How can brick-and-mortar stores be less boring? Here’s what experts say
Physical stores must revamp customers’ experiences by pushing “phygital” strategies.
When borders reopened and travelling resumed, businesses figured that they needed to revive their physical stores—but they must be different from the pre-pandemic times. In a 2022 Singapore Retail Report study, consumers said that they now demand excitement and pleasure from their in-store experience, because if they cannot get that, they would rather buy online.
According to Varun Sharma, vice president of the unified CX platform , Emplifi, in the Asia Pacific and Japan, one way for retailers to create this excitement is to be “phygital.” They need to mix physical and digital strategies for a unified experience for consumers using digital data-driven customer insights and technologies.
To gather and use data analysis and insights, Sharma suggested utilising video-powered retail that involves video software that uses data to connect callers to an in-store expert to handle their queries.
“Video technology helps humanise digital communication between consumers and brands via their website—leveraging data insights such as how, when, and why customers are interacting,” he explained.
For example, Marks & Spencer has a “call the expert” video button, enabling their experts to pair with customers for a stronger chance of a sale. This live video service accommodated 28,000 one-on-one consultations of customers browsing furniture, menswear, and lingerie in the store, according to Marks & Spencer’s statement on 28 January 2022.
“This helps brands understand the customer journey better and provide a more personalised experience. With customer data, retailers can give shoppers exactly what they are looking for, boosting their sales potential, and cutting costs, too,” Sharma explained.
Another strategy retailers are using is called the dark stores. Despite the name, it can illuminate brick-and-mortar stores' creativity. Dark stores are like distribution hubs of physical stores, said Sharma. These physical stores turned into dark stores, which are not open to customers but are used as store inventory and for brands to send out orders.
Online grocery store, HappyFresh, increased its dark stores in Singapore to allow an efficient shopping experience, bringing high-quality products to customers.
Since its launch, the online grocery’s users increased by 300%, month-on-month, to address growing demand.
The Buy Now, Pay Later (BNPL) schemes also received popularity in Singapore from 2020 to 2021 due to convenience and prudent economic climate, Quan Yao Peh, a senior research analyst at Euromonitor International, said.
Based on Euromonitor’s 2021 data, credit cards account for 61% of personal transactions.
“BNPL has been positioned as increasing the immediate affordability of goods and services, whilst allowing customers greater repayment flexibility compared to one-off spending,” Quan Yao said in an interview with Singapore Business Review.
To avoid turning BNPL to buy now, don’t pay later, businesses should consider the profile of their consumers.
“A millennial and Generation Z, someone who has just started working, is perhaps still in university and may not have that much disposable income at this point. The retailer needs to consider whether or not the BNPL implementation will allow them to better reach and capture the wallets of their target consumer,” said Quan Yao.
An example of a brand adopting BNPL is clothing brand, Pomelo's, partnership with Atome, a BNPL mobile app, to allow customers to pay one-third of the total bill first. After their check out of items, their orders will be shipped and customers will get the items and pay other payments later with zero interest, 30 days apart.
Pomelo is currently operating three physical stores in Singapore which are in Nex, Jem, and 313@Somerset.
Cashier-less checkouts, AR zones
Smart technology can also create seamless experiences for customers when they visit physical stores such as through cashier-less checkouts, voice-activated in-store robotic assistants, dynamic merchandising tools, and shelf-monitoring solutions, Guillaume Sachet, partner of advisory practice at KPMG, a professional services firm, said.
He added that these technologies can combat consumers’ frustrations such as long queues, insufficient stock of popular products, and navigating physical stores.
A brand that does this is Singapore’s Pick&GO, an AI convenience store, which resorted to AI tech to help customers walk and complete their payments within seconds.
Quan Yao said these cashierless options are better suited for grocery retailers, which focus on convenience. It could be different for other retailers such as department stores and beauty specialists that need human expertise to entertain customer concerns.
KPMG expert Sachet also suggested AR zones within stores to elevate customers’ interactivity with products that may be on static display.
In JLL’s 2022 Singapore retail property report, furniture retailer, Castlery, established an AR-enabled store that featured modern living spaces via mobile applications. This helped customers visualise the furniture in their homes and improved customer experience at physical stores.
Since 2019, Castlery’s posted a six-fold increase in its revenue. Further, its modern pieces were sold in 300,000 houses globally.
Mitigating inflationary pressures
Brick-and-mortar stores must also leverage customer experience as Singaporean consumers are bearing the brunt of rising inflation, which changes their way of spending.
These factors should push physical stores to “make adjustments” which will attract customers and generate sales, Sachet said.
Retailers can consider introducing or stepping up experiential components for shoppers. For grocery and food and beverage retailers, this could be in the form of sampling stations, self-serve bars, and demonstration stations. For clothing and apparel brands, leveraging AR to enable virtual product trials can refresh the experience while decreasing the hassle of physically trying on products, Sachet said.
“More than just a platform for showcasing products, physical stores are a community hub, which allows connections to be built between brand and customer,” he added.
Consumers are bound to spend more consciously with the rising inflation. In fact, a DBS survey showed that 42% of consumers said they will save more and spend less whilst 32% will look for cheaper alternatives.
“Retailers need to make the most of their brick-and-mortar assets. One of the ways to do so is by integrating the ‘phygital’ concept as consumers turn into hybrid shoppers,” said Sharma.
Sharma said businesses should tap omnichannel retailing, which allows customers to receive a unified experience of shopping through a mobile device, computer, or at a physical store.
This is due to the evolving demands of shoppers, who 67% of them in the Asia Pacific seek new products in-store whilst 66% seek new products on their mobile phones, as shown in Meta’s Seasonal Holidays Report.
“Setting up an omnichannel buying journey is no longer a nice to have option for businesses. Customers now want the flexibility to choose which channel suits them at a particular moment and expect to be able to contact businesses via multiple touchpoints,” said Sharma.
Sachet from KPMG agreed, noting that where transactions involve a physical element, there is a preference by customers for omnichannel interactions.
Consumers’ flexibility is also shown in Adyen’s 2022 Retail Report which found that 61% of consumers said they will be more loyal to a business that allows buying things online and returning in-store.
One way to do this omnichannel approach is to elevate the customer experience by speaking to a live customer service agent on social media, logging an order online, and heading to the physical store to get the product.
UK cycle retailer, Ribble Cycles, does this by partnering with Emplifi Shopstream by Go Instore, which is a one-to-many video-streaming service. This service will allow customers access to a Ribble physical store, a Ribble expert, and its range of products online.
When live events were cancelled during the pandemic, Ribble used ShopStream to feature new products. The broadcast on their website, which was also live streamed on Facebook and Youtube, reached 10 times more attendees than launching these new products on a personal event.
One in four engaged visitors add products to their basket during a live stream on Emplifi’s ShopStream, with purchase rates rising to as much as 50% when moving to a one-on-one discussion with an associate.
Locally, an omnichannel approach is being done by Singapore Airlines (SIA) which uses the KrisShop offering, which allows customers to buy from the brand’s website or mobile app.
“Products on sale range from cosmetics to fragrance and electronics, and items can be delivered to the customer’s seat on their next SIA flight or directly to their doorstep in any part of the world,” said Sharma.
Sportswear firm, Decathlon Singapore’s omnichannel approach is Click and Collect, which uses its e-commerce and retail stores.
Through this setup, customers can purchase goods online and collect them at the nearest brick-and-mortar stores within two hours but only for general goods. For items like bikes, they can be collected within seven days.
Using retail technologies is also one of the strategies for brick-and-mortar stores, Quan Yao said.
He cited electrical and furniture retailer, Courts Singapore, as an example of this marketing strategy after the store set up quick response codes that activate a virtual mascot, Bitty the Mascot, which will help in virtual shopping.
“Generally, we see key themes around meeting consumers' demands for product availability and a positive experience in-store trying the product. Stores should also be strategically located and easily accessible to their target consumer,” said Quan Yao.
Physical stores still relevant
EY, a global professional services network, said online sales in Singapore’s retail market are still increasing steadily from pre-pandemic to post-pandemic. Online penetration will increase from 5.5% in 2019 to 15% in 2021.
In the age of e-commerce, Olivier Gergele, EY Asean consumer products, and retail leader, said the physical stores will remain relevant and important for most businesses, with retail sales accounting for a year-on-year (YoY) increase to 12.1% in April 2022. Physical stores are especially important for high-involvement and high-ticket size purchases where consumers will still prefer to walk into stores to touch and experience the products before buying.
The largest sub-segment within the overall retail market is luxury watches and jewellery, which is projected to grow 60.7% YoY in 2022.
Physical stores are relevant for groceries, appliances, and electronics because consumers looking for these products have an urgent need or would like to try the products first hand, Quan Yao said.
“This is where the brick and mortar stores shine because it allows the consumers to go into the store, pick up what they want, and you know, exit the store with the purchases,” said Quan Yao.
According to Euromonitor’s 2022 Voice of the Consumer study, Singaporean consumers’ top in-store shopping motivations are “seeing or trying before buying” and immediate purchase.