Last month I started a discussion on the sea change that has become
retail, and what I believe it will take to survive. I listed 4
different advantages I felt brick and mortar retailers may have
over Internet Only Retailers. Briefly they were as follows:
1. The inherent advantage of seeing the products first hand at
a local merchant
2. Personalization of service and product by professional Sales
people in the store that listen to their customers needs.
3. Entertainment and in person experiences will appeal to the
social nature of the consumer.
4. Uniqueness in product offerings is a critical to competing in
The critical theme running through these four points from last
month is using the physical store for its strengths of personal
interaction. This is something that cannot be replicated online.
This month let’s discuss some elements that will allow retailers
to present more of an omnichannel experience, a blend of physical
and digital, to the ultimate consumer. Brick and Mortar retailers
need to digitize their stores focusing on improving customer
experiences and convenience, while online brands will
explore physical spaces like Casper, Wayfair and Amazon are
testing. Here’s what we see is necessary in both instances.
1. Technology investments will continue to ratchet up with
consumer expectations. To be successful, retailers will have
to lead with technology. Big Data will be necessary to determine
what trends are emerging, what to keep in stock, and
how quickly retailers can meet the consumers needs. This
data must be up to date on every transaction in order to
compete with the online players. The future of retail will
look nothing like what stores are now thanks to technology
innovations like AR/VR and voice AI. In fact customers can
now take a picture of a product anywhere and through visual
search technology, smart retailers are able to supply them a
quote on how fast this item can be delivered without the
customer knowing the item #.
2. Mobile technology will be critical to optimize the shopping
experience. Mobile accounts for 92% of ecommerce order
growth. According to a report by Salesforce and Publicis
Sapient mobile “is now the top driver of both traffic and
sales with more than 60% of customers beginning their journey
on a mobile device.” Mobile wallets remove checkout
friction and now account for 30% of mobile orders globally.
Finally, mobile usage in store is used by 71% of the shoppers
either to research products, compare prices, read a product
review or take a picture of the product. One area that is upcoming
is using voice assistance to make a purchase or do
research. It is going to change the entire search engine optimization
game when people search by voice. Finally, retailers
will continue to push convenient checkout using mobile
devices instead of cash registers like Apple stores do.
3. Your retail brand whether Brick & Mortar or Internet retailer
is what will drive the customer to do business with you. It’s
not about the products because those can come from anywhere.
Brands whether factory or store, must be authentic
and relate to their customer in a unique way. In the
Salesforce survey consumers indicated 50% of their first time
purchase would be with a retailer, followed by 31% marketplace
and 19% to the brands themselves. But when asked
where the second purchase of a product would come from
marketplaces got 47% of repeat purchases while retailers
dropped to 34% and brands to 20%. The conclusion is “The
second purchase is today’s battleground. Agility, loyalty, and
personalization are imperative for retailers and brands to
differentiate and win the second purchase. Unforgettable
experiences and products can’t be commoditized.”
4. Mixing it up keeps the consumers interest. 69% of consumers say it’s important or very important to see new merchandise each time they visit a store or shopping site. If you show the same recliner for years you are definitely not keeping up with the consumers. 59% of the top 5% of best selling products online change monthly. Keeping your products fresh will keep customers coming back. That’s the secret sauce in the Costco model. You go every month to see what’s new.
It’s a brave new world out there. As the retail climate changes we have to adapt and be relevant to the value proposition retailers present to their customers. Just like you we have to try and remake our business in this enviroment helping retailers and factories move merchandise. Hopefully our insights are helpful in this process. Please let us know how we can help your efforts.