The Times They Are A-Changin’: The Future of Brick-and-Mortar Stores
Paul Miller
Digital Acceleration Leader | Advisor | eCommerce, Mobile, Digital Marketing, Big Data, CRM
I’m really on a roll here (pun intended) with the music-themed titles. Time will tell if I can keep it up. In the first part of this series, I walked you through Amazon's Chicago-based bookstore and what it means for the future of retail. In this second part, I wanted to dig deeper into how retailers can innovate in their brick-and-mortar locations and stave off the so-called 'retail apocalypse'.
I'd like to paint to following pictures in broad strokes, which will be fully fleshed out in subsequent posts:
Brick-and-mortar, although suffering, is here to stay. Even the e-commerce giant par excellence, Amazon (who is on the tip of every retail executive's tongue) is investing significant money in brick-and-mortar stores, such as their bookstores and their recently announced Pop-Up stores in London tube stations. Alibaba (China's equivalent of Amazon), as well, is putting their money where their mouth is and investing in brick-and-mortar ($2.9B to boot) as an integral part of their omnichannel retail strategy. Alibaba CEO, Daniel Zhang, expressed the importance of stores well when he said:
Physical stores serve an indispensable role during the consumer journey, and should be enhanced through data-driven technology and personalized services in the digital economy.
Fact: Stores are Dropping Like Flies
It is a fact, unfortunate as it may be, that brick-and-mortar stores are suffering in the current retail climate, with brands like Gymboree and Diesel having to file for bankruptcy in 2019. Retailers, from Abercrombie to Zara, are struggling with how to keep their customers coming to their stores.
However, all is not lost: once retailers get their head around the fact that stores are not the quick-and-easy place to get stuff (that's what the internet is for!) but Customer Experience Centers (where consumers are delighted), they can be (back) on the road to commercial success. Don't forget: people like shopping in stores (heck, 76% of consumers prefer in-store to online for their holiday shopping needs)!
It seems to me that there are 3 no-regrets moves which retailers should be deploying in-store that will delight the consumer and make them want to come back:
1) personalization at scale
2) an accessible assortment + awesome experience = great success
3) achieve the right omnichannel balance
Recommendation: Personalization at scale
A 2017 iVend Retail report found that shoppers are increasingly looking for a personalized experience in-store: they found that twice as many British consumers (27%) expected online personalization to be mirrored in the physical environment than did last year (13%). Similar trends hold on this side of the pond: consumers are thirsting to be delivered discounts and recommendations tailored to them.
Make no mistake: retailers must invest in the technological infrastructure to harness the Big Data needed to provide a personalized experience to their customers. However, when it comes to the age-old 'Build or Buy' question, most retailers will be well-suited to buy a robust end-to-end solution, like Hybris, or something new and cutting edge like NewStore or Moltin.
Recommendation: If You Got It Flaunt It
A question frequently on the lips of in-store shoppers is 'where the hell can I find x?'. The stakes are quite high when it comes to retaining this dazed and confused customer since nearly 90% of shoppers who can’t find the help they need are leaving stores empty-handed. Sure, you can keep them entertained for a bit with a time and location sensitive push notification, but if they can't find what they came in to look for, you've lost the plot.
To achieve success on this front, an augmented store assistant or a well-placed virtual assistant like Alexa is your best friend. With tools such as Tulip's mobile platform, staff can become empowered and enlightened, as they become better equipped to assist customers. Although there is, as of yet, no out-of-the-box solution on the market (that I know of), a few Alexas or Google Homes scattered throughout the store can be ever-so-helpful.
A critical element that also comes up in this area is staff engagement. If the folks on the floor are not enhancing the customer's experience, odds are, they are creating frustration and dissonance. This issue is even more pronounced with high employee turnover. According to Retail Dive, Consulting firm Korn Ferry found that there was a rise in the employee turnover rate in 2018, especially among part-time hourly store workers — 81% on average compared to 76% in 2017.
Well-equipped and knowledgeable employees can help make the experience of shopping in-store not only bearable, but even a pleasure.
Achieving the Right Omnichannel Balance
In my next installment, I will talk about the importance of striking the right balance when it comes to omnichannel.
Questions and comments are, as always, welcome.
Senior Vice President Global Managing Principal HCL CX Studio
4 年Spot on Paul - the 3 no-regret moves resonate with the reality of world-class experiences can only happen with the right assortment relevant to me at my key moment in truth and accessible when/where I want it. When you combine these what you get is 'world class engagement" because experiences are what happens to you, engagement is what you seek.
I agree that stores will continue to be an integral part of the retail experience moving forward. Stores are assets, and retailers like Walmart are implementing both creative and effective ways to drive store traffic.? Specialty apparel and department stores are most susceptible to the transformation, but not apocalypse. We as an industry should push back on that term with full force because it is both inaccurate and damaging to the industry. Our research (IHL Group) for the past three years (2019 forthcoming in a month) shows that chains are adding stores and that most store closures are isolated to just a handful of chains. If you were to believe Charles Darwin and apply this to industry, we would say this is natural evolution. The press isn't up in arms over the growth of Airbnb, Lyft and Uber that are transforming their respective industries, but rather we see that as innovation. I see tremendous innovation, healthy store churn, strong revenue growth, and transformational business models that will continue to make shopping interesting, both in store and online.
Humor is the key to great business.
5 年Its amazing that it seems everything comes down to Old fashion "Customer Service". Whether it's from vendors to business or? Store staff to customers. Without engaging in communication between each other business does not grow. I have always said "That the best asset a company has is it's employees."
Strategist & Operator | Transformation & Integration advisor | Driving sales and profitability for retailers and consumer goods | CSCP, Lean Six Sigma
5 年The difference between a "label" and a "brand" is an emotional connection to consumers. "Brands" can profitability operate stores as Customer Experience Centers. "Labels" cannot. Apple operates a single store in the state of Mississippi. It's packed. It's an experience. GAP has exited every mall and strip center in the state of Mississippi (except for a couple GAP outlets).? GAP didn't have an emotional connection to consumers. What GAP had previously was a store distribution model that grabbed market share slinging non-differentiated, commodity product.? That model is over. Distribution & Assortment have been solved by Ecommerce & Fast Logistics. I 100% agree with your thesis that stores have a role as experience centers going forward. Brands will survive in stores. Labels will not.