With figures from IMRG revealing UK online retail sales reached £133bn in 2016, an increase of 15.9%, year-on-year, it’s clear consumers have been quick to embrace the ease and efficiency offered by online stores. The high street used to be the main – or only – shopping destination. Now, we can shop from the comfort of our own homes, and can choose delivery options to fit around our lives. But it’s important to realise that physical shops can still be a valuable part of the customer experience.

The Power of Online

The web is not just where customers go to order products; it’s also a crucial channel which influences where customers first find new products, and where they choose to purchase. KPMG’s research found retail websites or online shops were the most common source of initial product awareness, (cited by nearly a third of consumers), and, crucially, ranked above physical shops, which came second with 22% of customers.  With this in mind, we’re seeing retailers investing in tech to find new ways to deliver a personalised customer experience online.

Retailers are also exploring how Artificial Intelligence (AI) can streamline, tailor and improve the customer experience online. Traditionally, A/B split testing has been used to measure, improve and refine the user experience.

Now, AI technology could replace this time-consuming process and deliver more sophisticated insight into how consumers like to engage with websites. Italian lingerie company Cosabella is already using AI to rapidly test alternative options for its website design.

It’s clear consumers are engaged with mobile as an e-commerce platform; according to IMRG, sales via mobile grew by 46% year-on-year in December 2016. But slow load times, poor website design and a clunky user experience is hampering the true potential of mobile for many retailers. Research by Ovum and payments provider Klana revealed 52% of retailers are still finding abandoned baskets a major issue as customers lose patience.  Retailers need to invest in mobile functionality to remain competitive and keep pace with customers’ expectations.

The Changing Role of the High Street

It hasn’t been an easy start to 2017 for bricks and mortar retailers in the UK. Faced with the challenge of increasing business rates, a rise in the national living wage, fluctuating levels of footfall and consumer confidence, it’s a challenging time to remain profitable.

This is why we’re seeing some of the UK’s most-loved retail brands looking for ways to revive the experience they offer shoppers in-store, whilst others are simply becoming irrelevant. John Lewis announced it’s planning to trial beauty salons, and under-pressure, Next has announced plans to rent out space in its Manchester Arndale centre to a range of concessionaires, including a florist, to create a department store experience.

In contrast to the traditional path of physical shops moving to online, we’re also seeing a trend of pureplays moving to bricks and mortar.  Lured by the footfall of town and city centres, it’s easy to see why retailers that were born online are eager to see how physical stores could become a part of their offering.

Retailers know that there is still appeal in the tangible in-store experience. The trend of ‘showrooming’ – where consumers visit shops for inspiration and research, with the actual purchase being made online – evolving in recent years.  According to a study by Google, 72% of consumers visited a shop a store to check out a product, with plans to purchase online.

Amazon, ever the trailblazer for change, announced at the end of 2016 it would be launching Amazon Go, a checkout-free store in Seattle, this year. Although the launch has just been delayed due to technical problems, this is a significant step forward for the way on-and-offline channels can be merged to deliver a new kind of customer experience.

What’s clear is that bricks and mortar retailers need to get customer service right. It can make the difference between keeping or losing a customer. Our Unfaithful Consumer research showed 53% of those surveyed would change retailer if they receive bad service. KPMG’s global research revealed over two-thirds of the consumers said they had used a smartphone for product research while in a physical shop. With tech-savvy customers wandering the floor, retailers need to ensure their staff can offer insight and assistance beyond what customers can easily discover themselves.

A Challenging Time for Retailers

Regardless of whether on or offline, it’s a challenging time for retailers to remain profitable. Recently we partnered with the British Retail Consortium (BRC) to investigate how UK retailers are responding to the pressures they’re under, and what they are doing to beat rising costs and falling margins.

Our Beyond the Core research revealed many retailers are already looking beyond selling their traditional products to exploring secondary revenue options to boost profit margins.

Great progress and innovation is abundant in the world of retail, but the businesses that succeed will be the ones that integrate these into a seamless customer experience, whether online, offline – or both.

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