CW@50 - Celebrating 50 years of British technology innovation
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Some say the 1960s was the decade high street shopping sprang to life.
Prior to the development of large shopping centres, people would shop in local stores where they experienced a personal service from a shop assistant who knew them well.
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But larger stores began to dissolve this personalised service, targeting large groups of customers at once in an attempt to cater to customer needs – the power was very much in the hands of the retailer.
Catering to the customer
Technological advances have changed the retail landscape, shifting power away from the all-powerful retailer of the 1960s and 1970s to the well-equipped consumer of today.
What the 1960s consumer bought was dictated to them by what was provided by their local store owner; today’s internet-enabled consumer has endless information surrounding price and availability.
The modern consumer has choice, and this choice means retailers must work harder to keep them interested.
As put succinctly by Paul Coby, director of IT at department store John Lewis: “We follow what customers want.”
Coby insists retailers must follow customer trends to survive in an omni-channel environment – a situation that retailers have been forced into over the past 50 years as technology has advanced.
In 1966, the term omni-channel did not exist. And without smartphones and websites adding more ways for customers to order products from anywhere in the world, it wouldn’t exist now.
Coby tells Computer Weekly his favourite John Lewis Christmas advert is the one that features two characters – one from 1925 and one from 2012 – co-existing, each experiencing the same day-to-day activities in a different time period before the phrase “What’s important doesn’t change” is displayed.
Guy Chiswick, CEO of Webloyalty, agrees that customer needs are no different now than they were 50 years ago, but that technology has shifted the entire retail experience from warehouse to consumer.
“Human nature hasn’t changed and human needs haven’t changed – they are the same now as they were 50 years ago. But what has changed is consumer expectation,” he says.
Technology, the disruptor of the shopping experience
It’s fair to say technology has been the main transformative element in the retail space. Consider the following typical modern-day shopping experience as an example.
You arrive at the office on a Tuesday morning, only to realise you’ve forgotten it’s your nephew’s birthday party at the weekend. So you order him a present online, then order yourself an outfit for the event. Having these items delivered to your home is inconvenient because you’re working, so you arrange to pick them up from nearby stores. On your way home, you buy some bread and milk, bypassing the queues at the checkout by opting for self-service. You swipe your loyalty card, pay by contactless or smartphone payment app, then run off to catch your train home.
All of these actions are fundamentally different, both on the consumer side and the retail side, to the experience of shoppers in the 1960s.
“From a retail perspective, technology has led all of the change that has happened, because it’s changed that power balance from the retailer to the consumer,” says Chiswick.
“If you look at how things were bought 50 years ago, there wasn’t a huge choice on the high street, there wasn’t anything online. You bought what was in your local area – or as far as you were prepared to travel to get it – and the price was determined by the small number of people selling the item and the distribution was decided by them,” he adds.
Not only has technology enabled consumers to be more demanding and selective, it has driven this behaviour. Technology allows us to be more flexible, to work from anywhere and to expect convenience whenever possible, forcing retailers to deliver the experience exactly as the customer wants – or face the consequences.
“The challenge to the retailer is to meet the expectations of the consumer,” says Chiswick. “Before, the challenge was simply to provide the products, and the customer would buy them.”
A gradual boom in convenience shopping
The shift from bricks to clicks was a long time coming, and in the 1960s there were no clicks at all.
Although self-service supermarkets, where customers were allowed to pick their own goods from the shelves, had existed since 1916, for many the store experience in the 1960s involved handing a shopping list to a cashier, who would collect items on the shopper’s behalf before exchanging them for cold, hard cash.
At those times, the most technical item in the supermarket would have been the cash register, relying on the shop assistant to use some basic arithmetic before operating a machine that might not even have been electronic.
Guy Chiswick, Webloyalty
The only real changes seen in the retail space between the 1960s and the 1990s were small, driven by electronic equipment, a change in the payments landscape or an increase in imports.
Though many of us now don’t really consider our freezer technology unless it’s internet connected, the 1970s saw a rise in fridge-freezer ownership, and with it demand for food planning and frozen goods increased.
Although customers in the 1960s and 1970s would have received a more interactive and face-to-face shopping experience, Chris Field, independent retail analyst and chairman of Retail Connections, believes the move from corner stores to large supermarkets drove the first wedge between the customer and the retailer.
“I’m not sure ‘customer knows best’ was true 50 years ago. The mechanisation of retail by the supermarkets in the 1960s, such as the introduction of self-service, alienated retailers from their customers,” he says.
“It was almost a conspiracy between the brand manufacturers, the time and motion scientists, pop psychologists and the retailers who wanted to believe that customer behaviour could be predicted and therefore controlled. And customers went along with it for years.”
Further separating shoppers and retailers, the 1980s and 1990s were huge for catalogue shopping, as technology gave wholesale warehouses more control over stock.
But there was also a divide between these wholesale channels, which were fundamentally separate from any bricks-and-mortar offering by the same brands.
By the end of the 1990s, computers became smaller, people had them in their homes and many had an internet connection, albeit via a slow, dial-up modem.
The internet shopper
In 1995, Amazon graced the internet with its presence, igniting the fast-paced evolution the retail space has undergone ever since.
In its humble beginnings Amazon sold only books, before later catering to customer demand for new forms of media such as DVDs and games, then further branching out to sell a wide variety of products worldwide in the 2000s, acting as an online marketplace.
Once competition moved online, retailers began launching their own websites, either as a place-marker to allow customers to browse products before visiting a store or offering fully fledged e-commerce capabilities.
As the popularity of online shopping grew, so did the fear that consumers would no longer need the high street – a concern that is still strong today.
“Just consider how many retailers and analysts have research programmes that look ahead as much as 15 years from now,” says Field. “Clearly, there is a fear that stores could be redundant for some retailers. Certainly their size, design and numbers are being reviewed.”
Retailers thought the high street was dead, with brands such as La Senza and Woolworths forced out of their bricks-and-mortar stores, but as the younger generation came of shopping age, retailers began to realise consumers still wanted shops, they just wanted them to be different.
Catering to the tech-savvy shopper
The consumer retailers fear the most is the millennial. Millennials have grown up with technology, they strive for convenience, and will interact with a retailer through several different channels in the same day.
Sometimes they want a store, sometimes they want to order on their mobile and sometimes they want to use social media to kick off about a poor shopping experience.
The technology-savvy “digital native” generation is also driving retailers to change the store experience to save the high street, offering click and collect services to allow customers to pick up their goods from an iPad-wielding hipster store assistant with thick-rimmed glasses and a well-trimmed beard.
Launched in 2015, the Dandy Lab is an example of the modern store young consumers expect – combining the online and physical experiences in-store through beacon technology, touchscreens and a Wi-Fi café.
Store assistants are expected to know everything about products, and many wield smartwatches to help them deal with customers who have opted to speak to a human.
Miya Knights, head of global retail technology practice at Planet Retail, believes this is shifting the consumer-retailer dynamic away from the separate “one size fits all” service introduced by supermarkets and towards a more personalised and interactive experience.
“In the 1960s we saw the advent of mass retailing and mass merchandising with multiple grocers as we know them now. Retailers have never lost the “customer knows best” attitude – what they have done is lose sight of who their customer is,” says Knights.
“Right now retailers see the online shopper, the catalogue shopper, the in-store customer – but they don’t match them all up so they can recognise the customer as an individual.”
Miya Knights, Planet Retail
The 2000s saw mobile shopping take off in the same way online shopping did in the 1990s. It is predicted that by 2019 there will be 200 billion mobile commerce transactions a year.
Now retailers are developing mobile apps for their stores, and consumers want loyalty schemes to be pushed through mobile too.
With a direct line to all retailers in their pockets, millennials are becoming more fickle, demanding an experience that caters to them individually. Knights claims this allows consumers to hold retailers to ransom by taking to social media to complain or by voting with their feet and shopping elsewhere.
“As technology has seeped into our homes, consumers have so much more choice. It has increased competition and increased the amount of control that we, as consumers, have over the shopping experience,” says Knights.
“Now you need to see the customer from a 360-degree perspective to see what they need and when they need it,” she adds.
Smart supply chains
Each of these omni-channel concepts, and joining them up, is driven by possibly the biggest technology challenge for a retailer in the modern day – the supply chain.
The next step for retailers is to utilise technology for stock transparency, making it easier to allow customers to order online, on their mobile, by phone or in-store without an issue arising.
This transparency may come through radio-frequency identification (RFID) tags, as used by Marks & Spencer, or a software-driven model, such as that used by Argos. Many retailers are hoping to collaborate rather than compete to drive consumers into stores.
“Retailers will become more accurate and the shopping experience will become more personal to us,” Knights predicts.
She says the loyalty landscape will change alongside the personalised journey, competing on what customers want rather than on price.
“In the future it will be about seamlessly joining up all the things we’ve already got as part of omni-channel and personalising it,” Knights concludes.