CoStar Column: The future of retail - tech and mortar

By Rhodri Davies - Monday, February 12, 2018 8:39

As with most aspects of society, technological developments in the 21st century have fundamentally changed the retail industry. The latest in retail innovation surrounds the growing volume of digital transactions; and if the concept gains enough traction, we might well be on our way to a cash-free economy which would completely alter the retail landscape, writes Rhodri Davies, head of UK retail, CBRE.

Retailers around the globe are test-driving shops that do not accept cash or eliminate cash registers entirely. The concept provides multiple advantages; going cashless can speed up service, dissuade theft, and allow companies to gather more information on shoppers by linking them to digital loyalty programs.

Just recently, the world’s largest internet retailer opened a cash register-free convenience store where customers scan their smartphone on the way in and are tracked with cameras as they browse. When they take an item off the shelf, it’s added to a virtual cart, and the total is charged to the customer’s account when they leave. These new initiatives have potential to significantly alter the appearance of physical shops, eliminating checkouts and creating more space for customer engagement.

Taking this one step further, it is possible that shops could come to act purely as showrooms, with a single stock keeping unit (SKU) for each item. The shopper could browse the store, select the goods that they want, have their account charged, and have their shopping delivered to their home from an urban warehouse as soon as they leave.

Another key technological development changing the way people shop is the increasing focus on personalisation. The days of the chain approach to store expansion are on the way out – it is no longer enough for retailers to depend on footfall volumes to drive sales. The modern consumer is more discerning than ever, and for brands to stay front of mind, they need to curate a shopping experience that feels unique to each customer.

It is already commonplace for shoppers to receive notifications on their smartphones when passing a store with tailored offers based on previous purchases and shopping behaviour. The use of smartphones for digital payments, however, has opened a more extensive range of opportunities for retailers to collect information on what people are buying and how they are shopping, allowing them to build up an even more precise picture of their customers.

Understanding customer needs and behaviours will become crucial for the modern brand to survive. We look at this, and its impact in our Future of Retail 2030 insight series which examines how the world of retail will evolve in the future - amid changes in consumers’ lifestyles, urban environments, retail operations, logistics and other trends affecting the industry.

Furthermore, brands will need to construct a more personalised offering for particular locations to appeal to a diverse clientele. In response to this, CBRE has recently launched a new retail analytics service, called Calibrate. The new service enables CBRE to provide occupiers, landlords and investors with data-driven specific information on the shopping habits and movements of over 100 million consumers across EMEA, providing unique access to consumer profiling and retail spending behaviours covering the type of purchase in each location.

Some may be apprehensive that advances in technology will threaten jobs across the retail sector. However, we believe that innovative brands will take the opportunity to train staff who cater to the customer experience instead. If appropriately used, new retail technologies will alter the way we shop for the better, creating an immersive, sensory, experience to remember above and beyond a simple transaction.

Rhodri Davies, head of UK retail, CBRE

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