Photo by Alexandre Godreau on Unsplash
The UK retail sector has long been considered a bellwether of the country’s economy. In good times the tills are ringing and the media is awash with images of thriving high streets. Even the bad times have winners – ALDI, anyone? It would seem that we are no longer a nation of shopkeepers, but we remain a nation of shoppers. However, while there are exceptions, like our new found love for Black Friday, the overall trend in traditional retail is down 4.2% in the UK since last year. Less spending, less in-store shopping, and a demand for experiences over retail therapy.
The fact is, 2018 is turning into a significant year for retail in the UK, for all the wrong reasons. The Times report that 50,000 jobs have been hit in traditional retailers this year already. Even the Royal Wedding and sunny spells - traditional peak drivers - failed to boost sales as retailers recorded their worst May in twelve years. Big name casualties include: House of Fraser, Maplin and Toys R Us to name a few. The trend is so bad that former head of Wickes and Iceland, Bill Grimsey, recently warned that, unless drastic action is taken, Britain's town centres are in danger of becoming ghost towns.
Lots of problems with one big beneficiary
And as with all shifts, there is no one cause. Business rates, Brexit, exchange rates, failure to adapt, changing spending habits, lack of choice, customer service and convenience are all regularly cited as issues. And all true. But as disconnected as these issues may be, there is one big beneficiary: pure plays – those retailers that exist solely online.
For all of the criticisms levelled at the traditional retail industry, pure plays can address each of them. The most dominant player, without question, is Amazon. In a little over 20 years it has gone from online book seller to global retail behemoth and its dominance cannot be underscored. According to a recent article by Tamebay, 55% of online purchases in the UK and US are now done through Amazon. As if that’s not enough, Amazon is predicted to double in size in the next three years. To contextualise, Amazon's $356 billion valuation is so big, it is larger than some of the biggest names in US retail combined – Walmart, Target, Best Buy, Macy's, Kohl's, JCPenney, and Sears. And they’ve already made the move into grocery with the acquisition of Whole Foods, connected products, pharmaceuticals and soon, insurance and banking.
What is abundantly clear is that consumers feel that the in-store experience is simply not keeping up with the same convenience as shopping online. Customers now want, and expect, the physical store to offer more than simply selling a product. KPMG reports that customer experience will overtake price and product as the key differentiator by the year 2020.
Gaining advantage in the ‘competitive microsecond’
The competitive microsecond is the one-millionth of a second that consumers take choosing between a retailer’s site or defaulting to Amazon. Unfortunately, traditional retailers tend to be less skilled in eCommerce than pure plays. With consumer spend shifting online, retailers are losing control of their sales funnels, conversion rates, and consequently – market share. Retailers must reclaim the competitive microsecond to alleviate shoppers abandoning to find products elsewhere.
Advances in technology – driven by machine learning and a deep understanding of buyer behaviour and intent, can now enable retailers to market to customers when they’re primed to spend. This means keeping them on their site and ensuring that a transaction takes place with them, nowhere else. Spending habits are evolving – but not stopping. The pure play giants aren’t preventing new entrants to the market, they’re just killing off those that are failing to predict or react quickly to changing customer expectation. Retailers now have the ability to understand explicit and implicit buyer behaviours to better serve their customers online.
Up to 98% of site visitors leave without buying. We believe that every business, regardless of size, should have a fighting chance up against the pure plays. To accomplish this, we have developed our platform so businesses can better identify and engage with their visitors. This will enable them to ultimately gain, retain and grow more customers. On average retailers will increase their revenue by 16% with Cloud IQ, making optimising conversion both effortless to implement and an effective return on investment. In an eCommerce environment that’s only growing more competitive, the retailers who will win are the retailers who understand buyer behaviour throughout the entire purchase funnel and use that understanding to offer a truly individualised customer experience.