Marketing, Retail Insights

What Retail “Goliaths” Must Learn From the “Davids”

RR Retail StrategyMost retailers are relieved now that 2015 is in their rear-view mirrors. It was the worst year in retail since 2009, closing in the red, down 0.2 percent from previous year, if motor vehicles and food services are excluded. Unfortunately, 2016 doesn’t promise to be much better.

Yet amidst the flagging retail industry there are sectors that are outperforming the rest. No surprise that Internet retailers led the pack, up over 11 percent from 2014 to 2015. Also ranking among the best performers in 2015 were gift stores, hobby, toy and game stores, furniture stores, and home furnishings retailers.

The “Davids”

What distinguishes these types of retailers from the rest? They are dominated by small, independent specialty retailers. These are the kind of shopkeepers that make knowing their customers and delivering specialized products with exemplary service their hallmark. The retailing “Davids” beat the “Goliaths” hands-down in 2015.

In researching specialty independent retailers for my new book, Shops that POP! 7 Steps to Extraordinary Retail Success, I identified seven key factors I call POP!; an equation, that makes these stores irresistible to customers, especially to more affluent consumers who still have discretionary income to spend.

The POP! formula for success can be scaled for both big and small retailers. The secret sauce to make any shop POP! is to return the in-store retail experience back to what made it great in the first place: the personal touch.

Why the “Goliaths” Fail

Success at retail is less about what you sell, and more about how you sell it. What’s holding the “Goliaths” back in today’s retail environment is their long held, but now obsolete, notion that retail is primarily a product business. Their purpose is to offer product and price it right, and their focus remains uniquely on product, product, product.

But today product is not the differentiator. Same product or perfectly good substitutes are available anywhere, anytime, and at any price. What product focus fails to miss is that in-store retail is first and foremost a people business, where the attention must be on connecting with people and satisfying their emotional needs and desires. Product is core to the shopping experience, but shouldn’t be the primary focus. Back in the day when people needed something, they went to the store. But today when people decide to go to the store, they want a shopping experience, not necessarily a buying trip.

Retailers that deliver a visceral experience will thrive in the new shopping environment. Here’s how to make your shop POP!, whether yours is a small specialty store or
a big national retailer:

1. Encourage high levels of customer involvement and interaction. Shops that POP! deliver a shopping environment that fully involves the shopper and engages them interactively in the shopping experience. Shops that POP! encourage customers to touch, feel, taste, try on, and participate in the store through personal involvement.

Sephora made its name by emphasizing customer engagement with a well-staffed selling floor where customers could play with the beauty products, as well as get make-up application tips from trained experts. Bluemercury, recently acquired by Macy’s, incorporates much of the same Sephora high-touch, high-involvement approach in its stores, on a smaller scale—plus they offer spa services. Soon Macy’s will bring that selling approach into a store-within-a-store concept, which will be very different from the routine way beauty products are currently sold in department stores. Both Sephora and Bluemercury are on the forefront of digitizing the in-store beauty shopping experience to engage the next generation.

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2. Evoke shopper curiosity. Shops that POP! excite consumer curiosity to explore and experience with creative shop windows and entrances. Imaginative and well-executed visual merchandising lures shoppers into the store and down the aisles to transform a buying trip into a shopping experience.

For years, New York City’s retailing “Goliaths” —Bergdorf Goodman, Lord & Taylor, Bloomingdale’s, Macy’s, and Saks Fifth Avenue—have invested lavishly to create extravagant, over-the-top windows to draw street crowds and lure them into the store. Ironically, the window displays have become a competition unto themselves, and aren’t necessarily sparking enough curiosity to pull those onlookers inside. To POP!, retailers need to rethink their holiday windows to evoke enough curiosity to actually bring shoppers into the store.

3. Spark a contagious, electric quality. Shops that POP! exude energy and excitement that is contagious. It is this quality that makes a shop dynamic, exciting to visit, and a thrill to be in.

Energy can’t be dialed in. It must be planned and designed, systems wide, and the sales staff is its essential spark. Costco understands this and rewards its employees with good salaries and a die-hard commitment to their job satisfaction so that they are excited to work there. It’s no accident this spirit spreads to the Costco shoppers. Bluemercury also knows its staff must be electric; it is rigorous in its hiring practices, not settling for anything less than the most enthusiastic, people-pleasing staff to service the customer.

4. Create convergence among atmosphere, store design, and merchandise. Shops that POP! present a cohesive vision that captures all the tangible and intangible elements of the store into a unified whole. This level of convergence extends far beyond a cookie cutter, homogenized, neutralized shopping environment. These POP! shops present a distinctive point of view that holistically ties together all the disparate elements of the store into one experience.

Apple Stores have excelled in convergence with a store design, atmosphere, service (e.g. Genius Bar), and merchandise that all communicate the high-tech, high-touch Apple brand. Starbucks has also excelled at convergence. No Starbucks shop is exactly like another, though they share cues and clues that let the customers know they are in that special ’third place.’ The music, the merchandise, the service, and the design all work together to make Starbucks a truly special experience.

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5. Express an authentic concept. Shops that POP! are more than stores selling stuff—they are conceptually driven and reflect a visionary’s values. The shop transcends being just a store into a space and place for a new level of experience.

Over the years, Restoration Hardware has evolved from its vintage DIY fixtures and fitting roots to the RH that it is today. While much has changed, the authentic concept of classic, historically inspired designs for today’s home has remained. Now RH’s expanded gallery store concept, many in restored historical buildings, continue to express the brand authentically on a grand scale. They are adding one-of-a-kind art, antiques, and eateries for a more immersive experience, plus with the addition of RH Atelier fashion and jewelry designs, shoppers can decorate themselves, as well as their homes, in authentic RH style.

6. Price for value. Shops that POP! have a carefully constructed pricing strategy based upon offering fair value for a reasonable price. Pricing is not about how low you can go, but how much value you can offer. Pricing, therefore, hinges upon the value for the shopper, not the price tag.

Patagonia is a brand that refuses to compromise on its core values: producing environmentally-sound, high-quality, high-performance outerwear at a fair, though often premium price. When those values conflict with growing market share, Patagonia opts to stay true to its ideals. So Patagonia earns the respect and loyalty of its performance-driven customers, even though many other brands offer lower-priced products similar in look to Patagonia, but without Patagonia’s commitment to quality.

7. Be accessible, non-exclusive, and free from pretensions. Shops that POP! have all the six preceding qualities, plus another essential feature—they are immediately accessible to everyone, free from pretensions of exclusivity or snobbishness. They know they are good. Rather than resting on their laurels and expecting everybody else to know it too, they constantly reach out, drawing people into their web with missionary zeal and self-effacing charm.

Accessibility is where so many luxury-leaning retailers fall short. But they don’t have to. Nordstrom sets the standard of accessibility in luxury retail, all the while offering many of the same luxury brands as the more inaccessible and ultra-exclusive Neiman Marcus and Saks Fifth Avenue. And luxury shoppers reward Nordstrom by choosing it as their favorite destination among the bunch.

These seven POP! factors describe those qualities that transform an ordinary store into a shop that POPs! The POP! makes a store irresistible to shoppers who demand more than buying stuff. They want a truly exceptional shopping experience as a reward for the time spent in the store. Time is the ultimate luxury, and today retailers large and small need to realize that their shop floor must become a theater where the shoppers’ dreams come true. Shops that POP! create retail theater, and it all starts with the impassioned retail performers—the local store management and sales staff.

What “Goliaths” retailers need to learn from the “Davids” is to keep their focus on the people-side of the shopping experience. That means focusing on the customers with the personal attention only a people-pleasing staff can deliver. They need to give the power to make customer service decisions to the local managers and people on the sales floor because they are the ones who truly know and understand what their shoppers really want. They need to attract the right kind of staff members and pay them fairly, as they are on the front line actually delivering what the customers really want in the in-store shopping experience—the personal touch.

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