Retailing on the high street has evolved over at least 2,000 years but has changed as much, if not more, since 2000. We are in the middle of a retail revolution. How will the revolution change your shopping experience 20 years from now?
Retail has always been about managing fixed costs – goods, premises, marketing, people, place, prices – all have played a major role in the economics of any business that sells stuff. Online, many of these constraints can almost disappear.
At our BLN discussion dinner this evening, we were privilidged to have the leaders of businesses including Net a Porter, Tesco.com, Figleaves, GlassesDirect, My-Wardrobe, eBay, Reevoo, Spreadshirt, Viagogo, Isabella Oliver and other key revolutionaries, to discuss what the revolution means for consumers.
The discussion was surprising. This could be the future of the high street retail experience:
I found this photo on my camera the other day. There was a queue of people lining up to be photographed with the purple chappy who was advertising Mac Cosmetics. They didn’t buy any then, but her friend did later that week on eBay. This illustrates two theme of this discussion perfectly – the way people buy stuff has changed; brands are powerful.
The way people buy stuff has changed. Shops are still a big social experience for most people but increasingly online stores are benefiting from the trend towards meeting on the high street, finding stuff you want with your friends, deciding what you want – then buying online or mobile at best price. Naturally, pure play ecommerce businesses are happy with this scenario at the moment as they are typically the biggest beneficiaries – they sell great brands at low prices so do very well. High street stores with their high fixed costs and expenisve rents are effectively subsidising pure play ecommerce businesses for the most savvy consumers.
However, fast forward 20 years and what happens when everyone buys online/mobile and the only purpose retail outlets serve is to showcase stuff that people buy remotely for the cheapest price? Stores that showcase goods but don’t sell anything will go bust. Will high street brands move online? (In fact they already have and the vast majority of the highest traffic ecommerce sites are high street brands). Will online brands have to move offlline and lose some of the key benefits of their low cost models? (Some of them are experimenting but the general feeling was that most of them have too much of an advantage by staying online at the moment).
Brands are powerful. An alternative scenario considers the value of brands to consumers and retailers and paints a picture where brands take high street locations, and develop almost theatrical experiences that create a desire amongst consumers to buy – think Apple Store, think Ted Baker’s in house Olde Worlde Barber Shoppe. Ultimately, brands care much less about whether they sell in-store or online as long as they are creating demand for their goods.
These are exciting times for retailing. A revolution is happening but whilst we are in the middle of the revolution, it is not always clear who will come out on top and what the world will look like afterwards. Clay Shirky recently wrote a widely reported piece about the future of the newspaper industry.
In it he looked at sources describing what life was like in the early 1400s before the invention of the printing press and in the late 1500s when printing was well established in Europe. It was much harder, but interesting, to find out what was happening during the revolution.
“Chaotic, as it turns out. The Bible was translated into local languages; was this an educational boon or the work of the devil? Erotic novels appeared, prompting the same set of questions. Copies of Aristotle and Galen circulated widely, but direct encounter with the relevant texts revealed that the two sources clashed, tarnishing faith in the Ancients. As novelty spread, old institutions seemed exhausted while new ones seemed untrustworthy; as a result, people almost literally didn’t know what to think. If you can’t trust Aristotle, who can you trust?
“During the wrenching transition to print, experiments were only revealed in retrospect to be turning points. Aldus Manutius, the Venetian printer and publisher, invented the smaller octavo volume along with italic type. What seemed like a minor change — take a book and shrink it — was in retrospect a key innovation in the democratization of the printed word. As books became cheaper, more portable, and therefore more desirable, they expanded the market for all publishers, heightening the value of literacy still further.
“That is what real revolutions are like. The old stuff gets broken faster than the new stuff is put in its place.”
It is a strange thought that high street shops as we know them today may be little more than interactive, 3-d advertisements for consumers when the revolution has passed. The retail revolution will be swift but potentially bloody.