3 Disruptive Retail Trends & What They Mean for You
2016 is over. Like it or not, holiday sales are in, traffic is not going to rebound, retail tech is growing at an explosive rate and although the new year has barely begun, the flux of things you need to pay attention to—right now—is probably already overwhelming.
With that in mind, we’ve boiled down today’s hot button issues into answers and opportunities you can take action on.
Here are 3 trends disrupting retail and what they mean for you…
- Traffic Isn’t Going to Rebound
Choose whichever culprit you like, overstored retail, discount/off-price retailers, Amazon or other like ecommerce giants… but the fact is today’s shopper is not at a loss for options and retail traffic is declining. That isn’t going away. Comparable sales over the recent holiday season fell at nearly every major chain, and total sales at department stores dropped 5.6% last year, according to the Census Bureau. What’s more, in the last two years alone, U.S. retailers, including names like Sports Authority, Walmart and JCPenny have closed over 8,000 stores.
So, is it time to call it quits and stop opening stores? On the surface that rationale seems to make complete sense, but it would be a mistake to think that way. We would be overlooking some important facts. For instance, brick-rooted names like Ulta, which is planning to open 500-800 more stores in 2 years and countless online pure-plays, like Bonobos, Birchbox and Warby Parker that have begun moving in-store and seen impressive growth. That also includes the likes of Amazon, which has recently opened both bookstores and convenience stores.
The reality is, these issues we’re seeing aren’t indicative of the death of the retail store, rather they are more predictive of the death of the traditional, cookie-cutter retail store as we know it. Moving forward, retailers will indubitably need stores to stay relevant to consumers and offer them the conveniences they seek, but exactly what “store” means will need rethinking. In addition to size and format, other things to reassess include, the role and function of the store—is it simply to drive sell things or act as a distribution point, or perhaps is it part of our media mix and marketing budget?—, its agility for adapting to seasonal repurposing or changing consumers, our expectations of its life-cycle and, most importantly, measurement.
This obsession with traffic and comparable store sales as a measurement of store success must end. Of course profitability matters, but if we acknowledge that the store is changing, then we must also acknowledge that the traditional yardstick we once used to measure it must change as well. The reality is, in today’s retail environment it’s unrealistic to think stores can bring in the kind of traffic once possible a few decades ago. It’s time to combine online and store sales and end this channel thinking. The lesson? Less stores, but better more agile stores, focused on customer experiences that can’t be had online—i.e. provide additional value, entertainment and unique community-type experiences, more—so the store functions as both a marketing tool and driver of sales both in-store and online.
- Shoppers are Overexposed
As we already know, today’s shoppers don’t “have to” go to a physical store anymore—they’ve got everything they need literally at their fingertips. This means that while retail store traffic may be declining, in-store purchase intent is, in fact, increasing..
Recently at NRF, Brian Krzanich, CEO of Intel proclaimed that: “Data is the “new oil,” with every bit as much possibility for changing the world.” We couldn’t have said it better. Courting today’s always-connected shoppers now and in the future, will require real-time, actionable insight to engage, gather and respond consumer interest in-the-moment.
The reality is quarterly shopper intercepts and shopping transaction data are no longer sufficient when it comes to understanding today’s overexposed shoppers. These solutions also offer insights after the fact, i.e. after the consumer has already left the store and taken the opportunity with them. This laggard approach must come to an end, there are now a range of options to collect insights in-store. Path and heat mapping—to understand traffic flow—is just one part of this. However, advanced shopper analytics can let you track each shopper’s buying behavior and interests uniquely and in real-time. These kinds of insights can be used to drive real-time inventory and deliver targeted content to shoppers in real-time as well to help ensure the sale won’t be lost. (Learn more about advanced shopper analytics here.)
- Competing Requires In-Store Personalization & Real-Time Interaction
Speaking of lost sales/opportunities… A recent study by IBM found that on the retail front, just 19% of retailers provide a highly personalized digital experience. On the other hand, according to a new Salesforce study, 64% of consumers expect companies to respond and interact with them in real-time and by 2018, Gartner predicts that organizations that excel in personalization will outsell companies that don’t by 20%. This gap between what consumers want as far as personalization and interaction and what most retailers are providing presents a huge opportunity.
In a recent writeup on 7-Eleven, their executives explained that their average customer spends about 2.5 minutes in the store, so their goal therefore is to engage and gather consumer interest as quickly as possible so they can constantly satisfy the most customers and thereby optimize conversion and sales. Whether big and small, retailers across the board need to adopt this kind of “optimize conversion in every inch of your stores” thinking. It’s time to move away from mass-marketing and wasted retail footprints that do little to convert shoppers. Instead, you must focus on a better understanding of shoppers’ needs and convenience cravings so you can optimize conversion throughout your stores—whether at the category-, department-, merchandising- shelf-level or more. And, we would even take that one step further: learning, engaging and responding to your customers in a targeted way all in real-time?
Fortunately, we won’t leave you with this hypothetical and no solution. The reality is, this kind of experience is very possible today. By pairing advanced shopper analytics (we touched on this above) like unique, anonymized facial identification with a responsive content platform, you can leverage in-store personalization and real-time shopper interaction, with agile, insight-driven in-store experiences that engage and respond to each shopper uniquely and in real-time. (We know this point is a bit compact, so here’s a quick read on the ins- and outs- of how this technology works.)
The era of the big-box, cookie-cutter retail store is coming to end, and so too must our traditional way of thinking around the role and format of the store, how we market to in-store consumers and how we measure our stores. The store of the future is being built as we speak, and it will wait on no-one.
Also check out…
Retail Analytics: Understanding the Options
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