Are We on the Brink of a Retail Revolution?
Revolutions often happen over short periods of time and leave death and carnage in their wake. What we are experiencing today in retail is more of an evolution — a sort of “survival of the fittest” as both local and big brand retailers either embrace shifting consumer shopping patterns or face extinction.
According to the National Retail Federation, there has been an 11% drop in foot traffic at retail locations as measured in July 2016. And yet, with all the highly publicized increases in e-commerce, 90% of retail purchases are still made in-store. But local and big brand retailers should not rest on their laurels thinking that bricks and mortar will always dominate retail sales.
Omni-Channel vs. Multi-Channel
Today, very few retailers and local businesses actually employ true omnichannel strategies across their enterprise or small business. Instead today we have “multi-channel” strategies masquerading as omnichannel.
Case and point; I am aware of a specialty woman’s clothing store with over 50 nationwide locations employing practices that alienates their bricks and mortar employees through their e-commerce processes and procedures. In this example the retailer allows the consumer to return products purchased online to brick-and-mortar locations. That sounds like an omnichannel practice. But what happens at the local store level is where this retailer falls short. The store accepts the return as a negative revenue item to the local store sales receipts. So in effect the local store and the compensation of the local sales reps are penalized by the return of a product purchase online. Additionally there is also an added penalty to the local sales staff with the time factor it takes to assist the customer.
Now I am certainly not saying that the practice of “buy anywhere, return anywhere” is bad. But the headquarters’ staff needs to better understand the unintended consequences their policies and procedures create. Instead, they need to apply processes and compensation plans that value the contribution to the overall enterprise regardless of channel.
Conversely, today’s trend towards ROBO (research online, buy offline) needs to be better understood and measured to create smarter promotional and advertising investments that lift all boats as opposed to crediting the last click or sale. That means if a brand or SMB does not start to understand and employ multi-touch/multi-click attribution it will be crediting the wrong source and most often misaligning marketing spending.
Other Disruptive Forces To Keep an Eye On
Showrooming, or the practice of visiting a physical store in order to examine or try on a product before buying it online often at a lower price, is also a consumer trend impacting the evolution of retail. Let’s face it though, this practice has been going on offline for years in a host of retail categories.
Examples include test driving a car at one dealer and buying at another, or trying on an item of clothing at one store and then comparing the price at various retailers until you find the best bargain. It’s actually just called “shopping.” Smart retailers are embracing this reality by unifying price regardless of channel. In a true omnichannel environment cost/overhead of all sales channels need to be addressed and allocated for or lost sales will continue.
One revolutionary thought would be to charge the customer for trying on or experiencing the product if they do not buy from your location. “Oh we could never do that” or “We’d go out of business” will be the reaction of some business owners. But turn the concept on its ear and a potential solution comes into focus.
Astute local retailers that do a better job of selling during the consumer purchase process have always fared better with comparison-shopping. Think about what are you doing to create immediacy or heightened need for the purchase at that moment. Simple tactics include empowered sales staff that can provide on the spot price promotions to make the consumer feels they are getting a deal. Additionally, reminding the consumer of the advantages of buying locally should they need to return a product to an online only e-tailor.
There is no shortage of other forces that are forever changing the face of retail. One example is product delivery services (e.g. like Google Express, Amazon’s Prime Now and others) that are slowly but surely gaining share and interest of consumers in limited markets. One has to question: was Webvan ahead of its time? Can local delivery of your products create an advantage to your brand/business?
Also, technology is disrupting and reshaping the in-store experience including such innovations as Amazon Go and their attempt to streamline the checkout process by eliminating cashiers through technology. What can your brand/store do to streamline the path to purchase?
Net/net, it is time embrace changes in the retail experience and to knock down the silos between brick-and-mortar-versus-ecommerce thinking that exists in the majority of companies today. Instead face the consumer path to purchase as they see it as opposed to how you have operated in the past.
Revolution? Maybe not. But the evolution is certainly moving fast. Evolve or perish.
With over 30+ years experience leveraging the world of local marketing, Gregg Stewart leads 15miles, Inc. to help brands better grow revenue from social, local and mobile integration.