RE-THINKING RETAIL

CrossRoad

By now, you’ve probably heard or read news reports touting apocalyptic headlines that the physical retail industry is dead, thanks to the rise of e-commerce sites like Amazon. It seems like the news is constantly filled with a staggering number of stores such as Barneys, Sears, Payless, GameStop, Radio Shack, Sports Authority and many more that are shuttering for good, or at the very least, closing hundreds of stores across the nation.

While it’s true that e-tail is on the rise, it’s only a small piece of the story. A quick online search of recent stats shows that in 2017, e-commerce retail sales made up 9-percent of retail sales worldwide; in 2018, that grew to 11-percent; and escalated to 13.7-percent in 2019. Ecommerce is definitely growing and online is becoming a place that people investigate and make purchases — but it’s important to understand that brick-and-mortar environments are still relevant, even among millennials. According to the latest Nielsen Category Shopping Fundamentals study, 60% of U.S. consumers’ FMCG (fast moving consumer goods) decisions are still made at the shelf. Why do you think online brands like Amazon, Warby Parker, Peloton and Casper are all jumping into the brick-and-mortar game? They recognize that physical stores are an asset, just like online is an asset to brick-and-mortar.

So, which way do you go? There is no one way; instead, retailers should take every avenue. It’s evident that the retailers of tomorrow will survive, not the retailers of yesterday. Ecommerce has challenged brick-and-mortar retailers to reinvent themselves, and that means embracing technology and an omni-channel approach, offering customers choices on how, where and when they want to shop. For example, offering customers the chance to buy online and then pick up at the store (similar to grocery apps where you order online and then pick up curbside); or offering home delivery, where customers go to the store, buy the item and then someone delivers and installs. Or, stores that sell complicated technology like smart home devices, home security or solar can generate the lead in-store, then extend an in-home consultation.

Digital and social media are mission-critical to the millennial generation who are tied to their phones; Nielsen stats show that millennials make 40-percent of their purchases on a mobile phone, a full 10-percent higher than Gen-Xers. So, retailers should offer some sort of digital experience. For instance, you see something on social, but then have an incentive to go into the physical store. Keep in mind that omni-channel is two big buckets: the customer experience and technology.

The Customer Experience. When it comes to the shopping experience at a physical store, it needs to be three things to create a repeat customer: simple, convenient and enjoyable. You have a captive audience – the customers are there — but they won’t return if these critical needs aren’t met. Simple means staffing your store with knowledgeable people who are in-tune with the products that they are selling and can make the products easy for the customer to understand. When it comes to convenience, that means having enough staff to easily assist the influx of customers so that no one is left waiting, and that customers can get in and out quickly. And, what might be the most important is an enjoyable environment; customers should be greeted with big, friendly smiles by staff who are excited about what they’re selling and can make a lasting bond/connection with the customer. Those relationships create loyal customers.

One of the ways to do that is through “storytelling.” Whether that’s listening to the customer explain how they’ll use a product, or a salesperson who can paint a clear, vivid picture of how they should use the product (how it can help or change their everyday lives). Another way is demonstrations and sampling, letting the customer touch and feel a product, or demonstrating how it works such as a chef’s knife or the quality of the TV picture.

These days, brick-and-mortar retail stores should also be a “destination.” That means creating an attraction like hosting in-house workshops on the weekends. A good example is a workshop on home improvement. Sure, the customer can watch how-to videos on YouTube, but if you host a workshop showing them how to build a deck or add a backsplash to their kitchen, providing them with a checklist of what they’ll need, they can buy the items right then and there at your store.

Lastly, subscription-based offerings — from clothing to dog boxes to streaming services — are big now, and companies have seen a big boost by using this model. Many shoppers, especially millennials, don’t want to have to think about re-ordering and like that they can budget each month thanks to a flat rate. Millennials are more likely than other generations to consider e-tailers that offer subscription services. Nielsen stats show that three out of the five top FMCG categories that they buy online are subscription-based.

Technology is Key. Technology is playing a more important role in retail every day. That could entail video cameras throughout the store to learn more about what’s happening there to artificial intelligence (AI). According to the recently updated International Data Corporation (IDCWorldwide Artificial Intelligence Systems Spending Guide, spending on AI systems will reach $97.9 billion by 2023. AI can mean smart fixtures, so when you walk into a store, cameras capture what display or item that customers are looking at, or where they go first when entering the store; or even facial recognition that offers information on the age and gender of those buying products, so retailers can better curate products and services.

Assisted selling tools (sales agents walking around with tablets or apps for customers to log into their account) are also key, so customers can come in, do their business, pick up items and walk out of the door. Home Depot recently launched an app for customers to build a backsplash on their own — simply punch in your measurements, and it’ll detail what you need and show you a video on how to put up the backsplash. And, these days, not everyone wants to talk to someone. Some stores are even using colored shopping baskets that indicate if the shopper wants help or wants to be left alone to shop!

Robotics is another big movement, which can vary from greeters to robots that go down every single aisle and tell retailers what’s out of stock. This is a fascinating field, so stay tuned for a future article highlighting what’s happening. The bottom line — thanks to technology, retail is changing by the second, brick-and-motar isn’t dying and everyone has to stay current to survive. ###