UK Retail Unemployment on the Rise, But Data Is the Answer to Securing the Physical Store's Future

Last week the British Retail Consortium (BRC) issued a press release announcing a record reduction in retail unemployment, with hours worked in retail declining by 4.2%, compared with the same quarter in 2016. One of the key reasons for this? A technological revolution in retail, according to BRC's chief executive, Helen Dickinson OBE.

This revolution has also caused a 3% reduction in the total number of jobs in the retail sector. With the high street continuing to struggle against the rising popularity of e-commerce, driven in no small part by behemoths like Amazon, one wonders how employment trends in the retail sector will continue to evolve, and whether technology can help provide a boost to retail employment and bricks-and-mortar stores, rather than contribute to its downfall.

As Nick McConnell, commercial director at TwentyCi explains, traditional high street and shopping centre retailers are in a maelstrom of change, and it's not just related to technological advancements: "The weak pound has raised the cost of imports, and the accompanying rise of inflation is squeezing the discretionary spend available to consumers and sapping confidence." The UK government also isn't making it easy for retailers, as noted in the press release by the British Retail Consortium, which highlights the fact that government policy is driving up the cost of labour.

McConnell adds that the 'always on' availability of online stores provides competition not just from different brands, but also from different towns, cities, and even continents, providing ubiquitous choice and convenience as a new standard.

Driving change

At the heart of retail sits the consumer, and it's all about giving the consumer what they want. With technology as the main enabler for changing consumer habits, physical retailers are challenged with meeting these changing habits and expectations. Paul Maraviglia, general manager for Europe at MaxPoint, highlights that consumers' valuable shopping hours are increasingly spent on the sofa at home and, to combat that, physical retailers will need to make themselves as relevant and convenient as possible.

Ken Parnham, Near's general manager for Europe finds the 3% drop in the number of retail jobs alarming and he worries that, if we don't find a solution soon, the high street will become a museum.

Data is the key

So, what's the solution to stop the physical store becoming a thing of the past? It seems the answer lies in data. TwentyCi's Nick McConnell explains that today's retailer is more empowered than ever to make smart decisions about store locations and the ranges that store should hold.

MaxPoint's Paul Maraviglia agrees, believing that retailers need to be using digital to their advantage: "Taking into consideration the neighbourhood in which a consumer lives – and, therefore, which stores they are most likely to visit – and the interests they have, retailers can deliver relevant and helpful digital content that prompts store visits. After all, how persuasive can it be to suggest a discount in a store the other side of the country, on an item the consumer isn’t interested in?"

Physical retailers still hold a value to the consumer; but, at the very least, they need to be engaging with the consumer, to make them understand what that value is, and making use of available data to be able to communicate that to them effectively. And there should be no shortage of data upon which retailers can draw.

Optimise the physical, using digital

Nick McConnell from TwentyCi clarifies that: "Big data underpins the ability to understand the sociodemographic of the store catchment and, with it, the ability to determine the appropriate ranges. Additionally, with proactive collection of customers’ details through online purchases, collections, refunds, or loyalty programmes the retailer can ascertain further insight into their customer profiles together with the distance travelled and the reason for coming to the store."

Near's Ken Parnham cites the importance of the ability to map a customer's online and offline journey to achieve success. It is only by connecting the dots that a retailer can acquire a true understanding of a consumer through the data trails they leave: "Only once retailers know exactly who their customer is, where they are shopping, and what they are searching for, will they truly be able to keep pace with rising competition; and, hence, an investment in data is no longer a choice, but the only way forward for survival."

The physical store isn't dead, but it does need to be optimised. Citing some work TwentyCi carried out with a national furniture retailer, McConnell describes the findings that customers were choosing to drive past their nearest store in favour of one located in a leisure and shopping destination: "This is reflected in the rise of 'hero stores' at the centre of shopping destinations such as the House of Fraser at Rushton Lakes or the new John Lewis at Westgate Oxford. Technology can provide retailers with the insight to allow them to reduce the size or number of stores, and optimise the potential of the customers available."

Don't operate in a retail silo

MaxPoint's Paul Maraviglia believes in-store retailers can still compete against their online competitors by proving their relevance and highlighting the benefits of offline. And, maybe, reflecting the finding that consumers will favour a shopping destination over and above a one-off store, the value of data goes beyond retailers trying to find a solution in siloes.

Westfield Retail Solutions, the arm of the global Westfield shopping centres, is trying to encourage its retailers to do just that. Speaking at Shoptalk Europe last month, the company highlighted that retailers sharing data between each other should be an opportunity, rather than a threat, in the attempts to compete with the giants of e-commerce. Digital collaboration to protect the physical presence could give the retail sector a fighting chance.