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How does retail innovation in the UK compare to Asia?
Retail industry advice and recruitment expertise from Reed Retail
With the rise of experience stores and pop-up shops in the UK, it's clear that the retail landscape is changing. Technology is presenting a wider range of opportunities for retailers to improve the customer experience and create multi-channel retail. How does the UK compare to Asia, where new-found affluence is driving retail innovation at a much faster pace? (See footnote.)
So what's driving the shift towards digital retail?
Mobile is one of the biggest growth areas in retail and Asia is leading the way. In developing countries such as China, 95% of shoppers browse and/or buy online, compared to 82% in the US, 79% in Singapore and an estimated 58% in the UK. Mobile internet is cheaper in China and is increasingly used as the first port of call for shoppers looking to browse or buy, so many retailers see their mobile retail site as the primary shopping destination for customers.
Augmented reality is a big growth area for retail innovation and brands like Tesco have successfully used Asia to trial alternative shopping experiences, such as creating virtual stores at bus stops and in subway stations to catch busy commuters. The tech-savvy culture, combined with the fast pace of life in Asia, creates a receptive audience on which brands can test new retail technology.
Tech brands like Samsung are working hard to improve the in-store experience to attract shoppers through the doors and demonstrate brand innovation. Samsung opened its flagship ‘experience store' in Singapore in June this year ‘to consolidate virtual social experiences and create a space for physical transactions'. The store has themed zones for different levels of user interaction, an app operated coffee bar and a wall projecting customer movements, which all forms part of a bespoke tech-driven user experience.
A key factor in the success of brands like Tesco and Samsung in Asia is their ability to adapt to local preferences. This means understanding local markets, developing multi-channel retail to meet the demands of new affluence-driven shopping behaviour, and effectively managing, and responding to, customer expectations. This all ensures brands remain relevant to shoppers and differentiate their offering from competitors.
Those that haven't innovated to meet the changing demographic needs of shoppers in Asia have suffered. Unlike Tesco, French retailer Carrefour failed to recognise that shoppers in Asia require a more bespoke offering tailored towards their shopping culture. The Economist believes that the Carrefour ‘hypermarket' format isn't relevant to many busy consumers in Asia who prefer to visit their local stores often, rather than occasionally travelling out of town for a large shopping trip. As a result, Carrefour had to close its stores in Singapore, Malaysia and Thailand.
How does the UK compare to Asia?
In the UK, the retail industry has been slower to innovate, but is starting to respond to consumer behaviour. Research from Experian reveals that 90% of retail sales still occur in store, as shoppers use online stores for research and browsing, but prefer to complete transactions in store. Retailers need to ensure that they provide consumers with experiences that accommodate this behaviour, providing mobile stores and linking the in-store shopping experience to the benefits of shopping online.
Rise of multi-channel retail
A recent survey of UK retail by Experian suggested that ‘the established retailers that build a strong multi-channel proposition have a notable advantage.' Some of the bigger high street brands have begun this process. John Lewis are using iPads, QR codes and Wi-Fi to bridge the gap between online and offline shopping, enabling customers to browse in-store and visit the online shop to check product availability and find delivery dates that suit them. Marks & Spencer have launched a mobile app with a QR code reader to give customers additional information from product reviews to menu suggestions via in-store signage.
Growth of experience stores
One of the biggest growth areas in UK retail identified in the 2013 Retail Trend Monitor is the rise of experience stores. The term is associated with providing customers in the physical store with personal ‘branded' experiences that appeal to multiple senses.
Brands like Apple are famous for their ‘experience stores' but now brands in other sectors are also using new technology in-store to entertain, inspire and provide customers with a unique shopping experience. Nails Inc at Harvey Nichols is working hard to engage customers, who can now design personalised nail polish and visualise how different nail polishes would look. And Homebase now offers a ‘Create Your Own Look' tool, enabling customers to upload images of their rooms to see which paints, wallpapers, flooring and tiles look best in their home.
Predictions for UK retail
The 2013 Retail Trend Monitor revealed that marketers in UK retail expect to see the biggest growth in experience stores and mobile retail, with 59% expecting to see an increase in their mobile revenues over the next 12 months. If all large UK retailers want to see growth, they need to ensure that all retail platforms are aligned with changing customer behaviour and enhance the shopping experience for all demographics. As in Asia, brands that align their shopping experiences with changing consumer needs will see much better results.
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The PwC Experience Radar 2013 study reveals a significant rise in affluence in Asia's developing economies, which has resulted in a growth in spending and a shift towards digital shopping experiences.