The evolution of retail over the past decade has been rapid.

From changing customer behaviours to integrating technology, retail industry players realise that market dynamics – coupled with the Covid-19 pandemic – have had a significant impact on their businesses.

While a timeline to ‘post-Covid-19’ is still undefined, the retail industry has started to prepare for the new normal. US-based research firm Forrester has estimated that global retail losses likely reached $2.1tn in 2020, and that it will take four years to overtake pre-pandemic growth levels.

In addition, a study from Swiss investment firm UBS, conducted prior to the pandemic, had already predicted the closure of 75,000 brick-and-mortar stores by 2026, caused by the competitive e-commerce market. The study led to talk of a ‘retail apocalypse’.

Rethinking retail

Changes in consumer behaviours have led to a significant shift in the shopping experience. Globalisation has created a different reality and e-commerce is growing exponentially. The ‘always connected’ consumers are looking forward to shopping experiences that include the asset of the physical store without interrupting their digital experience.

The future of retail stores aims to highlight the strong attributes of the retailer that e-commerce services struggle to deliver, for instance, a tactile experience and the immediacy of product availability, advice and services. The retail store is set to become an amplifier of the consumer digital experience.

Several questions remain: How can a physical store stay relevant in the e-commerce era? How do physical stores fight against 'showrooming'? How can traditional retailers secure sales when competitors offer the same products at discounted prices online?

The answer to all of the above is to focus on a customer experience strategy. Millennials and Generation Z prefer experiences over products.

Customer experience impacts feelings and emotions and encompasses the entire customer journey. According to a recent study by Temkin Group, companies that earn $1bn annually can expect to earn, on average, an additional $700m within three years of investing in the customer experience. Additional benefits also include reduced customer 'churn' and higher customer satisfaction rates.

The future of retail stores aims to highlight the strong attributes of the retailer that e-commerce services struggle to deliver, for instance, a tactile experience and the immediacy of product availability, advice and services.

In March 2020, the spread of coronavirus brought the economy to a near halt. Retailers saw a shift towards e-commerce, as it became a safer option, and in some cases the only option, for shopping.

However, as the world emerges from lockdowns into new psychological and social territory – and even with e-commerce and mobile commerce continuing their meteoric rise in popularity – brick-and-mortar storefronts will continue to be a staple of retailers. The reason for this is that shopping has always been a visceral and social experience, and will continue to be so. 

The challenge for retailers now is to think creatively and holistically. And technology will undoubtedly play a major role in the future of retail.

Capitalise on digital

From the first interaction, retailers need to start building up data on individual customers and using this to create a deep understanding of each customer’s needs. The objective will be to gather more data than ever before, in store and across all channels, then analyse this data and anticipate customers' needs.

Amid the ongoing technological retail revolution, brands and service providers have ample opportunities to enhance their operations and the experience they provide to their customers. Many elements that were thought to delight yesterday's customers have become only satisfactory today.

With technology continuously evolving, retailers need to anticipate ways to deliver a convenient, easy and frictionless experience, and must test new technologies that aim to enhance the customer experience in the store against these measures.

The use of artificial intelligence and augmented reality in stores is already becoming more widespread.

Although the integration of digital services in physical shops is in its nascent state, there are already sectors that are taking their first steps. The fashion world is leading the way, with intelligent fitting rooms that enhance convenience.

Another game-changing offering in the retail industry is about blending offline and online experiences for customers. The model bridges the gap between traditional and online retail, putting consumer experience and the desire to discover at the heart of its concept.

Reassess and re-adapt

The pandemic has acted as the catalyst for future retail design concepts in many different ways. With the rules for the new normal in place, retailers need to evaluate their in-store offering and work out how they can balance customer and employee safety with the need to maintain the exceptional experience customers expect from their brands. There will also be additional focus on spaces designed with greater flexibility.

The challenge for retailers now is to think creatively and holistically. And technology will undoubtedly play a major role in the future of retail.

Innovation, creativity and complete transformation of the mindset towards one of growth and possibility will be the keys to solve all retail woes.

In the near future, to survive and thrive, retailers will have to integrate disparate channels, such as websites, physical stores, kiosks, direct mail and catalogues, call centres, social media, mobile devices and more, into a single, seamless, omnichannel experience to interact with their customers.

In addition, retailers need to re-adapt their business models to cater to non-linear buyers. Customers today are armed with smart devices, addicted to social networking sites and are ready to share their experiences with the rest of their ‘tribe’, who can easily be influenced by reviews shared online.