Retail’s great experiment in scramble to lure shoppers
Online pressures are forcing retailers to be wildly creative in devising in-store experiences, but, for many, survival is a more pressing issue, writes Ben Woods
Behind the door of “Room Y” at John Lewis’ London headquarters, change is brewing. Tucked away from the corporate maelstrom in a former washing machine testing room is the retailer’s so-called “skunk works”.
It is home to a team of inventors seeking answers to the industry’s most fundamental question: what is the future of retail?
“It is not really a room, it’s more a cupboard,” says John Vary, John Lewis Partnership’s futurologist. “But it is really important to us.
“We don’t really have a budget. The budget is spent on the people in the team. But we are trying to stretch the thinking in other departments across the group to say, ‘you should be doing this, you should be thinking here and really pushing the boundaries out’.”
Vary is best described as the retailer’s crystal ball gazer in chief. His team – primarily a hacker and engineer – models itself on the first “skunk works” created by defence giant Lockheed Martin in the Second World War, which dreamt up the design for the P-80 US fighter jet.
The purpose of Vary’s group is to ensure the John Lewis Partnership remains in line with the breakneck speed of technological change.
The fact that it exists at all says a lot about the state of the retail sector.
The tectonic shift towards online shopping has created an increasingly fickle customer, stiffening the battle for brand loyalty.
Long gone are the days of the early 20th century when Harry Gordon Selfridge’s eponymous store could dazzle London shoppers with intricate window displays.
For some retailers, the tried and tested methods of yesteryear are not cutting it on their own, but can anything replace them?
It is a question that is forcing some retailers into a desperate scramble for answers.
“I have never seen so much experimentation in the retail sector,” says Vary during an interview at the sidelines of an event for John Lewis’ start-up incubator JLAB. He points to fashion retailer Zara’s temporary concept store in Stratford.
It operates like a showroom. Clothes cannot be bought over the counter. Instead, sales staff are tooled up with mobile devices to help shoppers make their purchase online and get them ordered into store.
The mirrors are also laced with technology. Scanning a top, or a pair of jeans, over the reflection tosses up recommendations for other products,
– if your self-esteem can take it
– an image of the model wearing the same clothes you are trying on.
Vary has also been cooking up experiments that force customers to engage with technology.
Starting with a miniature sofa from the animal toy collection Sylvanian
Families, he developed John
Lewis’ “Any Shape,
Any Fabric” concept.
It cost just
£920 to make, but was used 65,000 times in store over
“We did some research and looked at how children played with shapes and fabrics,” Vary says.
“We then created a mechanism where customers could take a 3D printed shape of a sofa, and when you put it on the table along with a fabric, it would show you that exact sofa in that fabric on a computer screen.
“If you took that fabric away and put another one down it would change again.
“I remember one day seeing a three-year-old playing with it, and then an hour later someone over 70 was playing with it, so there is no barrier to that engagement.”
Another creation saw Vary build a window with changeable weather conditions to demonstrate how smart home technology works.
“The presentation of smart home products has always been a bit dull,” Vary says.
“I have been going around the world looking at this product. What you tend to see is just the Nest thermostat displayed in a box.
“But what differentiates that from another thermostat? What makes that connected and smart? To answer that question, we transformed 1,000 sq ft of selling space into a home.
“We put a bedroom, a living room and a front door in, to try to create these theatrical moments, which told the story about these products.
“We put the Nest thermostat on the wall next to a window that was showing different weather types.
“When the weather changed on that virtual window, the Nest thermostat was changing temperature accordingly. We are trying to bring that visualisation and experimentation into the store, so people can sample what the products can do.”
Keeping step with technological change, and the digital habits of consumers, may be at the forefront of retailers’ minds, however, many industry players are realising that canny in-store technology is not enough to stave off declining footfall. Some are experimenting with transforming their bricks and mortar stores into community spaces, where entertainment and buying are part of the same process.
Game Digital is trying to revive its fortunes by pushing into the esports market.
The computer games retailer is driving investment into in-store gaming zones – given the name Belong arenas – where customers pay a £7 fee to play against each other and test the latest titles.
Meanwhile, supermarket giant Waitrose has teamed up with supper club start-up Wefifo in a bid to lure in more customers.
The grocer has been hosting dinners led by top home cooks and chefs, with plans to roll out the concept into more stores.
This desire for new concepts is also driving business for industry experts. London-based consultancy group Arigami is attempting to solve the high street’s problems using neuroscience. It wants to encourage firms to shift away from creating a compelling visual display in favour of smell, taste and touch.
But while experimentation may be ramping up across the industry, not everyone is convinced it will deliver results.
Phil Dorrell, managing partner of industry consultant
Retail Remedy, thinks firms are better off focusing on price rather than “gimmicks”. “Customers go to stores for very simple reasons,” Dorrell says. “Initially, it is because they like the range of products that they sell and, fundamentally, getting that right is the most important thing that a retailer has to do.
“If they don’t get that right, it doesn’t matter what they do with price, what they do with marketing, what they do with any gimmick, it doesn’t make any difference.
“It is the same with Game, it is the same with New Look, it is the same with River Island and with Sainsbury’s. If they haven’t got that offer right, then forget it.
“On top of that, it is about making sure that pricing fits with what the customer expects to pay for those products. “Sometimes it is about whether they can get a deal, or a bundle or a price, but largely it is about base-pricing.”
For some pockets of the retail industry, getting these basics right is proving tricky. The
‘We need to experiment towards the future and have to be comfortable in trying things that don’t work’
restructuring and refinancing raging across the high street have left some firms in a precarious state, where day-to-day survival takes precedence over experimentation. Troubled flooring specialist Carpetright and discount retailer Poundworld are the latest high-profile chains to lay bare their woes.
Both are pursuing company voluntary arrangements, a type of insolvency process that allows them to shut loss-making stores and secure deep discounts on rents. Together, they look set to axe nearly 200 stores from the British high street, putting 1,800 jobs under threat.
They are not alone, however. New Look is also pulling down the shutters on 60 stores and culling up to 980 jobs. House of Fraser is additionally mulling a similar restructuring drive, which could see it significantly curtail its store estate in the future.
The challenges facing high street retailers are no secret. They face rampant inflation, rising costs linked to the National Living Wage Paula Nickolds, John Lewis’s managing director, is driving experimentation and last year’s business rates revaluation, coupled with waning consumer confidence and a squeeze on household spending.
Some retailers have seen margins hammered by their addiction to discounting, while the bitter weather conditions have hit footfall.
Department store chain Debenhams saw its profits crash 85pc to £13.5m as the UK’S cold snap dealt a sucker punch to sales.
The retailer launched its own turnaround strategy in April last year, closing 10 under-performing stores, and pushing investment towards digital technology and in-store experiences.
But can the retail stalwart arrest its decline and drum up a point of difference that drags shoppers back? It feels like a tall order.
Paula Nickolds, John Lewis’s managing director, said it was no longer possible to draw up a definitive plan for the future of a retailer. “The days of imagining it is possible to have a fixed five-year strategy all neatly tied up in a bow are unrealistic at best, and a recipe for disaster at worst,” she said.
“We need to experiment towards the future. But those experiements have to be in pursuit of a clear vision, and we have to be comfortable in trying things that don’t work.”