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Bricks and clicks

This article forms part of our ‘New How: Perspectives’ report: ‘Can real estate help solve the productivity puzzle?. To access this free report, please click on the download link to the right of this page.


Traditional bricks and mortar retailers, occupying premises under long leases with upwards only rent reviews, can be forgiven for looking enviously at online retailers and their flexibility and comparatively low overheads. But those retailers which integrate the benefits of technology into their store strategy through a combined “bricks and clicks” approach will surely be best positioned to enjoy a successful – and productive – future.

Perhaps the most obvious use of bringing technology into stores is providing in-store ordering capability, whether that is an easy to use terminal or staff with hand held devices, allowing potential customers who have not found the item they want in the store to order it for subsequent delivery, either for collection in-store or to their home. By catching customers before they leave the store, retailers can ensure that sales are secured and the customer is not left to order from home, where countless competitor options will be available. Retaining customer interest and streamlining the ordering process is key to boosting sales and deriving extra value from a physical store portfolio.

Retailers can also use their online and logistics capabilities to allow for a more efficient use of existing shop space. If an item can be delivered to a customer within 24 hours, it can also be delivered to a store within the same time frame. Automatic replacement of sold stock means that the need for back-of-house storage is reduced, allowing more of a retailer’s valuable space to be used for the display and sale of stock or for smaller, less expensive premises to be acquired. Either way, a retailer can expect to see an increase in margin, be it through turning back-of-house storage into shop floor space or through downsizing to a store which retains the shop floor size but reduces storage space. A combined digital and logistics strategy, therefore, is one of the most effective tools a retailer has in its toolbox to help boost margin, but it needs to be done in a way that delivers cost and convenience to the customer that is at least comparable to a fully online alternative model.

A common complaint of physical retailers is the rise of “showrooming”, i.e. customers visiting stores to see and feel a product before ordering online at a cheaper price. Having online ordering capabilities in-store and providing customers with the comfort that, at least with that retailer, online prices are the same, goes some way to addressing this. In addition, particularly for single-brand retailers, where profits will benefit the business however and wherever a purchase is made, the focus has to be on allowing customers to browse freely in a relaxed environment, allowing them to experience and appreciate the product, which should ultimately lead to better customer engagement, brand loyalty and high productivity levels.

While lockdown has undoubtedly swung the pendulum further towards online shopping, by embracing the advantages of the digital world, backing it up with a reliable logistics operation and focussing on the customer experience, traditional shops can still compete with and gain an advantage over their online rivals. Once that advantage turns to an increase in margin, productivity levels will soar again.

 

To read more of our perspectives on whether real estate can help solve the productivity puzzle, download our free report using the link to the right of this page.

Disclaimer

This information is for educational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.

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