Eight hundred and ninety-six high street shops closed in 2016. In the same period, year-on-year figures for online shopping remained the same. This led to a willingness to consider more innovation in retail among the investors, startups, analysts and brands represented at this year's WIRED Retail conference.
Speakers discussed the impact of new technology and explored the future of bricks-and-mortar retailers and the merging of physical and digital experiences.
"Retail is about emotion - giving customers a reason to purchase," said Matthew Drinkwater, head of the London College of Fashion's innovation agency. "Customers want to be told a story," agreed Leila Martine, who oversees Microsoft's HoloLens.
For Martin Harbech, director of retail, e-commerce and fintech at Facebook, emotion is the new currency. "On Instagram, you can go from discovery to immersion to shopping in seconds," he explained. "The problem is producing thumb-stopping content. You've got less than three seconds to impress people."
The new high street
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The store of the future could be right outside your door any minute now, according to Per Cromwell, advertising executive turned entrepreneur and founder of Moby Mart.
"Retail today is not about buying it cheap and selling it expensive," he explained. "It's about logistics - moving from producer to consumer as fast as possible."
Cromwell's company is piloting the Moby - an autonomous and unstaffed mobile retail space that you can call up with your phone in the same way that you'd call an Uber driver. "The high street will survive," he said. "It just won't look the same."
John Vary, futurologist at the John Lewis Partnership (JLP), and Sandrine Deveaux, managing director of the Store of the Future at online retailer FarFetch suggested a different strategy. "We believe in human interaction," argued Deveaux. Vary aims to enhance the in-store customer experience with 3D furniture modelling, psychometric tests and innovative digital displays. He plans to use JLP's 84,000 staff, or partners, as his sounding board for new ideas.
The future of luxury
Mixed-reality holograms and smart end-to-end shopping experiences may help the sceptical luxury-retail sector embrace new technology, said Matthew Drinkwater, head of the London College of Fashion's innovation agency.
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"The luxury industry is all about making customers feel excited and connected," Drinkwater added. "3D images on websites boost clicks by 20 to 40 per cent and we should move that into the real world."
Drinkwater and his team are developing holograms with Microsoft's HoloLens, which places a virtual model in the room and allows customers to cycle through entire catwalk collections. "Virtual reality needs to have more realistic content," he admitted. "But as fashion designers sketch with CAD at the early stages, they could use holograms to try out new products."
Sandrine Deveaux, managing director of the Store of the Future at FarFetch, agreed that emotion is key. With the company's luxury boutique Browns, its app links customers to sales associates to ensure a seamless online/offline relationship, allowing in-store conversations to extend into after-sales care and analytics.
Pay-as-you-go storage will help stores cut costs
Stowga is launching an Airbnb for warehouse space, the company's CEO Charlie Pool explained to the room, after winning the WIRED Retail Startup Showcase.
"Warehouses are not the most sexy business," he said. "But for most retailers, it is the only long-term fixed cost in their supply chain." When Pool managed warehouses for an asset-management firm, he realised that they all had significant empty space, which cost them extra money. Pay-as-you-go warehouses, he argued, help retailers escape long-term lease arrangements and make warehouse space a variable cost. The benefit to warehouse owners is that they are able to fill empty space with temporary rentals.
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Citing one of his existing fast-moving-consumer-goods clients, Pool explained that a large company could take risks, explore new markets and cut their delivery costs by renting short-term spaces that are located near city centres.
Personal assistance
In the future, retailers and brands will offer personal AI assistants that can mine the shopping habits of millions of customers, use your friends to crowdsource ideas and check what suits you, before making recommendations, eBay's chief scientist Kira Radinsky told the room. In 2016, the company bought Radinsky's SalesPredict startup, which uses AI to observe and forecast human behaviour. "By combining data, artificial intelligence and your own details, an app can suggest things to buy while predicting new products for retailers," she explained.
For Daniel Murray, co-founder of fashion and lifestyle app Grabble, the problem is getting your app on to a shopper's phone. "No one downloads apps any more, but 89 per cent of all time spent on mobile is spent in apps, so something is wrong," Murray explained.
His solution? In-app apps, such as the brand stores in Asian social network WeChat. He warned, though, that "it is the duty of these walled-garden native apps to provide data. Amazon are famously tricky with data and that has to stop."
Customers call the shots
The shopping experience is looking confusing from the customers' point of view, warned Karen Pepper, head of the UK at Amazon Pay.
As physical stores embrace different kinds of technology, customers often struggle to find a simple, swift payment option. "Millennials want shops with in-store technology to operate seamlessly alongside online," Pepper told the room. Thirty-five per cent of online-shopping-basket abandonment is due to sites asking customers to create accounts, according to Pepper. Too many passwords leads to chaos, she added.
Pepper also argued that bricks-and-mortar stores need to embrace online-payment platforms such as PayPal and Amazon Pay. Grabble co-founder Daniel Murray warned, however, that this could cause a different kind of confusion. "It's the duty of these companies to provide transparent data to business customers," he said.
Will hubs replace shopping centres?
Is the future of retail in underground car parks? Craig O'Donnell, head of information systems at Land Securities, and Elram Goren, founder and CEO of CommonSense Robotics, think so.
Goren won the Startup Showcase at WIRED Retail 2015, and the company has since raised £4.5 million in seed financing. Based in an underground car park in central Tel Aviv, his pilot scheme involves hundreds of robots picking and packing orders in "property costing 20 per cent of a retail lease, delivering four times the sales, for a quarter of the labour costs," he told the room.
O'Donnell, who aims to improve the experience in Land Securities' 30 shopping centres and retail parks, sees the potential of such hubs. "It takes seven years to build a shopping centre," he said. Car parks make sense for logistics, freeing space to improve user experience."
