The death of the high street – an innovation opportunity for UK retailers
The death of the UK high street is a very real threat for retailers, with stores throughout the country losing footfall to fierce online competition. In fact, high-street sales fell for the seventh month running in August 2018.
To understand the impact of a demised high-street on business and IT strategies, we surveyed 250 IT decision makers in the UK retail industry. What we found is that the vast majority of UK retailers (80%) are now prioritising online services due to dwindling high-street sales.
However, this industry-wide shift to digital retailing has resulted in even greater competition online. And as the digital marketplace becomes increasingly saturated, having an online presence is no longer enough. Retailers must clearly differentiate themselves to retain a competitive edge, all while reducing costs and enhancing customer experiences. And this is no mean feat.
These expectations are putting immense pressure on IT departments, with 80% of decision makers reporting they've changed their strategy as a result. But what are the key considerations and how are they responding?
Differentiate with new technologies
Many retailers are introducing new technologies caused by declining in-store sales. More IT decision makers indicated they plan to invest in online capabilities rather than in-store, with emerging tech such as AI (33%), chatbots (30%), and virtual and augmented reality (24%) primed for significant adoption.
Multi cloud was identified by a third of decision makers as key to delivering this, and providing new services and features was the primary motivation for meeting customer demand.
Deliver a flawless experience
As the importance of online services grow, decision makers must ensure that customers receive a flawless omnichannel experience. Nearly half of respondents cited the need to handle more traffic on the website as a key element of their IT strategies, which is little surprise given that just a 100-millisecond delay in load time can impact conversion rates by up to 7%.
Avoiding disruption is therefore key, with 46% of retailers investing in cyber security solutions over the next 12 months – representing 12% of UK retail IT department budgets in the year ahead.
Delivering on new channels
Retailers are recognising the need to deliver one seamless service to customers across all channels. Nearly half of the respondents reported that better integrating their customer experiences online and in-store was a key factor of their IT strategy. Retailers are also investing in new purchasing channels for their customers, with nearly half planning to invest in ecommerce mobile apps over the next 12 months.
Overcoming barriers to success
While our research shows that retail IT leaders are ambitiously adapting their IT strategies in response to waning footfall on the high street, many must still overcome significant barriers to deliver their flawless, multi-channel visions. Budget constraints, a lack of in-house technical skills and the availability of partner support were cited as the three greatest barriers to delivering their IT strategy.
However, while the death of the high-street presents a very real and immediate threat for retailers, it's also an opportunity for IT decision makers to embrace new technologies and deliver a flawless customer experience in-store and online. This is a big undertaking for any business, but working with a trusted partner can support retail leaders in putting a road map in place to successfully navigate the death of the high-street.