The convenience of shopping from home and getting a guaranteed lowest price are powerful incentives for consumers to skip the store visit. Very few retailers can operate more efficiently on price and convenience than Amazon. This is the macro-level challenge facing traditional retailers today. How can brick and mortar stores beat the experience of endless aisles of product options, predictable delivery, no traffic, no waiting in line, all while offering the least expensive option?
We believe that the answer lies in evolving the role of the store in the customer journey. Traditionally, stores have been points of conversion. Advertising drove traffic, specialty stores and department stores allowed for feature and price comparison, and sales folks helped in the conversion which allowed consumers to leave that very day with the item of their choice. Today, social media relationships drive the most influential product awareness, purchases convert on smartphones, and customer’s behavior online helps companies predict what a customer needs before they know they need it. The fully controlled retail funnel has sprung leaks.
That’s what retailers are up against today. The comfort zone of the store as the sole point of conversion has left most retailers exposed. And it begs the question, how has the store evolved in the eyes of the customer? And what does that mean for retailing in the future?
Before retail’s digital revolution, the physical store was where the “first moment of truth” happened. Crest over Colgate. Tide over Cheer. People were made aware of the products through marketer’s pushed communications which drove store traffic and in-store conversion. Because that linear path to purchase no longer exists, it changes how the store could be utilized as a marketing tactic. A few examples:
Apple’s Genius Bar
Apple’s Genius Bar occupies a significant area of the store but it’s not dedicated to purchase. Its role is for customer education, service, and loyalty. This is powerful in two ways. First, the Genius Bar gives customers a sense of comfort that even if something goes wrong with their purchase, there is an actual place that they can go to fix it. Second, having all of those extra people milling around the store gives the space a sense of energy – which makes consumers want to be part of the fun and visit the store.
Starbucks has turned all of its coffee shops into micro-fulfillment centers powered with their ‘Order & Pay’ app. Imagine the operational efficiency and expedited service it can now provide with a way to track and manage in-bound orders. Contrast that with the stress and missed sales due to a line out the door.
Google’s new pop-up shop is a store with no physical products for sale. It’s purpose is to create a branded environment that impacts perception of Google and its new Pixel phone. There’s no pressure to purchase, just come in and enjoy – and when you are thinking about purchasing a new phone, think fondly of Google.
American Girl is turning their flagship store into a place where girls and their dolls can bond and create memories together. This is a store they want families to visit long after the star of the show, the doll, is purchased.
This short list demonstrates the new ways of thinking about the role of the store in the marketing mix. It meets consumers needs, conforming to their lifestyle instead of conforming to the brand’s established business operations.
In the coming weeks MJD, along with FRCH Design Worldwide, will explore some micro-concepts that, in aggregate, can help push back on the “Amazon Effect” and help retailers reinvent themselves.
Areas of focus will include:
- The Digital Tactics of the ‘Store of the Future’: Let’s not introduce technology for technology’s sake. We’ll examine the toolbox of tactics and the appropriate times to use them to create a useful omni-channel program.
- Enhancing the Customer Journey: How customer journeys can be enhanced with new ideas and technology to increase sales and profit and, in turn, begin to fix the cracks in the retail world as we know it.
- Consumer Expectations: Low consideration goods and services like toothpaste or kitchen utensils rely on convenience, speed, and price as the largest factors in consumer preference. High involvement purchases like home appliances or cars involve consumers that are much more calculated and considered in their ultimate decision. We’ll look at how retailers can modify their operations to meet the needs of the consumer.
- The Right In-store Experience: Satisfaction comes in many flavors – joy, convenience, problems solved, breakthroughs, discovery, getting a deal, being unique. We make the argument that these experiences can be designed to be unique to the physical store and are a huge competitive advantage.
- Store Space Management: Retail square footage is not cheap. It’s important to use design thinking to make decisions about what is space worthy. How often should the space change, season-to-season or day-to-day? How do you manage that? How do you represent things that aren’t space worthy but are store worthy? We’ll explore rules of thumb when planning layout, fixtures, and substitution/augmentation with digital components.
- The Retail Brand Ecosystem: All forms of business are omni-channel at their core. We’ll attempt make this concept tangible and take it beyond the buzzword hype as it relates to retail. We’ll show how to create a superior customer experience by providing a high level view of how the proper platform and product architecture can open up new insights to help every level of retail organizations.
Retail isn’t dead. People need and want products and services that make their lives better. And the purveyors of those products and services still need outlets to get those items and experiences to the public. But why, how, when, where and what is no longer dictated by the retailer. The consumer is now dictating and it’s up to the retailer and its partners to figure out this omni-channel puzzle and evolve. Its tantamount to their survival and prolonged success.
Check out Part 2 of the Evolution of Retail series: The Digital Tactics of the ‘Store of the Future’