Author:

Bio:

A Boston-based marketer spending his free time taking photos of people's faces & far away places.

Spotlight on CX: Matthew Hopkinson, Local Data Company

customer_experience_news Today we’re speaking to Matthew Hopkinson at the Local Data Company about the role of physical retail in a world of shifting customer expectations.

Hi Matthew, tell us a bit about the Local Data Company

The Local Data Company is a data and tech company that field surveys 3,000 towns, shopping centers and retail parks as well as tracking chain retailers in a further 4,000 locations. We cover 92% of Great Britain’s retail and leisure outlets. We’re analyzing up to 75,000 retail premises every month and with that data we have a good view of what’s happening in those places and the market in general.

On top of that, we’re able to overlay other datasets such as append data to create a comprehensive view of what is happening on high street. This is displayed in a Bloomberg-style dashboard with analytics and reports that you can access at the press of a button.

Recently you spoke to the Guardian about how 10% of the UK retail stock is surplus to requirements, can you tell us a bit about this and what it means for the industry?

There are about 47,000 empty shops up and down the country. Some places, there aren’t any, but some places have 40-50% with countrywide vacancy rates averaging at about 11%.

Out of those 47,000 empty shops, over 16,000 have been vacant for over three years. Often the shops that lie empty are your traditional victorian shop in town centers which are difficult to service and have a strong out of town offer or a shopping center.

customer_experience_trends

Is there a certain kind of retailer that you expect will be hit hardest?

The convenience sector, particularly when it comes to food. We’re in particularly interesting times with Tesco’s acquisition of Booker and what’s happening with P&H.

Secondly, there are all of those retailers that are reliant on selling brands and increasingly these brands are wanting to take control of their own destiny. So you could ask: if you’re a brand, why would you lose 10% - 15% margins from a retailer if you could sell direct?

There’s also issues facing fast fashion and the ability to supply online and offline. Retailers need to be able to respond to customer needs at a point of time, across any channel, and that is very challenging.

Do you think retail banks are facing a similar issue? Do you have any stats to support this

If you look at the uses of banks, they probably serve three main functions; the back office book for mortgages and debt, business banking and then consumer banking.

A lot of this has moved online. The big challenge is about the cost of locations with high footfall. They are wrestling constantly with the idea of remaining local while also storing everything centrally.

We’ve just seen the Bank of Scotland and RBS cut back a lot of their branches and I think the real problem when you look at banks is; how many floors they need to occupy. Typically they could be in a 3-4 story building where banking staff are dealing with local and regional transactions but that has now been nationalized. The problem is that due to security issues, banks are still unable to lease the rest of this space.

What do you think retailers could be doing to tackle this challenge? What advice would you offer them to prepare?

Most of them are closing stores and consolidating because when you look across the country you have to look at the role of a place.

You have ‘destination’ locations where people may go for 2-4 hours and ‘convenience’ locations where you may go for an hour. The experience at these convenience locations is more transactional than going somewhere to browse eat, drinks and be entertained.

The driver for some of these stores is about function, location and format. You’ll see a lot about click-and-collect driving sales, so you have to think where is a service center to collect these things and that drives you more to these out of town areas where parking is free and lower cost.

customer_experience_news

Have you seen any examples of retailers who are already striking a good balance between online/physical? How do they differ from the others out there?

It depends how you define a good balance, John Lewis do a good job of this. The other extreme is Primark who don’t try to do it at all but they do fast fashion really well.

It’s dependant on what people are buying. If you’re buying a washing machine, that may be somewhat different as you see the growth of companies like AO.com. A lot comes down to service and price.

There is this big issue when you look at click-and-collect when you look at transport hubs -- people need things to be delivered and can also be returned. It’s far more effective and environmentally friendly thing to try at a location and then return.

I think what Amazon are doing is interesting but to counter that and they’ve bought Whole Foods and they’ve closed a number of the stores. It’s difficult to say many people are trying different things but fundamentally if you’re looking at the profitability of all the things we’re talking about, it’s not as profitable.

They are seeing rising costs, more channels and a more demanding customer that is value driven.

What do you see as the future role of physical stores in this new age of retail? Will we see them disappear completely?

I think there will always be an argument for physical location. We are humans, we are social beings and people will always want a connection. We might see backlash when you start looking at break down of community and environmental impact.

It only takes the government to come in around these issues with strong regulation to completely shift this model. Looking at it politically, there’s an inherent undercurrent and dissatisfaction to the status quo and the various issues around taxation between online and in-store. There will alway be a need for that connection, but it has to be really good experience.

retail_customer_experience

What kind of impact do you think decreasing numbers of physical stores could have on customer loyalty and engagement?

65% of all shops are independent so the fact they have a great propensity to open and close is just the nature of the beast. But it does show that one of the challenges chain retailers have aside from price is actually connecting on that personal level.

A lot of these big brands are trying to personalize the experience with technology but have to be careful so you don’t get it wrong. There’s a subtlety between invading privacy and helping find a solution.

What else do you think is important to the customer experience here?

The only one I’d mention is around footfall. I think knowing where people are and what they’re doing on major shopping streets is a million dollar question. We’re developing a tool called Smart Street Sensor to try and figure this out.

At the moment there’s a lot of data but no clarity. The British Retail Consortium say retail footfall is down 4.2% while IPSOS measure things differently and claim footfall is up over 1%. We need to build a clear picture of what’s going on here with validated data and a clear data story.

Want to continue reading about best practices in customer experience? Download our eBook, Do You Need a CXO?, below.

customer<em>experience</em>trends