Reading the media headlines, you would think a retail apocalypse is already upon us. Countless news reports inform the public of store closures, profit warnings and redundancies.
But is that a fair reflection of the dominant trends within the retail industry? A closer look at the figures suggests the broader reality is a long way from the doom-and-gloom narrative that captures so much attention.
So what is the real story?
Consumer spending looks strong
The latest UK figures from the Office for National Statistics (ONS) show total spending in the three months up to September 2019 was 3.5 percent higher than the same period in 2018 and the volume of sales was also up by a similar amount.
One business journalist described retail sales and broader consumer spending as bright spots in an otherwise fragile UK economy .
In fact, far from a retail apocalypse, some commentators are calling the current period a retail renaissance.
A 2019 study from consulting firm IHL Group, entitled Retail Renaissance, found that more than five retail chains in the US are currently opening stores for every retailer that is closing stores.
Looking into the future, forecasts for the UK retail industry are also optimistic, particularly among the large retailers surveyed for Lloyds’ latest Business in Britain report. Almost three-quarters (71 percent) of retailers are forecasting an increase in turnover over the next five years. Additionally, more than half of the large retailers in the survey said they had plans to grow their workforces.
Underneath these broad figures, of course, online retail is showing the biggest rises, but that should not overshadow the continuing importance of bricks-and-mortar stores.
Research suggests consumers still value the opportunity to browse around a physical store. The ability to touch or try an item is the number one reason but shopping in a physical store also offers the advantage of face-to-face interaction with sales assistants. For retailers, the advantage is that the rate of conversion is higher in-store than online. Additionally, customers spend more, on average, when visiting a store than they do online.
Retail technology trends
In both online and physical environments, the implementation of new technology is seen as a vital contributor to growth. Retailers that leverage the new capabilities that advancing technology enables are not only the most successful today but better equipped to expand their market share in the future.
Areas of innovation that are gaining traction include:
AI and machine learning
The addition of artificial intelligence and its close cousin, machine learning, is valuable for multi-channel retailers trying to optimise supply chain efficiency and inventory management, as well as helping deliver more personalised experiences, recommendations and discounts to consumers through better use of big data.
Scan-and-go and checkout-free facilities are moving into the mainstream, with more consumers willing to use payment apps on their mobile phones to speed up transactions.
For online retailers, the growing presence of smart speakers in UK households opens up a new way to order goods and services. Businesses that are ready to capitalise on voice recognition are well placed to thrive.
Interactive displays, augmented reality, smart signage and social media integration are all being embraced by retailers to enhance the experience for shoppers visiting a physical store.
However, it’s important to point out that all of these emerging technologies depend on the IT infrastructure that underpins the enterprise’s operations. Retailers must examine whether their storage, compute and networking architectures are sufficiently agile, responsive and scalable to deliver the required performance.
This is an imperative that may be overlooked in the rush to deploy the latest innovations but it is vital to get it right.
Find out more about CDW’s retail capabilities by downloading our Midcounties Co-operative case study here: https://uk.cdw.com/about/case-studies/midcounties-co-operative/