February 21st, 2010

Adding value to online retail: the in-store shopping experience

With time to kill in between appointments last week I found myself in Top Shop’s flagship store on Oxford Street in London. Not for the first time I was struck by how different the shopping experience is. Indeed Top Shop is less of a shop nowadays, more like a nightclub-cum-youth club-cum-beauty salon. With TVs and music blaring, girls of all ages (thirteen up to forty!) were browsing, chatting, phoning, texting. Oh and there was some purchasing going on too. Top Shop is a real-life social media experience.

Back in the virtual world, in December 2009 £5.46 billion was spent online in the UK, a 17% increase y-o-y. According to the IMRG Capgemini e-Retail Sales Index, the Clothing sector saw an 18% annual increase in online spend and Accessories in particular saw a phenomenal 101% annual increase. Driven by a quest for shopping on demand, online retail, or e-tail, is certainly thriving.

The challenge for both online and bricks and mortar retailers is that the Millennial generation – defined as the mid-teens to late twenties who have grown up in a digital world – are a fickle bunch. They want social interaction but they also want a highly personal experience. They expect you (the retail brand) to know exactly what they want, and they want to have it now. They have been spoilt by the instant gratification of Google, and the infinite choice of niche sellers that the Web has to offer. It’s all about me, or “me-tail”, after all.

Customer acquisition and retention strategies must therefore be cross-media and highly targeted. Indeed, in its Industry Report entitled ‘The “me-tail” revolution’, Accenture urges retailers to radically reinvent themselves, and cite the example of Domino’s Pizza’s use of Facebook and mobile phone apps – as well as TV – to facilitate orders, and Best Buy’s leveraging of Twitter to answer customer queries.  According to Accenture, it won’t be long before this new generation of always-on customers spurns the concept of retail grazing.

Whereas for the last ten years, retailers have been trying to work out how their websites might add value to in-store spending, the tables are now turning. What is clear from the Top Shop experience is that the physical store space must now add value to the price-led, convenience and personalisation of shopping online.

This blog post was written by Amanda Davie, Founding Partner, Reform.