The retail business is changing. It is a process of slow transformation that will include a balance of virtual retail platforms and relevant brick and mortar store chains. There is no stopping that trend and it is time for everyone to accept this reality and to get on the change train. The proof is in the data. A February census report noted that e-commerce sales accounted for 5.4% of total retail sales in 2012 up from 4.8% from the year before. This number, on average, is not alarming but some sectors have been experiencing a hard awakening versus others: electronics, books, CD and other media for examples. In these markets, shoppers are moving more and more of their business online and using the brick-and-mortar stores as a showroom before buying online. But these customers don’t necessarily set out to showroom; it is reported that six customers out of ten who showroom actually intended to purchase in-store, but were deterred by higher in-store prices, stock availability etc.
So the trend is real, and retail firms should work hard at preventing the exodus of their customers to online platforms, at reducing the “show rooming” phenomenon, and at building trust with the value and pricing experience. If customers are in the store, they have to create an environment to make sure they buy in the store. Easier said than done obviously.
So how do we get those six out of ten (or more) to convert? There are plenty of success stories and interesting reports available online. Let us look at five ideas or concepts in greater details.
1) Pricing Intelligence
Retail stores have to take away the fears and uncertainty of shoppers related to the perceived value and pricing. Most shoppers have a feeling that they cannot trust prices in stores and that they can get a better deal somewhere else. So building their trust in the brick and mortar store that they are getting the best value for their hard earned dollars is critical to make sure they convert in-store. Price intelligence solutions are helpful in allowing retailers to right price from the beginning and avoid price-match situations, or if the data is used in-store, it can be used to assure shoppers that the retailer’s price is the best, or in the case that it is not, offer a price match on the spot. Shoppers might also be interested in real-time price-matching kiosks in stores where they can compare prices and bundle multiple products on the spot. How about interactive and dynamic price shopping while in the store? That is the foundation of a great retail shopping experience: building trust.
2) Hybrid Locations
You probably are aware of the old saying in retail: location, location, location. Bottom line, if shoppers do not come to your store, then you might want to bring the store to them. Groceries chains are now offering shopping online and home delivery of their products. In the Pittsburgh area, Giant Eagle started combining small express stores which are integrated in gas stations. Other chains have moved their stores in shopping malls and in vending machines at airports and at other store locations. The traditional brick-and-mortar approach is not enough, as shopping patterns and behaviors evolve. Retail chains have to adapt and adopt hybrid location strategies.
3) Innovative Experience
Some categories of shoppers left the brick-and-mortar format because they are bored with the experience. Younger shoppers might be looking for more excitement, an emotional connection and a sense of belonging while walking in stores. A recent example of such innovation is the new concept created by an ex-Amazon executive in Seattle: Hointer, a fashion retailer that has robots who find customers their size and then delivers the clothing they want to try on to a change room for them.
Shoppers also want to experience a new level of customer service while in stores. Brick-and-mortar stores chains still get the lowest satisfaction ratings in the retail world. So they have a long way to go. They need to be best they can be in service, and as innovative as possible to retain shoppers.
4) Unique Offerings
The “cool factor” is essential. Differentiation in products and service offerings have to remain a priority. Offering products and bundles that no one else have is a tricky proposition, but one that requires intense market research and competitive analysis. Best Buy’s latest deal with Samsung to have in store branded sections is the latest example of a potential breakthrough in electronics retail. Alliances and partnerships to secure exclusivity for certain products might be another avenue to attract certain categories of shoppers.
5) Real time Analytics
It is reported that Amazon generates 20% of their revenues from the recommendations features of their online platform. Can some of these advanced prescriptive analytics be used in stores? Can retailers know exactly what the customer might buy before they walk in the store? Can the sales force in the store have access to the customer purchase context by simply using a tablet that receive analytics retrieved in a few seconds using the customer cell phone ID or name? Amazon invests billions in artificial intelligence, big data analytics and overall system integration. Can that be transposed to the brick-and-mortar environment? Why not leverage all that loyalty data collected?
Brick-and-mortar stores are here to stay. They have to find their place in the changing retail landscape. They have to evolve with new generations of shoppers that are using technology as second nature. That requires innovation, breakthrough thinking, advanced analytics and investments in the right intelligence solutions. Closing stores, laying off employees and merging with other chains might not provide the necessary remedies to stop the changing retails dynamic.