For the better part of 150 years, the art and science of retail has evolved slowly. In an era when brick-and mortar stores controlled a stable shopping experience, there were occasional flashes of innovation, but mostly a slow, steady cultural shift focused on price and availability. Category killers cut down the mom and pop, and mass merchants like Walmart flexed muscles in ways never seen before.
RETAIL WAS RETAIL, UNTIL THE INTERNET. CHANGED. EVERYTHING.
Online merchants and their ecommerce engines were the disruptive force heard ‘round the world. They changed the landscape of the retail industry, and introduced entirely new channels, processes and methodologies. Online retail ascended to wrest control from physical stores.
But a funny thing happened on the way to ecommerce’s domination of retail. As the online titans were unveiling disruptive change, something bigger and more important happened. Shoppers changed, undeniably and forever. Today’s shoppers are now fully informed, fully empowered and today, they—the shoppers—are the ones fully in charge. Shoppers have conquered retail, and they’re forcing retailers to relearn their art and science.
Brick-and-mortar retailers and their online brethren are seeing a change in the very nature of their relationship with one another. Once they were adversarial rivals, sometimes even when separate,”siloed” channels within the same retail organization.
In today’s retail reality, there’s no room for intra-organization cross fighting. The fight is outside the organization, against competitors—not inside, with teammates. Today’s retail is about the ubiquitous multichannel—omnichannel— and the brands that succeed are optimizing their shopper experiences across all channels.
LEARNING’S TWO-WAY STREET
Every retailer is diversifying across channels, recognizing that each channel has significant inherent advantages. As they do so, they must acknowledge the expertise already developed in each channel, and the lessons learned that can be so valuable.
For online merchants opening their first physical stores, there’s no better resource library than the brick-and mortar professionals who have been there, done that—the good, the bad and the ugly. Likewise, new era retailers who grew up in the online digital space have lots of lessons to share—all learned through experience, and also inclusive of the good, the bad and the ugly—to enlighten old-school physical retailers about shoppers, their new shopping journeys, and best practices to serve and delight.
FROM CLICKS TO BRICKS
Traditional online merchants have introduced some very different business models, and despite the often-contrasting nature of their core businesses, they have great applicability to physical stores. Areas where the bricks are learning from the clicks include:
While stockouts are bad,excessive inventories and their drain on precious working capital are every bit as bad, and quite often much worse. Online merchants have shown that stores do not have to have stacks and stacks of inventory, particularly with next-day and even same-day global fulfillment readily available. One just has to look at the success of stores like Warby Parker and Bonobos to see that a store can meet and exceed a shopper’s expectation without carrying any inventory.
Regardless of fulfillment models, inventory management and demand generation planning come to the forefront, as does the ability to execute real-time promotional opportunities.
Letting go of legacy technologies.
Online retailers recognize that technology is the enabler for today’s new shopper and her shopping behavior and journeys. As a result, they are quick to adopt new solutions (not systems!) that ease friction points and result in a more customizable, personalized and seamless shopping experience.
The key for many old school physical retailers is to focus on these “solutions”— and to ensure they are shopper-centric solutions. Too often physical stores are bogged down with antiquated technology stacks, where obsolete systems don’t mesh well together. If a store can’t create a seamless internal efficiency behind its own walls, it can in no way expect to deliver an efficient, smooth and seamless shopping experience to today’s customers.
Better data means better decisions and better performance.
The click-and-mortar online shopping experience of 2015 is completely different than the experience of 2000.
The reason for continuous improvement in the online experience is the wealth of data acquired and analyzed, helping retailers understand shoppers and how they navigate and engage with different aspects of their online experience. Data shows what works and what doesn’t, and it quickly identifies the most meaningful opportunities to capture.
Brick-and-mortar stores are now learning that data acquired over time and in scale empowers better decision making from store design to merchandise assortment and display, from staffing/traffic alignment to promotional marketing, and more. With the shopper now clearly in charge, retailers can no longer dictate the experience. Instead, they have to provide the experience most desired, and learning more about shoppers and their behaviors is the only wais the only way to do so.
Test, trash, and repeat.
In an era of retail where companies are looking for solutions, there is no one, singular solution. Since its advent, it’s been relatively easy for ecommerce businesses to test new ideas and tactics and immediately determine if the desired results are being achieved—there are literally no hard, physical capital assets to build, reconfigure or remove.
Pop-up shops are just one way brick-and-mortar retailers are getting involved in the learn fast game, trying new concepts and models in a lite-buildout approach, keeping what works and quickly changing what doesn’t.
FROM BRICKS TO CLICKS
Online retailers are far from the only teachers in today’s retail game. Brick-and-mortar retailers have decades of experience connecting with customers on a most personal level, and they have plenty of teaching points of their own to share, particularly with ecommerce retailers jumping into physical stores for the very first time.
Emotional connections matter.
Connecting emotionally with shoppers, authentically and on a personal level, is the proven secret to long-term shopper retention and loyalty.
It’s more than giving her what she wants, when she wants it and how she wants it. It’s about understanding her, and even empathizing with her in her day-to-day life and aspirations.
Stores often have an inherent competitive advantage here, as they have star sales associates who develop and foster close relationships with customers. However, it’s not a strategy for just a single channel. Many catalogues have made these connections, and today’s best catalogues are more lifestyle publication than traditional catalogue. Additionally, some niches —in particular fitness apparel companies like Nike and Under Armour—have apps and other digital tools that tend to make ironclad, authentic connections.
Location, location, location.
The old adage of real estate remains true, and today’s overbuilt, “over stored” retail landscape offers further proof of the location equation. Before the Internet, retailers were forced to build stores in order to attract new customers to engage with the brand and understand their value propositions. The result of aggressive store expansion was overbuilding, and with so many online alternatives today, you see physical stores and malls in C- and D-tier markets get shuttered and mothballed every month.
Retailers are consolidating locations not only around market size and potential, but also around the company’s ability to internally support them—especially critical in this age of experimentation, fast failures and continuous improvement. “Clusters” of locations are also valuable, as they allow a retailer to attack a market en masse and from all angles, driving brand awareness and shopper loyalty, providing the ability to A/B test and more. And don’t forget those mothballed locations—they provide an opportunity for a different kind of branded retail experience, including physical stores with completely different display, inventory and staffing models—think high-tech, interactive, self-serve and quick (but not instant) fulfillment.
The same, but different.
With a web site, it’s easy to fall into the trap of thinking that one size fits all—that there is one brand, one business model and one approach to customers. Today’s shoppers, with their circuitous omnichannel shopping journeys, can be very difficult to pin down.
Leading brick-and-mortar retailers understand that markets and shoppers are different, and as a result, stores are different. It’s a big mistake to treat every store the same. For example, conversion at a brand’s flagship store will be very different than conversion of a store elsewhere in the chain. Two stores not even a mile apart can work very differently. And, of course, different communities demand different approaches—what works in one region often doesn’t translate to another.
Different shoppers and different retail markets/segments will require not only different approaches, but flexible approaches that can change and adapt to changes in the market place. The C- and D-locations mentioned above offer a proof point. Traditional approaches to those markets weren’t successful, not for shoppers or for corporate profit ability. But, there is demand there. It just takes innovation, persistence and a willingness to experiment to unlock the secret.
While there’s a lot of talk about stores of the future, today’s shoppers, through their behaviors, are essentially drafting a request for proposal (RFP) for the preferred retailer of the future. It creates a two-way stream of learning between online and off-line, and the prizes are yet to be handed out.