Could stockless stores be the future of the high street?

By Alex MacPherson, Director of Consultancy and Account Management, Manhattan Associates.

We have all seen the headlines and plethora of statistics about the uptick in online shopping over the last twelve months. The boom in ecommerce is incontrovertible, but what is less clear is what the impact the last year will have on traditional high street retailers in the longer-term as ‘new’ consumer behaviour becomes the ‘norm’.

Along with the continuing popularity and convenience of ecommerce, health, hygiene and social distancing will continue to be matters that consumers tackle with wariness at least for the medium-term. However, in-between the various national lockdowns witnessed throughout the UK, high street retailers were learning to adapt to the nuances of their new operating backdrops: virtual queueing, curb-side pickup, contactless payment options and even using physical stores as mini-fulfilment centres. 

Going stockless

One of the biggest challenges at the start of the pandemic when stores closed their doors was the issue of in-store goods: Lockdown 1.0 saw large volumes of stock trapped in closed high street locations that couldn’t be sold, or even reintroduced to the supply chain for ecommerce purposes. 

Further down the line, this stock was then forced to be sold at huge discounts once stores could reopen, or in some cases, inventory was arduously and eventually made available for ecommerce fulfilment – great for consumer’s pockets, bad for retailer’s balance sheets. 

Looking ahead, having a smaller volume of inventory within stores will ensure retailers avoid this position again. Furthermore, if customers can’t, or are unwilling to try on the items they’re looking to buy, is there really any need to have stock in stores at all?  

In reality, aside from the safety implications of having multiple customers handle the same item of clothing, the more stock held in a store, the less accessible and less profitable it is. 

Fit for purpose

Back in the late 90s, Argos’ model was regarded as unusual for its approach, using its stores as mini-distribution centres, only having the goods on display with a ticketing system for purchase. Now, however, this approach could actually become the default for many retailers in the future: think virtual queuing systems, increased use of mobile tills to ensure social distancing, and stock used for display purposes only. 

The disruption of 2020 has made retailers realise that stock located in the ‘wrong’ place greatly impacts sales, profitability and the customer experience, so why not also use the learnings of the last twelve months as the catalyst to change the whole ‘philosophical’ approach to the physical store? 

The face of the high street has been changing for many years now, but the pandemic may well represent the short-term, significant shock needed to kick-start a high street renaissance with brands rethinking the best use of their most valuable assets – the bricks and square footage of their flagship stores. 

A bold reset

The next decade will likely see brands look to reinvent their high street store presences in a move towards more experiential brand experiences: rather than (effectively) super-sized showrooms full of products across all sizes and colours, in the not-so-distant future, the traditional shopping trip we once knew may well be completely transformed.Instead of the multi-coloured array of bags associated with Oxford Street, tomorrow’s shopper may well be bag-less.  

Racks of clothes could well be replaced by mannequins displaying fashion combinations as shops reduce the levels of goods they hold; smart mirrors will allow shoppers to use virtual/augmented reality to try on clothes in a completely contactless environment. Shoppers will be able to avoid queueing, instead of using app-based queuing and mobile point of sale technology through iPads and contactless payments. While some stock may be available to actually take home there and then, more likely it will be delivered on the same or next day to the customer’s home – in effect, a reverse click and collect! 

But what about the high street?

Consumer behaviour has changed over the last twelve months, so approaches to retail and how the high street actually operates must adapt too. Once upon a time, out of stock would have meant out of business, however, that may not be the case tomorrow. 

Abstract as it might sound, the backdrop that the retail industry is operating against today actually means that the less stock a store physically holds, the better off it might actually be. If retail is to recover and grow again over the coming years, the way in which physical store are operated and used has to change.  

The high street as we once knew it isn’t going to return. The important thing is to recognise that this is ok!  
With an increased awareness of shifting consumer behaviour, an understanding of the latest applications possible for supply chain and retail technology, will require retailers to think more creatively and innovatively about how best to use valuable floor space. Retailers will then be able to reinvent the brand experience on offer in their flagship stores, welcoming in a high street renaissance of epic potential. 

The future is bright, the future may yet be stockless too…