Christopher Hansen, chief product officer, IgnitionOne
Is the time of the retail apocalypse nigh? With sales down 0.2% in June, the second straight month of decline, the headlines looked grim. Faced with the question of “why’, many analysts point to the “Amazon effect” and the growing competition between brick-and-mortar shops and e-commerce.
While some retailers are fighting against online competition, others are struggling to find a balance between their physical stores and the online retail habits of today’s consumers. At best, there is internal competition within retail brands that operate across both channels. At worst, there is blatant disregard for e-commerce. If retailers want to survive, they need to think differently about e-commerce. It won’t cannibalize their brick-and-mortar stores. Rather, online and offline experiences can work together as two pieces in a future-facing retail strategy.
Thinking differently means re-examining the established practices of brick-and-mortar retail. First up: Killing the attitude that physical locations are the priority. The majority of retailers who started out solely with brick-and-mortar stores still devote most of their attention to these locations, with less attention going to e-commerce. Department stores, which saw sales decline in June, put their stores in place 10 or 20 years ago, when consumers frequently visited physical locations. With more consumers shopping online, these stores have become albatrosses, but are still the heart of the marketing and branding strategy.
Meanwhile, retailers that started out in digital and then opened physical locations are succeeding because they’re agile. These digital-first companies, like Bonobos and Warby Parker, still have sales that are largely driven by e-commerce and the online experience. They are more selective about where they put their stores and how many they open, maintaining a small footprint that won’t become dead weight if sales slow.
Along with this massive footprint, retailers are also stuck in thinking that the stores themselves can only operate in one way. Take clothing as an example: nearly every store is the same—it holds as much inventory as possible in the front for consumers to peruse. If a consumer can’t find their size, they might ask a store associate to look in the back. But what if a consumer visits a store and can’t find their size? This experience negates the biggest advantage that brick-and-mortar stores have: instant gratification even faster than Amazon can provide.
E-commerce has a distinct customer experience advantage here, because these sellers don’t have to worry about stocking inventory in a finite space. As long as the consumer gets the purchase within 48 hours, they’re happy. It may not be instant, but it’s close enough, and more convenient.
It’s important for brick-and-mortar sellers—especially those with e-commerce operations—to get creative and rethink the in-store experience and layout. Think: Shrinking sales floor space and turn it into a showcase, where consumers can still see what’s for sale and try on various sizes, but with less stock up front. Brands that think creatively can use these smaller spaces to develop shopping experiences that make the brand and store feel unique in consumer’s eyes.
Meanwhile, the remaining store space can hold as much stock as possible, ensuring that the store never runs out of a size. These larger storage facilities can double as local distribution centers for e-commerce sales, ensuring faster delivery or in-store pickup. Set aside clothing and think about what this would mean for office supply stores, or stores that sell CPG products—both of which are among the hardest hit by the retail decline. More space to store stock means an easier time competing with e-commerce players like Amazon, Jet, and Boxed.
Another way to bridge physical and online retail is marketing, which in most cases remains wed to the idea that retail is brick-and-mortar, and e-commerce is an afterthought. This prevents any kind of creative thinking when it comes to marketing for both channels—a major miss for brands considering this is the easiest space in which to leverage both options collaboratively.
Doing so means bringing online marketing and sales data offline, and vice versa. This includes CRM data, in-store traffic, mobile app downloads, beacon signals, abandoned shopping carts, POS system data and more. If a data signal or insight can be used in a campaign for one retail channel, it should be used in both.
Consider how many retailers have apps. Why aren’t they more useful within physical stores? Apps can and should be treated like an in-store marketing channel, delivering coupons in real-time, geo-targeting and pushing relevant notifications, in addition to acting as way-finding for consumers looking for specific items within the actual store. Apps need to be viewed less as extensions of e-commerce and more as an extension of retail and the consumer experience across channels.
While these challenges aren’t going anywhere, we’re still far from the so-called retail apocalypse. The changing landscape presents a great opportunity to tie digital shopping and the in-store experience together, benefitting consumers (and revenue) long-term.
IgnitionOne is a digital marketing agency. It is listed as the provider of search marketing services by three retailers and email marketing by two retailers in the Internet Retailer Top 1000 ranking of North America’s leading online retailers.
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