The end of the physical retail store is coming soon, as customers turn to e-commerce for everything from TVs and pants to diapers and groceries, right? Well, maybe not.
Physical stores will matter in the decade to come, according to researchers and retail executives. The only question is how they will be transformed by technology to make the experience for customers more seamless and enjoyable.
A variety of retailers — from brands with mass-market appeal to high-end e-commerce outfits — are considering and testing new high-tech retail concepts, including cashierless checkout, smart mirrors customized to users’ preferences and in-store product wish lists tied to mobile applications. Some of the underlying technologies are old, while others are newer or are being combined in new ways.
A report released by consultancy Bain & Company this week found that although 70 percent of luxury purchases are influenced by at least one digital online interaction prior to purchase, 75 percent of luxury goods sales will still occur in physical stores by 2025 (down from 92 percent in 2016).
It’s not just luxury stores that are still going to be relevant. Target CEO Brian Cornell says that about 30 million customers currently visit Target’s 1,800 stores every week, the Minneapolis Star-Tribune reported in March. “Five years from now, it’s unclear how many people will continue to shop in stores. It could be 80 percent of that, or even 70 percent,” the Star-Tribune reported he said.
How will physical stores change in that time? This week, Farfetch, a global e-commerce marketplace for independent luxury boutiques, unveiled its “Store of the Future” concept, which is designed to have data and technology augment the physical retail experience, allowing shoppers to move seamlessly between the online and offline worlds.
“Customers don’t wake up and think, I will be online this morning or offline later; we are rarely purely one or the other anymore and tend to jump constantly between two worlds without noticing,” José Neves, Farfetch’s founder, told The New York Times. “Harnessing this behavior is a major challenge for retailers and brands and why we are doing this event. It is in our interests to give our partners firsthand access to information about changing behaviors and new technology, so everyone is ‘future-proofed’ as to what might come next.”
Farfetch this week unveiled its "Store of the Future" concept. Photo credit: Farfetch
According toForbes, Neves asked, referencing the Bain report: “How can you really be serious about data when 92% of the action is happening in stores and you are not collecting data in stores?” During an average five-minute session on the Farfetch website, 15,000 data points are collected, Forbes reported he said.
Forbes notes that Farfetch’s concept can be tailored to work with a variety of stores, since the company works with hundreds of boutiques:
The system is built on the idea of a universal login or identity for each customer.
