Skirting the Apocalypse: Rethinking Retail for Brick-and-Mortars in 2018

January 2, 2018

Jennifer Powell

CMO of Installation & Service Technologies (IST)

Skirting the Apocalypse:  Rethinking Retail for Brick-and-Mortars in 2018

By Guest Author Tim Flavin, CMO of Installation & Service Technologies (IST)

This is part one in a two-part series with end-of-year observations on shifting retail strategies and the role that emerging technologies will play through 2018.

As early reports emerge, it’s becoming evident 2017 was a good holiday season for the retail industry. Sales increased by 4.9 percent, which marks the industry’s largest year-over-year increase since 2011. As expected, e-commerce led the charge with an 18.1 percent increase from 2016, but brick-and-mortar held its own.

Despite the last-minute uptick, retail is still in correction mode, shedding underperforming brands as slowing foot traffic and decades of overbuilding and overexpansion take their toll.

According to a recent IHL Group study “Debunking the Retail Apocalypse,” the sector faces authentic challenges in the coming years with the portfolio of successful brands shifting according to both the usual demographic changes and a notably unusual disruption in consumer attitudes towards shopping.

This too has been years in the marking, but panic right now is premature as the IHL Group reports:

  • S. retailers have opened 4,080 more locations in 2017 than they closed.
  • Forty-two percent of retailers saw a net increase in locations, while only 15 percent reported a decrease.
  • Sixteen struggling brands were responsible for 48 percent of store closings.

In these more extreme cases, managerial missteps and outdated business plans were clearly to blame. It should be plain to any industry insider that change is vital. Some industry segments are simply better suited for e-commerce and not much can be done to change to overall trajectory.

But for most retailers, a shift in perspective can improve the odds of survival. An apocalypse may be coming, but only for retailers unwilling or unable to change. The following are a few key places to start:

1. Move from Need to Want

Until the internet, shoppers had to go in-store to buy a product, but over the years they’ve been able to get more online with greater convenience, often at a lower cost. This points to a shift in thinking many brick-and-mortars have yet to act on: consumers shop in stores because they want to, not because they have to. Retailers must scrub the very thought of need from their minds.

Instead, leverage the customer experience to generate demand for your channel as well as your product. Merchants must move from transactional to relational thinking and establish an emotional connection, as well as, if applicable, a sense of identity, community or belonging. The question is no longer how to get consumers to buy, it’s how to get them to buy there and then with a sense of urgency. There must be a payoff they can’t find through other channels.

2. Sell with Experiences

To this end, top-performing brick-and-mortars will look for ways to provide unique in-store experiences that reinforce brand identity, values and associations.

All demographics are moving towards experiences over objects and are more likely to buy when a product is part of a larger set of associations and unique sense of place. For example, Urban Outfitters will soon serve pizza in-store, while Lululemon has yoga classes and Frank + Oak gives seminars on high-end whiskey investing. These efforts give consumers a sense of community and a shred identity that they cannot get on Amazon. Gather like minds and give consumers something to talk (or post) about.

3. Play Nice with Digital Integration

Visiting a store to try on or examine a product before buying it online at a lower price, or showrooming, is also becoming a common practice for 73 percent of active shoppers, according to an Accenture study. Fortunately for brick-and-mortars, this practice is a two-way street. Consumers also research products online before eventually purchasing in a real-world location where they can see and touch. By many estimates, this is even more common than showrooming.

The savvy merchant will understand that the two-way relationship between online and in-store purchases is not something to fear. It’s a lifeline to exploit. In fact, in its report “Navigating the New Digital Divide: Capitalizing on Digital Influence in Retail,” Deloitte Digital states:

  • Shoppers who use social media to help shop either before or during their trip are almost 30 percent more likely to make a purchase that same day.
  • Over 65 percent of consumers read product reviews online before making an in-store purchase.
  • Consumers who use social media while shopping are four times more likely to spend more than they otherwise would.
  • Shoppers who say they’re influenced by social media are six times more likely to spend more after a digital interaction.

When planning your showroom, make social integration a key part of your strategy. Make products easy to research online while prominently featuring social feedback and reviews. If technology allows, integrate reviews directly into your in-store displays. Customers are drawn to stores-as-social-hubs, which is something to embrace rather than fight.

Make it easy for shoppers to post items to social media and ask friends for feedback. If they get real-time feedback, they’re statistically more likely to convert, especially on impulse buys. Keep narratives in mind when creating shopping experiences, as story-type posts have spread to nearly every other social platform.

4. Implement Testing, Iteration and Play

A robust testing program will give customers more input into your merchandising strategy, which is clearly preferable since they’re who you hope to enchant with it.

Start small and see which simple changes make an impact and try running different experience tests in multiple stores. Sometimes the same solutions don’t to work in all parts of the country so testing what works best for that market is key. Experimentation is an invaluable tool for creating the kind retail brand experiences that will keep sales healthy well past 2018.

Part two of this series will outline some retail technologies that can assist with these recommended strategies for success in this next year.


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