Many times over the past months we've discussed how stores would need to reinvent themselves to survive in today's multichannel world. (Top 10 Trends That Will Drive Online Competitive Pricing In 2012). Studies like the J.T. Kearney survey we referenced in Part 1, (What Do 81% Of Shoppers Do In Stores That Only 19% Of Shoppers Do Online?) indicated that a large percentage of customers (61%) still prefer to shop IN STORES for many reasons. That means that stores can survive and thrive by making some adjustments in their physical and psychological offerings. The key is for retailers to understand and focus on how and why their customers shop, and then retool and redeploy the store network accordingly.
Categories where customers especially favor the personal experience of in-store shopping include beauty and personal care products; footwear, apparel and accessories; consumer electronics, pharmacy and grocery products, home and furniture, home improvement, and office supplies.
In order to keep the consumers happy and returning, this is what retail stores have to do to transform themselves into more interesting and attractive places:
*Make the store a place of DISCOVERY. A place where consumers can learn more about products, try them out (think Apple) and hunt for (or happen upon) hidden treasures. (This, by the way, is part of the thrill of the hunt for product and pricing consumers say they want. See 8 Retail Pricing Strategies To Satisfy Shopper Needs For Thrill Of The Hunt).
*Make the store a place of ENTERTAINMENT. Provide an exciting in-store environment that engages shoppers, especially those who enjoy shopping and consider it a social experience. This can be literal entertainment -- music, shows, happenings, etc. A more entertainment-focused venue builds longer-term engagement with the retail brand and the lifestyle it represents, says the Kearney Study.
*Make the store a place of great RELATIONSHIP. That is, make the store the ideal place for personalized service—before, during, and after the sale. (Customer quote: "Stores that treat me like a person and not a number get my business.")
*Make the TRANSACTION the key. A convenient, enjoyable transaction through short checkout lines and service-oriented cashiers helps build brand loyalty.
(NOTE: *The point of sale also affords an opportunity to boost profits by upselling or offering value-added services such as extended warranties).
*Make FULFILLMENT the key. Stores can still offer same-day delivery or same-day satisfaction that digital channels cannot. Regardless of where a product is purchased—via online or mobile channels—the product can be picked up in the store.
(NOTE: *Here again is an opportunity to capitalize on impulse purchases during checkout).
Since the majority of today's retail stores and store networks were not designed or built with the omnichannel shopping experience in mind, here are four actions retailers can take to ensure that their store and store network remain at the heart of the customer relationship:
1. Optimize store locations to facilitate transactions, i.e. enable consumers to formalize purchases and fulfillment (such as through local store delivery).
2. Leverage stores to support the five roles described in Part 1: (Research, place to test or try on; place of purchase; place for pickup or delivery; importance of after-sales experience).
Different stores may play a different role or set of roles in this process: For example:
*Large flagship stores might support the discovery and entertainment roles and build strong customer relationships.
*More traditional stores may be the best venues for everyday shopping, with well-executed transactions as well.
*Smaller format stores, closer to target-segments areas of residence can attract convenience shoppers and also provide for efficient fulfillment of online purchases.
*The stores can be used as logistics and distribution assets, improving efficiency while offering customers delivery speed and flexibility.
3. Increase the visibility of inventory across channels, such as displaying in-store availability online to meet traditional and online shoppers' needs -- and potentially convert online sales into store pickups (*which increases impulse spending).
4. Merge performance management approaches. Analyze and capitalize on the store's role in the consumer's omnichannel experience. For example, a seemingly unprofitable store may be valuable as a showroom or as a fulfillment location for online or mobile sales.
Bottom Line For A Retailer's Bottom Line:
In an ever-changing omnichannel world, it is critical that retailers (and customers) understand the new role the store network plays in optimizing sales, profits and loyalty across all channels.
That means retailers have to transform the physical shopping experience -- by providing engaging entertainment and discovery opportunities or convenient fulfillment of online purchases -- to efficiently and effectively support the new behaviors.
So, while retailers understand the importance of providing customers with the ability to shop where and when they want, it is as important as ever to make your store the place where people WANT to shop.