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Internet commerce sites continue to steal consumers from traditional bricks-and-mortar retailers with their promise of choice, convenience and bargain prices.
Retail sales figures for stores dropped by 1.3 per cent in the US after Christmas and business is also slowing in the UK, following a profitable spell leading up to the festive season.
So how is the high street responding?
One organisation with a mission to stem this decline in traditional shopping is BT, the UK telecommunications company, which has spent the past few years building Ker’ching, its own London-based demonstration shop of the future, using inventions from its Adastral Park research laboratories, near Ipswich.
The shop – with its talking windows, fingerprint payment systems and radio-frequency identity (RFID) cards – looks as if it has been lifted from Minority Report, a science-fiction film set in 2054 in which retailers make use of retinal scanning and talking mannequins.
Ker’ching addresses two of the biggest challenges retailers face: making bricks-and-mortar stores convenient to shop in and fostering customer loyalty, says Mark Quartermaine, managing director, commercial and brands at BT Global Services.
“Ten years ago people would have visited their local greengrocer and electrical shop, but they are a lot less loyal now. Today, consumers have 24/7 access to information about prices that they never had before,” says Mr Quartermaine. “They will check on the web and then go into stores to buy, or vice versa.”
But the internet, which is currently taking away bricks-and-mortar customers, could become the bridge that links the home with shops, he says.
Home appliances, such as fridges, rubbish bins and bathroom cabinets could be electronically linked to weekly shopping lists.
Mr Quartermaine says that as radio frequency identification tags fall in price, they could be placed on individual goods and pass information to small internet-connected computers throughout the home, notifying when items have been thrown in the bin or become out of date.
“Consumers could use this to update their shopping lists automatically. They could arrange for things to be delivered or they could swing by the supermarket on the way home from work and get an update of what they need via a personal digital assistant or smartphone,” says Mr Quartermaine.
In-store internet kiosks are also being developed to offer customers greater choice, allowing them to view a greater range of goods than can be displayed in smaller shops.
UK company, Mothercare, is already working with BT to roll out kiosks, similar to those being developed in Ker’ching, to many of its stores. In addition to letting parents and friends view larger items, such as cots and pushchairs, the internet booths can also provide stock availability and home delivery options for shoppers unwilling to queue.
With broadband and wireless internet dropping in price, bricks-and-mortar companies can also adopt some of the customer loyalty methods that have proved successful for e-commerce sites.
Customer purchasing data – used by internet retailers such as Amazon and Play.com to identify consumer habits and personalise special offers – could be used in-store, says Mr Quartermaine.
“Most retailers don’t know who’s in their store until it’s time for them to leave,” he says. “But using RFID loyalty cards, self-check-out and self-scanning, you start to know when people have entered the store and what they like buying.”
Supermarkets and their marketing departments could use this to their advantage, by sending promotions to the customer’s handheld device or by using networked display screens to personalise adverts.
“They might know that you drink Boddingtons beer and the adverts you walk past could change to reflect that,” he says.
On-shelf electronic price tags and in-store TV advertising can also be changed instantaneously, using wireless broadband, meaning retailers can react quickly to seasonal events or promotions that competitors are running.
“Retailers are going to have to get a lot smarter and link sales to buying patterns and exploit it in the best possible way to differentiate themselves,” he says.
In the UK, Marks and Spencer, The John Lewis Partnership, and Lunn Poly have already seen encouraging results, when trialling Whispering Windows, a technology on display in Ker’ching’s shop front.
The technology, developed by partner FeOnic, detects passers-by and plays advertising messages to them through the glass. If linked to RFID loyalty cards, such promotions could even be personalised.
London-based department store Peter Jones, for example, saw a 56 per cent increase in passer-by interaction with window displays when it tested out the technology, which was originally used by US submarines in the second world war to detect German U-boats.
Wireless tills and handheld computers will also allow retailers to change the layout of shops more often, making it easier to run special promotions and entertaining events to lure customers into the store.
Shops in the US and Japan are making the in-store environment more entertaining, but European retailers need to do more to lift sales, says Mr Quartermaine.
“Top Shop in Oxford Street has fashion shows and Apple runs in-store events, but others could have more interactivity, such as gaming and video,” he says.
With high-street retailers having to cut back on staff because of shrinking profits, handheld devices could also improve employee efficiency.
“You can get staff out of the office into the store. They can use the handheld devices to serve customers and when it’s not busy, the same device can be used for stock checks and staff training,” says Mr Quartermaine.
Lost sales from customers refusing to queue could also be curbed if biometric fingerprint technologies prove successful in speeding up payments.
Supermarket chain Midcounties Co-operative is already trialling a system at three of its stores in Oxford and the same Pay By Touch technology is used at US retailers Cub Foods and Albertsons.
“It might seem like science fiction but a lot of the things in Minority Report aren’t far from becoming possible,” says Mr Quartermaine.