03 October 2014

Graham Parker - 'Talking Head'

'Clicks and Bricks' by Graham Parker, Editor at Shopping Centre magazine, discusses the impact of technology on the retail sector.

Technology has been transforming retail for two decades now - Jeff Bezos founded Amazon in July 1994 - and if anything the pace of change is still accelerating.

Only this month Phones 4U, with more than 550 UK stores, was forced into administration after it lost its last contract with a network provider.

This is yet another example of the way the rapid pace of technological change is overtaking traditional retail models. The mobile phone business is no longer about selling a customer a phone and tying them into a contract - the networks are all about selling bundles of products and services and developing a long-term relationship with the consumer. And to do this they want to sell direct, and preferably online.

So what can the world of physical retail do in the face of what seems to be an insurmountable threat? The answer, many retailers and shopping centre owners believe, is to take the online players on at their own game. They believe if they can make the physical shopper journey as seamless and as interactive as the online one then bricks & mortar still has a future.

And communication is the key. Communication with the customer means more than corralling a shop assistant behind a counter - online retailers communicate with their customers from the moment they enter the site to the moment they leave and physical retailers need to do the same. New technological advances mean that ambition is not as far-fetched as it first seems.

Take the latest product launches from Apple, for instance. The iPhone 6 and the new Apple Watch are enabled to make in-store payments. The device connects to the retailer's EPOS system through its Near Field Communication (or NFC) chip, and to maintain security the purchaser verifies the payment through the phone's fingerprint sensor. Before long, it may no longer be necessary to carry any plastic cards when we go shopping. And it will no longer be necessary to remember a PIN number, either.

But shopping's about more than just a financial transaction. It's about interaction with the retailer and products as well.

And here technology is transforming the shopper experience, providing product information and special offers through devices called iBeacons. Land Securities, the UK's largest commercial property company, is investing in the proximity-based beacon technology following a three month trial at its Trinity Leeds shopping centre. And its rival Hammerson has trialled iBeacons at its new Terraces du Port mall in Marseille.

Beacons have been placed at participating retailers in the centre, as well as the customer service lounge and catering areas.. Using the technology is straightforward for shoppers who simply download the centre's app and then input basic information such as their age and gender. This data then allows retailers at the centre to send personalised messages and discounts to the shopper based on their preferences.

Personalised is the key word here. Retailers like Amazon are able to suggest products to their customers based on past purchases and on products bought by other shoppers who match a similar profile. Now technology is enabling retailers to know who's in-store and to communicate with them just as an online retailer would. If there's sufficient take-up by shoppers and by retailers, rumours of the death of physical retail may turn out to have been exaggerated.