key facts that illustrate the balance:
- UK retailers blasted for poor online stores
- The retail industry employs more than 2.9 million people (approximately 11% of the total UK workforce; that is over 1 in 10 people), sales total £293Bn, which generates 8% of the GDP of the UK and that there are 286,680 retail outlets.
- A report commissioned by the BBC found that shop vacancies now stand at 14%, up from 10.5% a year ago, say retail analysts the Local Data Company.
- Who's Gone Bust in Retailing 2010-11; the change in brands and ownership.
- Brits buy more online than any other European country; according to the latest figures for every £10 spent, £1 of that goes to online stores
- The UK spent £58.8Bn online in 2010; a further 18% growth is predicted for 2011 taking online sales to £69 billion. Some sectors like clothing are seeing big increases of over 34% yr on yr sales.
- According to Mintel 87% of internet users had bought online goods or services during 2010
We quickly get a picture that people are spending more time online because it is convenient. However the social aspect of retail shopping will still be important and whereas we used to research online before we shop we now do this whilst out shopping; this makes the need to be digital even more urgent. The key point here is that busier lifestyles mean consumers want to shop when, where and how they choose. But what does this mean for a retailer?
The essential need in todays fast moving commercial world is to be where your customers are, when they want to buy. To maximise commercial opportunities retailers need to be present across multiple digital channels. The three main digital channels currently are Website, Facebook and Mobile (almost one in three European Union mobile subscribers now owns a smartphone).
Why? - well it extends the reach of the retail brand and how a retailer sells their services and products; this enables them to wrap their business around the consumer rather than trying to get the consumer to fit to an old bricks and mortar model. Yet many retailers are not harnessing these channels and as a consequence floundering or failing.
"...but the majority of retail marketers are trying to catch-up with the shopper and figure out how all these channels work together,” said Richard Winter, POPAI President during a recent presentation at EuroShop 2011.
A good indicator of this shift is advertising spend. Traditionally marketing budgets have always followed where people spend their time; it is an indicator of where marketers are going to spend their money in the future; clearly the future trend is heavily weighted towards digital channels.
Who is doing this well?
Brands with consumer products are particularly suited to selling on Facebook.
Here are a few examples:
Heels.com (click to see store)
Asos (click to see)
Asos claims it is the first in Europe to open such a store, which will allow fans to buy its clothes without leaving the Facebook site. ASOS mobile sales exceeded £1m in December 2010.
French Connection (YouTique) (click to go to YouTube)
Marks and Spencer
Why is Social Business Important to Retail?
The examples above show some of the leading brands but if we look at the future it is only the start of things to come. Technology is 'rocketing' forward and subsequently creating a digital divide between those that get it and those that are still figuring out what it is.
The value of goods sold through social media is currently $5bn, but is set to grow to $30 in the next 5 years. . We use Social Business as way of expressing how technologies that enable social collaboration; comments, feedback, input, ratings....and commerce are used by brands for developing their business.
Most large companies are now wrestling not with the need to be digital, but more on how to plan and execute. The complaints we hear from the boardroom are about (people) resources, about target pressures, about the lack of time, about internal legacy ways of working and the need to change quickly - to make things happen.
Why Retail Needs to be A Social Business
With digital becoming ubiquitous, and the pace of change in mobile showing no sign of slowing, the need to change and adopt digital channels is obvious. Here are some compelling reasons we think a retailer should adopt mobile and use social channels to reach customers.
1. Social becomes a shopping experience
As this infographic neatly explains 1 in 11 humans on Facebook, thus making it an obvious place to move from just brand engagement to selling - f-commerce. Brands are moving away from corporate websites to engage with customers where they are e.g. Kraft and in ways that add relevance, value and deliver a customer experience. Retailers need to build a community of people around their brand and use the interactions and feedback to sharpen their understanding of their customers.
2. Video is ubiquitous and interactive
YouTube's growth and success has been undeniable; as of Feb. 2011, YouTube has 490 million unique users worldwide that searched about 92 billion pages per month. It means that we spend around 2.9 billion hours (over 325,000 years) on YouTube in a month.
Now Add video to a Facebook commerce site and you have a powerful combination of how you can deliver video content within Facebook and at the time it is relevant to a product. Zappos experienced an increase from 6% to 30% in sales for products with video on it website. As French Connections site demonstrates it is an obvious combination. Retailers need to harness video into their offering and use video channels to distribute content.
3. Mobile, Location, Local
In our last blog we talked about the growing need to have a mobile website as increasing smartphones will enable new ways for brands to interact with consumers. Mobile will become our day to day tool taking over from the PC and some predict that mobile shopping could be as big as online shopping.
In addition to this you also have the growing use of Location Based Services e.g. Shopkick , FourSquare , Gowalla or Facebook places for checkins which can be used to incentivise a customer to buy. Notifications will automatically go to a user’s profile and news. In effect this is a great word of mouth and extends the reach of the business and brand.
4. QR Codes Blending Online and Offline
QR codes seem to be getting traction but this research shows people don’t really know what they are and what they need to do with them. QR codes are here to stay as an accepted form of marketing, cleverly integrating the offline with the online. Here are some innovative uses of QR Codes:
- 72 percent of Smartphone users likely to recall an Ad with a QR Code
- Shoppers who buy a bottle of M&S brand orange juice are directed to scan a QR code with their phone’s camera which directs them to a Food To Go mobile site
- Ralph Lauren use QR codes in their windows allowing you to shop when the store is closed. You simply scan the QR code and instantly be taken to the relevant product on the website, which you can then purchase.
- Miss Me jeans - cardboard tag was attached to a pair of jeans I recently purchased. The QR code takes you to a video showing a woman walking around in her Miss Me jeans in a sexy manner.
5. Community, Contact, Promotions
As brands develop a community on their Facebook page they have a direct and ongoing relationship with them. These fans are more likely to talk about a new product or promotional campaign to their own friends and followers, increasing both awareness and word-of-mouth.
In light of this, companies are presented with a great opportunity through social channels to reward those fans and followers that are sharing, liking, posting, and generally talking about their new products.
By aligning new product launches with Facebook competitions, brands can both increase fan acquisition and engagement, as well as present customers with special offers, exclusive discounts, additional content, and even free product trials e.g. Heinz.
Retail is everywhere
Retail is changing, how brands now engage with customers is still in its early stages with some brands clearly being more innovative than others. There is virtually no limitation now to how different technologies can be combined and used within Facebook, Mobile and on the Web. It is now an imagination business - retailers need to start imagining their futures.
So what do you think about shopping in these new ways?
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