The shops of tomorrow are likely to be very different to those of today. Transformed by the growth in e-commerce and the impact of Covid-19, the stores of tomorrow will lack either stock or customers.
The reopening of the High Street after a series of lockdowns has been welcomed by shoppers and retailers alike, but the impact of the pandemic means change is now inevitable. The High Street of 2031 will be very different to that of 2021.
Many experts are predicting the death of the High Street as we know it by 2030, but that assumes retailers fail to wake up and smell the home-delivered coffee. If they are to survive, High Streets will certainly need to undergo considerable change, not just in how they look, but in terms of their entire role in retail.
The impact of the pandemic has accelerated the evolution of physical stores, but the jury is still out on what they will evolve into. One of three radically different options is likely to win out: ‘dark’ stores, shops where customers are within metres of automated pickers or stockless stores.
During lockdown, many shops went over to the ‘dark side’. Due to the closure of all non-essential stores, many outlets became, almost by default, dark stores. Retailers found themselves with shops full of stock and no customers. E-commerce grew 77.6% between February 2020 and February 2021. In February 2020, online took just 20% of all retail sales; by February 2021, that had risen to 36.1%.
Small stores had to find ways to work with staff to meet Covid regulations and start picking goods from shelves to ship to online customers. Once they had conquered the problem of social distancing for their staff, many indie shops that had initially closed in the first lockdown had shifted to online trading throughout England’s third lockdown. Some stores found other ways to reach customers. For example, Lush Local delivered by bike and on foot to loyal local shoppers.
At the other end of the scale, long before the pandemic, Tesco opened its first purposely designed dark stores in Croydon and Aylesford in 2009, when its online business began to boom. These Customer Fulfilment Centres (CFCs) were built solely for pickers to fulfil local online orders. The supermarket giant now has numerous dark stores in areas where there is a demand for online goods.
Other supermarkets followed suit but, counter intuitively, some have chosen to close them recently because small CFCs were unable to cope with the surge in demand. This year, Asda announced it was closing its e-commerce CFCs in Dartford and Heston while Sainsbury’s is scrapping its sole dark store in Bromley-by-Bow. Clearly, some retailers had problems increasing the scale of operations from their CFCs. Sainsbury’s explained: ‘Our new plan puts food first and will create a simpler, nimbler and more efficient business.’
Why did supermarkets create dark stores? They were trying to keep pickers away from shoppers; traditionally, the two don’t mix well. Shoppers get annoyed seeing large trolleys in their way, especially if staff are actually taking products rather than stocking them. Even before Covid, a third of consumers said they found manual pickers annoying.
The problem is that it doesn’t make sense to only fulfil online orders from huge distribution centres (DCs), even though there is no conflict between shoppers and pickers in them. Most DCs are based in industrial parks well away from town centres. That creates significant difficulties delivering fresh food direct to homes the same day. Most supermarkets, on the other hand, are ideally placed in urban centres where most e-commerce food deliveries are made.
So how can retailers expand in-store picking without upsetting shoppers? By concentrating on picking at quieter times of the day, many retailers are gambling that the risk of annoying some customers is more than offset by the flexibility of fulfilling local online demand.
Certainly, at large stores with wider aisles, their use grew significantly during lockdowns. Sainsbury’s and Asda are now concentrating on in-store picking to get food delivered to local shoppers and, even though it has more dark stores, Tesco has also boosted its number of in-store pickers considerably. Trolleys emblazoned with ‘It’s not all for me’ are now a familiar sight.
Manual picking is slow however, and it’s expensive compared to automated picking at distribution centres. Automating the process inside shops could be a step too far for shoppers, however. Imagine being constantly bumped into by automated karts.
That’s why some retailers are swiftly developing the ‘semi-dark store’. Urban, or Micro, Fulfilment Centres (UFCs) are small areas inside large stores that are dedicated to picking. Again, Tesco is pioneering these areas, carving a small amount of space from its huge Extra stores. In the future, UFCs will be easily automated to bring stock to pickers and will only need a surprisingly small amount of room.
As they grab goods at the same stores, shoppers and robot pickers will be keeping socially distanced well into the future.
Stockless stores sound like a scary proposition, taking us back to the bad old days of the first lockdown when toilet rolls, flour and hand sanitisers vanished from the shelves. In fact, stockless stores could be the ‘next big thing’ in retail.
For example, Polish footwear retailer Eobuwie.pl recently launched a new store format with no physical product featured on its shop floor. Designed to blend both physical and digital retailing, and create an alternative to traditional shoe shops, the store contains digital screens and order points, but the stock itself is kept behind the scenes. With video screens and plenty of seating space, the store’s aim is to encourage customer dwell time and an immersive experience.
British and US shoppers may be wowed by the new, cashierless Amazon Go and Fresh stores but in China, the use of technology has advanced customer convenience even further. Hema supermarkets, owned by the Chinese e-commerce giant Alibaba, has transformed shopping. To shop at Hema, customers must first download the Hema mobile app. Once at the stores, they scan the QR code of each item they wish to buy and it is then added to their virtual shopping kart. Scanning QR codes also provides customers with information such as nutritional value, customer reviews, recipes, etc.. Shoppers can then place items in a physical basket to take home there and then, but the majority check out automatically and have the items delivered to their home at a convenient time.
If you’re thinking all this sounds strangely familiar, you are not wrong. Argos, that staple of the British High Street, has been a stockless store for years. Customers have never been able to buy most items off the shelf in Argos stores, but instead wait for them to be sorted from behind-the-scenes storage. Not so long ago, Argos seemed doomed as its catalogue-based model grew outdated, but now the option of buying in-store or online, with the option of having it delivered or reserved for Click & Collect, elevates the Argos model as we continue to shop amid Covid. Since many are now based inside Sainsbury’s stores, they escaped ‘non-essential’ store closures as well.
Any one of these concepts – or a combination of them – could become the shopping experience of the future. In 2030, will we shop entirely from home, visiting stores to gaze at displays, find inspiration or to socialise with friends? Will we be rubbing shoulders with robots? Less of a chore and less of a bore – retail looks set to revitalise itself for a new breed of recreational shoppers.