An interview with Natalie Berg, Retail Analyst, Author & Founder at NBK Retail. By Ross Falconer
Today, customers expect to shop on ‘their’ terms, not the terms dictated to them by the retailer. There has never been so much choice for the customer, but this has naturally created a lot of complexity for retailers.
“Travel retail, in particular, must adapt to changing customer demands for near instant gratification and a frictionless instore experience,” says Natalie Berg, Retail Analyst, Author & Founder at NBK Retail. “The rise of mobile means that customers no longer see a distinction between online and offline, so it’s essential that travel retailers replicate the ease and convenience that was traditionally only found online. This means more frictionless navigation and checkout, as well as greater personalisation instore. In retail today, you need to save time or enhance it. There’s no longer a middle ground.”
We often hear about the ‘Amazon effect’, but does e-commerce, and Amazon in particular, really signal the death of the retail store as we know it?
“It depends who you ask,” says Berg. “It could mean putting a company out of business or drastically enhancing the customer experience. Often, the ‘Amazon effect’ has a negative connotation as we think of boarded up shops, job losses and retailer bankruptcies. There is an element of truth here. A decade ago, online sales accounted for 5% of UK retail sales. Today, it’s a whopping 20%. And if we had to single out one retailer responsible for driving this growth and change in customer expectations, it would of course be Amazon. In the US, around half of e-commerce sales go through Amazon’s platform. But I don’t think it’s fair to position Amazon as the death-knell for the high street.”
Indeed, Berg argues that Amazon isn’t killing retail, it’s killing mediocre retail. “It’s exposing those weaker, complacent retailers and forcing everyone else to raise their game, all to the benefit of the customer.”
According to Berg, ubiquitous connectivity, leading to the growth of online/mobile, has created the “on-my-terms” shopper. “As low-level tasks like inventory and checkout inevitably become automated, employee time will be freed up to focus on greater customer engagement,” she says. “The role of the sales associate will become far more consultative, as bricks & mortar retailers cling to one of their last remaining USPs, albeit one that is enhanced by technology, which is the human touch. Sales associates will have to become genuine ambassadors for the brand – knowledgeable, passionate and motivated – and, therefore, it’s essential that retailers are empowering and incentivising their staff accordingly.”
The role of the store is shifting from transactional to experiential, and Berg believes we can expect to see greater collaboration with other retailers, including digitally native brands, in a bid to provide something new and unique to the customer. “It’s about offering something that you can’t get online – experience, service, community, curation, knowledgeable staff. This is why in the future I believe that retail will become more blended – we’ll see an acceleration in the convergence of physical and digital worlds, but retail will also become more blended in the sense that retail space will be less about retail. There will be a greater blurring of retail, hospitality and leisure.”
Berg recently visited one of her favourite retailers at London Gatwick Airport, and was disappointed to see that the range hadn’t been adapted to the traveller’s needs. “The store was filled with photo frames and other breakables, when more sunglasses and jewellery would have perhaps been more suitable in an airport setting,” she explains. “Also, at a time when shoppers are increasingly willing to sacrifice privacy for convenience or a more relevant shopping experience, there’s an opportunity for retailers to tailor their offerings based on a variety of factors – destination, purpose of travel, flight time, etc.”
It’s also important to recognise that an immediate transaction doesn’t equate to success. Digitally native brands do a good job here. Berg highlights interior design company MADE, with its branded waiting spaces at Amsterdam Airport Schiphol. “It’s functional with an element of ‘surprise and delight’, allowing shoppers to engage with the brand and test the quality of its furniture in the most practical of settings.”
In a world where shoppers can buy just about anything online, retailers need to give them a genuine incentive to ditch their screens. “Yes, there are constraints unique to travel retail – time and storage – but this should be seen as an opportunity to target customers with a very specific shopping mission,” Berg concludes.