The long-term future of the once-loved high street is a complex subject for retailers and customers alike. In this piece for RetailTechNews, Nick Felton (pictured below), SVP, MHR Analytics, explains how the phenomena of instant internet shopping has caused unprecedented issues with physical stores, draining customer visits, with millions choosing to switch their shopping to mobile apps, to save time and money.

This year alone, we have already seen many high street giants experience extraordinary challenges, with many now facing an uncertain future. Most recently, we saw discount retailer Poundworld announce a further 40 stores were to close, on top of the 105 that have already been closed. As well as this, Sports Direct profits experienced a significant fall to £77.5m pre-tax, down from £281.6m the year before. This is being blamed on the company’s 29.7% stake in department store chain Debenhams, as they navigate through a difficult sales period.

It’s certainly clear that this summer we have seen a pessimistic vision for the future of the high street, with the Office of National Statistics reporting a 0.5% fall in sales. The current heatwave and hype that surrounded the World Cup is taking the blame for a difficult summer for the high street after the celebrations discouraged shoppers from visiting stores, who instead chose to enjoy entertainment at home with BBQs and beers.

While we are living in a time when business rates are high and the archaic high street lease model is not helping the future of the retail industry, we are also starting to see some positive industry changes. One of the most exciting aspects of the retail industry is its ability to be flexible and continuously reinvest itself. After years of negative forecasts, and high street giants closing their doors for good, we are now beginning to see a reverse of this trend. Successful online giants are beginning to harness the power of their brand loyalty and use their status to set up physical shops.

These physical shops are not always long-term initiatives, with many simply experimenting in the pop-up market or using short-term leases. Avoiding long-term leases means these retailers are picking up spaces for a significantly cheaper price than the traditional high street model, meaning more profit is being driven to the online retailer with smaller cost margins.

It is difficult to define whether the short-term and pop-up model will soon be the future of the high street, but it would certainly be interesting to visit your local shopping centre and not know for certain what to expect from the stores that are open for business.

Nick Felton, SVP, MHR Analytics

Whilst the likes of checkout-free shopping such as Amazon Go and pop-up concept stores like Mercedes-Benz are working great for those businesses, it is important to note that these investments, which still come with significant overheads, are far from the vanity projects they may appear to be. The creation of new physical stores is predominantly about offering brand experiences to customers, through targeted services.

In many ways, the journey from the digital, to the physical is an extension of existing multi-channel communications. The retailers that are managing to get the journey from the digital world of their offering into their physical stores are correctly introducing synergy between online and physical sales to produce a seamless omnichannel approach that is suitably linked-up between outlets.

When moving from online to a physical store, it is incredibly important that all data between the two outlets are aligned and clearly accessible. This includes knowing insights into customer demand, sales planning, and inventory figures. Having insights into these prominent departments will help retailers predict future sales in-store to ensure the physical stores are worth the overheads.

Before even thinking about opening a physical store, to guarantee success, online retailers need to have data insights that are up-to-date to make accurate and informed decisions about the vital next steps of the business. Ultimately, physical stores are expensive and opening one is not a decision that should be made lightly. Having said that, a brand can now open itself up to a whole new market of individuals who prefer to see items before they buy and enjoy the physical shopping experience.

Physical stores from online retailers will need to provide the same customer experience that they give to online shoppers. This means products and services in-store must be tailored to individual customer needs at all times. This is something that simply cannot be achieved without accurate use of data analytics. This technology can be used to predict spending habits, show customer preferences and trends, and to ensure the investment of the physical store has the desired and correct effect on brand awareness and sales.

Without knowing what is going on with the data behind the scenes, it will be difficult for online retailers to create a seamless customer experience as they move from online to physical. However, if the online giants cannot drive take-up of services, segment brand awareness, or help sell physical products, the stores are useless to the retailer. Therefore, every investment must be backed-up by a comprehensive data-led strategy that can help give existing and prospective customers access to the items they are looking for.