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

The Sunday Telegraph - Money & Business - - Front page -

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

10 weeks.

“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.”

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