E-commerce may be booming, but traditional stores must not panic. Clever re-invention and learning from the success of online ventures can put bricks back on the retail map. If things go well, retail may soon be heading back to bricks and mortar.
Of course, this statement may sound a bit far-fetched given a growing number of store closures in the USA. American retailers are planning to close more than 6,000 locations in 2015. The need to constantly evolve the retail network and make the shopping experience compelling is stronger than ever. Consequently, approximately 80 percent of retailers plan to increase their customer experience budgets this year.
'Nice price' is not enough
Competition on the market is fierce and getting noticed by consumers gets harder by day. It turns out that traditional stores may already have one competitive advantage that online ventures don't: distinct location that plays the role of the key differentiator. The majority of websites look the same, with price remaining the only real differentiator online. That said, a retail business based only on the lowest price will not go a long way. Look at Amazon. The firm that introduced showrooming is doubling its efforts to differentiate itself with faster delivery, membership programs and even original entertainment content. The low-price leader in majority of cases, Amazon does not forget to create a unique shopping environment to attract consumers. Likewise, physical stores also do their best to refresh the in-store shopper experience. Retail giants like Walmart are bent on improving the in-store experience, while Macy focuses on remodeling its flagship stores.
The art of re-invention
Forward-thinking retailers invest in the means to understand their customers and then deliver on their fundamental needs. This does not always require cutting-edge technology. All it really takes is careful insight into shoppers' needs and behaviours. What these retailers have in common is flexibility and willingness to take creative risks. First they set up pilot stores, test the concept and implement the solutions that work best. Failures will happen, but they are perceived as a necessary step towards innovation. Texas-based supermarket chain H-E-B is a case study of reinvention. Changes range from completely new formats, such as its Mi Tienda chain of Hispanic grocery stores, to an app that pinpoints an item’s specific location in the store. The chain is not afraid to test new-fangled concepts and solutions. In 2013, it trialed “Fast Scan” checkout aisles with 360-degree scanners that automatically registered items as they traveled down the conveyor belt. It has recently launched app that enables users to check product availability, create shopping lists via bar scans and then sequence those lists by store layout. With these insights, H-E-B can send digital coupons relevant to specific shoppers while gaining a better sense of what is in high demand at individual locations.
Standing on the shoulders of e-commerce giants
Interestingly, the brick-and-mortar store is rising in importance thanks to its foe - online shopping. The number of chains that are eager to provide shoppers with the most popular online features has been rapidly growing. Most of them offer their customers the ever-so-popular option to buy online and pick up in the store. To facilitate this, retailers are using the stores as fulfillment centers. Retail IT technology now lets shoppers access store inventory and choose a location where an item is in stock. And it lets them order or even reserve those items, pay online and pick up at a designated location later that day. This integration of inventory highlights the role of physical stores as part of the retailer’s supply chain. Bricks are no longer reduced to displays but operate as small distribution centers.
Sources: http://www.forbes.com; www.computerweekly.com