Insights

The hybridisation of offline and online retail through digital integration

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The huge increase in online shopping over the last 12 months is here to stay. But this shift in behaviour is having a more profound impact on the way we shop than consumers simply choosing to buy through a new channel. Retail is undergoing a transformation in both the physical and digital spaces, as our offline and online worlds collide to create a more hybrid experience.

Demand for in-person shopping remains strong, as consumers clamoured back to the high street in their droves once lockdown ended. In fact, more than half of the omnichannel retailers recently surveyed by us, in partnership with Klarna, said physical outlets will always be a key focus for their brand and will co-exist with online channels for some time.

However, the most successful retailers are doing more than simply taking an ‘open it and they will come’ approach. Many are also looking to bring the best of online, in-store. More than two-thirds said they will be investing in digital in the next 12 months, according to our new report, Get Set. Grow: How UK retailers are preparing for the return of demand.

The trend towards a greater omnichannel experience has been massively accelerated by the pandemic. One example of bricks and mortar better supporting online (and vice versa) is Dixons Carphone ShopLive service, first launched last year. It allows in-store colleagues at Currys PC World to offer advice to online customers via a video web chat. Assistants can use the service to demonstrate products in-store and carry on selling even when the shop is quiet.

Meanwhile a raft of contactless features have appeared on the high street, such as QR codes which can be scanned to reveal more product information, the introduction of virtual queues to minimise wait times and the expansion of the ‘clicks and mortar’ offering. Although it’s not just about making the in-store shopping more convenient. As 59% of retailers pointed out, stores are expected to play a key part in driving a great customer experience. That means the entire purpose of the physical space is also changing.

For example, John Lewis recently re-opened its Edinburgh branch – a multimillion refurbishment aimed at creating “inspiring spaces'' to showcase its products, experiences and services – such as a new beauty studio, personal styling service and its largest ‘World of Design’ area for home design advice. The company is undergoing a £1bn digital transformation programme and has reduced its shop footprint to 34 from 50 last year. But its new store offers a glimpse into how it hopes the in-store space can stay relevant and inspiring to consumers as more people shop online.

Getting physical

At the same time brands are also seeking ways to bring greater depth to online shopping, aiming to make the browsing experience less functional. Something many of us are craving due to screen fatigue over the last year. And while more than half of retailers believe online can never fully replace the in-store experience, 56% said that technology is allowing aspects of it to be replicated online.

Augmented and virtual reality have featured heavily in making online shopping less two dimensional, particularly in areas such as home improvements and beauty. For example, customers can upload images to see how a piece of furniture might look in a room or whether a shade of lipstick complements their complexion. In April, Clinique launched its new UK site, incorporating video chat, the ability to try on products using AR and personalised recommendations based on customer data. Next it plans to make this feature available to multiple friends so they can browse products together from various locations and recreate the social aspect of shopping.

Meanwhile Ralph Lauren’s virtual store experience, launched at the end of last year, allows consumers to step into any of the brand’s most iconic sites around the world and shop from the comfort of their own homes. In addition, it unveiled a virtual gaming experience and customisable products to make its online shopping more engaging.

This trend of merging the physical and digital experience is set to continue. As many as 63% of retailers said they are looking to hybridise instore and online over the next 12 months, while 64% said they will be using technology investment to bridge current offline and online gaps.

One quick win for retailers, particularly those who don’t have a huge budget for transformation, is to ensure customers have a consistent experience across channels. This includes ensuring pricing, offers and payment choices are the same in-store as online - for example introducing pay later and pay in instalments options.

Having a truly connected vision will be crucial as retail spend becomes more evenly split across channels. And finding new ways to bring the virtual and physical worlds together will be the key to making that happen.