Are we at risk of tech giants taking over the high street?

Over the years independent retailers have had to battle it out on the high street with larger chains and supermarkets. In more recent times, the addition of competing with online retail has proved a headache for many, with the behemoth that is Amazon being blamed as the source of much of that pain.

While all these elements continue to affect smaller stores, there has been another spanner in the works for tech retailers in particular – brands setting up their own physical retail spaces.

The latest news relating to this issue is the rumour that Google is planning to launch its first ever permanent retail store. Despite numerous pop-ups in other stores over the years, a 14,000 square foot retail space in Chicago is allegedly going to be the home of the first “proper” Google store, according to the Chicago Tribune.

While Google is refusing to comment on “rumors and speculation”, various Chicago press outlets seem pretty certain that it’s going ahead. If it does, the space will give consumers a chance to get hands-on with Google’s expanding line of products, including its Nest range, Pixel phones, Google Home smart speakers, VR headsets and the Chromecast smart dongle. Retailers in the area may find it difficult to compete with the big, bright and inviting retail space that tech brands love to create.

Of course, there is a chance that this may not happen at all. According to Ad Age, this isn’t the first time Google has eyed up a permanent retail space. In 2015, it abandoned plans to open a store in New York City after spending $6 million renovating the location.

While things aren’t confirmed – and we are talking about a store in America – it’s wise to remember how quickly a brand’s physical retail empire can grow.

In 2001, Apple opened its first retail store in Virginia, USA. Three years later and London’s Regent’s Street got a flagship store. Skip ahead to the present day, and there are 38 Apple stores in the UK.

Another example of a big tech brand finding value in a physical retail space is the Microsoft Store. The company started opening stores in 2009 in the US to coincide with the launch of Windows 7 and has steadily been gathering more and more retail spaces since.

In late 2017, Microsoft announced that it would be following in the footsteps of Apple and opening a flagship store at Regent’s Street. While we don’t yet have an opening date, if the company sees the same success that Apple’s first London store did, then it’s not inconceivable that additional stores up and down the UK could follow in the coming years.

So what does this all mean for indies and smaller chains on UK high streets?

While tech giants have the money behind them to take on large retail spaces created by some of the best designers out there, it is important to remember that these stores are purely there to stock their own brands or partner products. Apple doesn’t stock a range of Windows PCs, and as such, consumers that are looking to compare different brands are less likely to trudge to individual brand stores. Which is fine for Apple, Microsoft and Google; their aim isn’t to offer a smorgesborge of tech brands, but focus purely on what they themselves can offer consumers.

Independent retailers can provide a different experience from brand stores, and one that’s still very important to a lot of shoppers. Moving with industry fads, opening up into new product areas, and taking on different brands are all useful tools that indies have at their disposal.

Many retailers PCR has spoken to over the years have described how their stores started out as one thing and evolved into something completely different as they followed the trends of tech consumers.

Tech Worries

Despite the difference between brand stores and general retailers, from a consumer’s perspective, one can win out over another when it comes to in-store experience. If someone is unsure whether they even want a Surface tablet but end up having a great experience at the Microsoft Store – and a not so great one at an indie – the tables can turn relatively quickly. At this point in the game, though, retailers are clued up on this; they know how important customer service is to survive on today’s high streets. But another area that may affect the customer experience can be a little more tricky to implement.

According to new research from Retail Business Technology Expo (RBTE), keeping up with technological innovations is the “greatest challenge faced by retailers”.

The report shows that amongst the 7,500 retail professionals polled, 35% noted staying ahead of the innovation curve as their greatest challenge. Issues around meeting customer experience was cited by 25% of retailers as the greatest barrier facing their organisations.

“Innovation is king in the retail industry – and business leaders must now, more than ever, define and prioritise driving digital transformation into their own strategies, whether through omnichannel customer service, payment options, product access and clever shipping opportunities,” commented Matt Bradley, show director at RBTE.

“The evolution of technology within retail is shaping how consumers behave and interact with brands. Technology has become central to retail and continues to shape the future of the sector.”

Despite the need to keep up with tech, there is a fine line between providing a great experience and putting shoppers off. According to a recent survey by RichRelevance, UK consumers are skeptical when it comes to some of the latest AI innovations, especially facial recognition and emotion detection.

The survey also found that while close to a third of UK customers are willing to share personal data to improve their shopping experience, they are less willing to hand it over than their European counterparts.

RichRelevance suggests that such privacy fears could be based on a lack of understanding, as only 25% of UK consumers said they were familiar with AI.

Henrik Nambord, VP Sales, EMEA for RichRelevance, offers this advice to retailers: “It is clear that UK consumers still do not fully understand AI. As such, not only do retailers need to be transparent about how they use AI, but also emphasise its benefits – primarily its ability to make the customer shopping experience more memorable than ever before.”

Read more about IT and tech retail in the latest issue of PCR.