The Future of Supermarkets: The new age department store?

Supermarkets have historically been a more traditional retail bricks and mortar affair. However, with the increasing take-up of online shopping, and with the UK leading the way globally, supermarkets are having to "change" in order to maximise the value of their large physical retail assets.

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“By 2020 online shopping in Britain could rise by 50% to £63bn –”

Many supermarkets have embraced online channels but there is a thought that supermarkets will never really be purely online, with a mixture of offline and online environments existing long into the future. So how then is this marriage between online and offline to be made…..…and what will it look like?

The cost of delivery for online supermarkets has a huge part to play as it is a constant challenge; forcing supermarkets to become more akin to logistics companies in order to deal with the ever-increasing expectations of the consumer. A large part of that challenge revolves around developing apps, innovative delivery methods and options that make it easy to consume whilst drawing in the tech savvy generations.

“1.2bn parcels sent out by British Retailers in 2016, that figure was 920m in 2014 says IMRG”

Will supermarkets that are labelled as technological laggards and brands who have not hit the mark with the online experience fail? It's unlikely. Instead they will need to add an alternative channel to market and become the department stores of the future; the hub or destination to "click and collect" from. Not just for their own products or brands, but expanding either by partnering with other pure online retailers to leverage their physical retail assets and logistical might, or by making strategic acquisitions to make the in-store experience something to shop for. Sub-letting parts of, in some cases, vast "shop floor" is becoming more a commonplace scenario that not only adds an additional revenue stream but increases the overall foot fall in store.

“If you start with a blank piece of paper, you could probably take the same amount of trade in 20% fewer stores – Retail Week”

Why stores still matter, will we come a full circle…?

Consumer's needs are ever-changing, and limited time, ease and speed of delivery and returns are the key drivers. However, will consumers in the future see stores as an escape from their homes and offices into attractive, exciting spaces? Stores that let them browse and learn about multiple categories of merchandise, compare them by touch and smell as well as sight - something that is not available online.

Retailers already see stores as a way to engage shoppers face-to-face, building loyalty, trust, and revenue through expert personal service, up-selling and cross-selling. Will the current virtual shop assistance become physical, in store and knowledgeable once more?

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