DRIVING GROWTH THROUGH A NEW COMMUNITY COMMERCE MODEL

HOW CONSUMER DEMAND FOR DIGITAL INNOVATION CAN SPUR ENTREPRENEURIALISM, COMMUNITY COHESION AND ECONOMIC GROWTH ON UK HIGH STREETS
Driving growth through a new community commerce model 1

Digital technology and innovation is having a major impact on Britons purchasing habits and the retail, banking, hospitality and the services sectors at large. This paper sets out a vision for how this innovation could herald a new, as yet unexploited, era of growth for SMEs (Small and Medium Sized Enterprises), retailers, restaurants and communities to revive our ailing town centres. NCR is working with some of the UKs leading high street brands to transform how they interact with consumers and attract more people into their physical locations by using the online, mobile and social channels that are now central to our lives. NCR believes that in developing its retail growth strategy it will be vital for Government to look at how a highly innovative Community Commerce Model could enable smaller, local businesses to harness new technologies rather than being over-shadowed and, ultimately, wiped out by them.

UK AND THE INTERNET ECONOMY

Britain is the worlds biggest internet economy. The internet contributes to 8.3% of UK GDP in 2010, making it bigger than the construction and education sectors, thanks largely to the popularity of e-commerce. Online retailing was worth 68 billion in the UK in 2011 according to IMRG, a consultancy, and already accounts for 17% of all retail spending. This holds true just as much for silver surfers as it does for so-called digital natives born before 1980 and the advent of the computing age. Online spending levels in the UK are double the average cited by the Organisation for Economic Co-operation and Development (OECD). Boston Consulting Group (BCG) forecasts some 23% of retail spending in the UK will be online by 2016. Mobile shopping in particular represents a massive economic opportunity for the UK, promising to deliver a 4.5bn boost to UK GDP by 2016, and a further 13bn by 2021, according to a study by Verdict Research, commissioned by eBay (May 2012). The smartphone is arguably the most significant technological development in retail in generations. It brings the ability to perform all sorts of functions on a single device - everything from locating stores and restaurants to creating shopping lists, booking restaurant tables, in-store price comparisons, self-scanning and self-checkout, earning loyalty points, redeeming vouchers and coupons, and sharing experiences.

DRIVING GROWTH IN LOCAL COMMUNITIES

While online retail grows exponentially, our high streets and town centres remain vital to our local communities and should act as engines of growth for small firms and local entrepreneurs. Recent Government measures have highlighted the huge importance of the high street to the UKs growth agenda. In December 2011 the Department for Business Innovation and Skills published Understanding High Street Performance to review the role of our high streets, recognising their value in promoting local (and wider) economic health and wellbeing.

Driving growth through a new community commerce model

The new National Planning Policy Framework retained the presumption of town centres first in land use decisions. Major changes in the regulatory regime for town centres have been geared towards driving growth, as have initiatives to improve the management of towns and cities through Business Improvement Districts (BIDs) and community interest companies. The Governments response to the Portas Review, published on 30th March 2012, contains 28 measures and significant funding initiatives to support innovation on our high streets to promote economic growth and job creation in local areas. But, to date, local businesses are failing to respond to consumers desire to engage via a combination of digital and physical channels and, as a result, many local town centres and economies have lost share of overall retail expenditure. Globally, the UK has the fifth lowest number of businesses who use the internet. NCR believes there is a direct correlation with the loss of 15,000 stores between 2000 and 2009, and an estimated 10,000 loss of predominantly smaller, independent high street stores since then. New figures published by the British Retail Consortium (BRC) and Association of Town Centre Management (ATCM) highlighted the continuing impact that the economic downturn is having. Vacancy rates for UK town centres remain high at 11% in April. Wet weather contributed to a 2% fall in footfall, while out of town shopping centres experienced an increase in sales during this period. With the growth of online shopping and out-of-town retail, small independent traders are missing out. As the Prime Minister said in his foreword to the Government response to Portas Review, the challenge for high streets is clear, Internet shopping and out-of-town shopping centres are not going to go away - they offer the convenience and choice that customers welcome. So, for our high streets to thrive they must offer something new and different. NCR believes that for genuine impact on competitiveness, the Governments strategy for driving local economic growth must embrace digital innovation as an opportunity not a threat. As e-commerce and m-commerce tighten their grip on the nations spending habits, collective and individual opportunities through community partnerships could be developed for local SMEs, struggling retail chains, market traders and public services to collaborate, using digital innovation to bring customers back to their high streets and drive local economic growth.

THE COMMUNITY COMMERCE MODEL

Consumers today want to access all the things they love about the online world - including endless choice, total price transparency and peer ratings and reviews - when they visit our high streets. The internet brings greater diversity and efficiency to their shopping, dining and banking experience. In order for local high streets to compete with major online retailers today, and in the long-term, we need to integrate online and mobile in physical stores. It is vitally important to enable local entrepreneurs and community groups to connect with consumers using these digital touchpoints and deliver a better overall experience in-store. By adopting new consumer interaction and business management tools, entrepreneurs within our communities will be able to compete on a level playing field against the pure-play online retailers and out-of-town shopping centres.

Driving growth through a new community commerce model

Blending digital discovery and sensory exploration in a new, affordable and inclusive Community Commerce Model will deliver better service and better overall value in todays experience economy. This principle applies across all the consumer industries represented on the high street, including shops, restaurants, pharmacies, market stalls, popup shops, post offices, banks and rail and bus transport providers. One exciting store in a street wont be enough businesses will need to work together to ensure the whole destination is somewhere people want to be. All the evidence shows consumers want to use multiple channels when they shop. Over half of consumers (56%) like to click-and-collect to avoid delivery charges according to research commissioned by NCR from Buzzback Market Research. Encouraging people into their local stores increases the likelihood that they will buy other products on collection. High streets need to take advantage of the fact petrol prices remain high and consumers are also time-starved to encourage local shopping. Consumers who visit a high street with one specific task they need to carry out will take advantage of other shopping and leisure offers once theyre there if they can be sure of getting what they need and the experience is easy, engaging and enjoyable.

COLLABORATE TO INNNOVATE
New collaborative technology means its far easier to take a cost-effective partnership approach to innovating and offering something new and different on our high streets. Local Town Team stakeholders - such as town centre managers, high street landlords, councillors and community groups - can work in partnership to introduce solutions without high up-front costs to reach and interact with consumers in new ways that are relevant to the way they now live their lives. Advances in technology means software and supporting infrastructure no longer needs to be owned, but can be accessed on a Pay-As-You-Go (PAYG) basis, like a utility, via a smartphone or tablet computer. For example, customers could download a High Street App to their mobile to help them find a local restaurant, book their table online, receive discounts and share experiences socially. A Community Touchscreen could be introduced on high streets or in an anchor site, such as a newsagent or convenience store, to automate the experience of picking up click-and-collect orders placed with online retailers. Shoppers could be given the option to buy gifts or flowers to be sent to a loved with a personalised greeting. The same touchscreen could act as a rail and bus contactless travelcard top-up point and provide information on local community information and services. Local schools, churches and charities could update a digital Community Pinboard with information about fundraising events that would normally not be publicised to such a wide audience.

Driving growth through a new community commerce model

A smartphone or tablet payment and customer relationship marketing app could be used to enable sole traders to take card payments, but to also offer value-added services, such as signing up people for home deliveries or to receive information about special offers and events. Such apps now provide real-time information on inventory, sales and margins. Non-sensitive sales data could be viewed on aggregate by Town Teams to get an accurate overview of consumer behaviour on the high street. This could include insights into the days of the week and times that people are shopping and what sort of stores they spend money in. This would enable entrepreneurs to make informed decisions about how to attract consumers to the high street, including whether changes are needed to opening hours or what kind of special promotions and events should be run. This sort of data-driven approach to managing and marketing products has enabled major retailers to grow from market traders to international conglomerates in the past. With the democratisation of technology such tools can be, and should be, used by start-up entrepreneurs. Community pop-up stores, owned by the Town Team, could be set up with through-the-glass digital signage, displaying the logo and photos of the latest entrepreneur or charity to try out a new business idea or fundraising initiative. Card payments - essential in light of the continued decline in the usage of cash in the UK by value and volume as a share of total payments - could be taken through the mobile POS (Point-of-Sale) business analytics and marketing app. By off-boarding 3G and 4G mobile phone signals to a Wi-Fi connection, the high street can deliver reliable, high street online connectivity to consumers and local businesses. High streets and local businesses need enough Wi-Fi access points, located in the right places and set to non-competing channels to avoid signal conflict to handle rising consumer demand. This Community Commerce Model provides an excellent opportunity for transforming community groups and local health and public service delivery. The Government Digital Service aims for public services to be digital by default and the new Government Digital Advisory Board wants best practice from the commercial sector to be applied to Government services. NCR believes that many local services could be offered within a Community Commerce Model to help drive local regeneration and encourage people to use local businesses and services.

Driving growth through a new community commerce model

FOR EXAMPLE:
The Government is investing 1.34 billion in modernising the Post Office network to help drive efficiencies, but also to improve customer satisfaction with the many services that the Post Office has to offer and ensure that the branch network is well placed to compete against alternative online services. Making the Post Office a genuine front office for accessing government and council services will increase the convenience for consumers. Already 25 councils are developing pilots to help address this need. Touchscreen technologies can speed up service provision in main branch Post Offices or Post & Go facilities to enable people to avoid lengthy queues. Community touchscreens can provide information on local workshops or programmes, such as Sure Start, and other childcare services. The arrival of local NHS clinical commissioning groups that will mean communities have more autonomy to decide which healthcare services and advice will be provided within their geographic area. Technology can serve to integrate health and social care networks, as outlined in the recently published NHS Information Strategy. Again, this needs to be addressed at a community level. A Community Commerce Model touchscreen could be used in a pharmacy to give simple, clear information on medical issues and conditions to inform consumers and encourage them to take an active role in managing their health, complementing advice from their pharmacist. The option to book an appointment for a flu or travel jab, eyesight, hearing or dental check-up, could be given directly at the touchscreen or via the High Street App, with full, real-time visibility into the service providers availability and automated reminders by mobile or email to reduce the no show incidences. We believe it is important that technology providers engage with and support key stakeholders in Government and local communities in exploring ways to develop a new Community Commerce Model to drive growth and competitiveness through a partnership approach. Digital technology needs to be at the heart of our high streets to ensure they remain relevant to contemporary consumers needs and expectations. By piloting a Community Commerce Model, which can be consistently replicated throughout the UK, the Government will be able to help support local enterprise partnerships, entrepreneurialism, community cohesion and economic growth.

ABOUT NCR
NCR is a global technology company. For 128 years NCR has been helping businesses and organisations to better connect, interact and transact with consumers. NCR developed the first cash register and commercialised the first bar code scanner and currently develops a combination of online, mobile and physical channels for interaction with consumers. With 22,000 employees in more than 120 countries, NCR enables more than 250 million transactions every single day.

Driving growth through a new community commerce model