Can you imagine a world without stores? Unless you've spent time in a very remote area with limited access to public transport, the likelihood is that you've never had to. Retail as we know it today has its roots in antiquity, with merchants in Ancient Greece setting their stalls in the agora and Romans using the forum as a marketplace.
While retail has evolved greatly over the centuries and is unrecognizable from the very early variety that operated on barter system, one thing is certain: Stores are part of the fabric of society, serving not only the need to provide goods for purchase but also addressing humans' desire for social interaction.
However, online commerce is changing the retail landscape, with an increasing number of consumers choosing to make some of their purchases online instead of going into a store. According to comScore, e-commerce in the United States grew by 13 percent in the third quarter of 2013, compared to the same period the previous year. During the holiday season, Americans spent $46.5 billion in online shopping from desktop computers alone.
However, despite the attraction of letting our fingers do the walking, bricks-and-mortar have a definite advantage—their ability to satisfy humans' desire for instant gratification. While several retailers have made huge strides in decreasing shipping times, consumers still have to wait a day or two before getting that package in the post.
Then, late last year, Amazon threw other retailers a curveball. Jeff Bezos, the company's chief executive, announced on CBS' 60 Minutes that Amazon was researching the concept of Amazon Prime Air, which would use drones to get packages to customers in a mere 30 minutes. For many people, that's faster than going to the store, let alone more convenient.
Some critics have shrugged off Amazon's plan as impossible. During last month's NRF 103rd Annual Convention & EXPO, Lynn Dornblaser, Mintel's director for innovation and insight, described it as "clever marketing to promote Amazon." However, while FAA regulations could ground Amazon's ambitious plan before it even takes off, Don Peppers, founding partner of Peppers & Rogers Group, notes that it's not inconceivable that future technology will facilitate the use of very small vehicles that will be dedicated to package delivery.
Irrespective of future innovations, there is no doubt that brick-and-mortar stores are fighting an increasingly difficult battle to remain alive. Therefore, retaining the status quo is not an option and retailers need to make immediate changes if they are to survive, not to mention thrive, in a world that is heavily leaning towards e-commerce.
Beyond the cash register
While experts believe that there will always be a place for physical stores, they will only remain competitive as long as retailers are willing to adapt to a changing world. And the first step is to take the in-store experience beyond a simple purchase. "Retailers need to disassociate the store experience from buying," notes Michael Whitehouse, senior marketing strategist at OpinionLab. The idea is that humans have been congregating in public places since the beginning of time, and this should be one of the functions of physical stores. "It should be less about fulfillment, which can be done online, and more about the magic," Whitehouse explains. "Rebuild a store around connecting product evangelists and providing entertainment and value."
Christina Van Houten, Infor's vice president of market strategy, agrees. "Create a reason for customers to visit your store," she says. "Physical retail stores shouldn't just be about handling a transaction but more about educating and delivering value." This is a role that Apple stores have become extremely good at filling. The purpose of their physical locations goes beyond selling products; it's also around teaching and evangelization.
Bernard Louvat, president and CEO of TouchCommerce, notes that retailers can make the in-store experience more exclusive and exciting by offering special content on interactive touchscreens and self-service tablets, or even on a customer's smartphone through store wifi. "This would involve delivering personalized product information," he notes. "Stores will benefit from a renovated, unique experience culminating with the best of stores' classic value propositions, such as staff and touchable products, and the multi-screen online animation," he explains.
Delivering such an experience requires more than changes to the stores themselves. Retailers need to make sure they're hiring the right people for the job and equipping them with the technology and information to deliver value to consumers rather than solely a purchase experience.
In fact, the role of store associates needs to change and their function as operators of checkout counters should be a relic of the past. Instead, associates should be there to connect with consumers and help them through their shopping journey, giving them the information they need to make the purchase. "They will take on the role of trusted advisors," Peppers notes.
First of all, this requires equipping associates with technology like tablets that puts information right at their fingertips. For example, it is well recognized that most of today's consumers start their shopping journeys online and are already in possession of ample information about a product and how it compares to its competition by the time they walk into a store. Therefore, associates need to deliver an additional layer of information rather than repeat what the consumer already knows. "The retail advisors will be able to qualify what information a customer already knows based on his buying journey, and complement that," Peppers explains.
Further, associates should know their limitations and if they're unable to answer customers' questions, they should connect them to someone who can. Even here, technology is essential. Louvat recommends providing ways for customers to connect with product experts, either through chat or by phone, while they're in a store. For example, a customer who wants more information about a particular kitchen appliance, can be connected with a rep for the manufacturer who can delve deeper into the details than the store associate can.
However, a very targeted conversation is dependent on the availability of data from different channels. "You need visibility into a single source of truth," says Rick Chavie, hybris' vice president of omnicommerce. Not only is bridging channel silos important to building a 360-degree view of consumers, but also to creat a seamless experience across different touchpoints. "You need to put the customer at the center of the experience, so stop thinking in channels," stresses Branden Jenkins, NetSuite's general manager for retail.
Further, a centralized data system will also close the gap between the online and in-store experience and instead bring the two together, allowing consumers to seamlessly move from one to the other. This includes the availability of in-store pickup of online orders, something that Best Buy has been offering for some time. However, bringing data together will also allow retailers to use their brick-and-mortar locations as distribution areas, explains Dinesh Bajaj, Infosys' vice president for retail. "Leverage existing stores rather than a central warehouse," suggests Craig Peasley, head of marketing at Magento. For example, if a customer made an online purchase that's available in a store close to his location, he can be alerted and offered the option of picking the item up or having it delivered in a very short period of time. eBay Now is leveraging a similar concept in a number of cities, allowing consumers to make online purchases that are delivered within an hour for a $5 fee.
Personalizing the in-store experience
As we mentioned in this article, consumers have become used to the hyper-personalized experience they get online and are expecting the same treatment in stores. The ability to deliver a very personalized experience hinges around a crucial element—recognizing consumers as soon as they walk into a store. While loyalty programs are allowing retailers to gather very important data about their customers' purchase histories as well as their online shopping journey, including what they looked at but didn't purchase, most retailers don't have the mechanisms in place to identify who is shopping in their stores until the time of check-out, leading to several missed opportunities. Bajaj notes that one option would be developing consumer apps with Geolocation capabilities that recognize when a consumer walks into a physical store and allow him to opt in for a personalized experience. However, he warns, retailers should refrain from simply sending offers, but also content that would resonate with the consumer. For example, a consumer who was recently looking at coats on a retailer's website can get a message inviting her to explore the top outerwear trends of the season when she walks into the store.
Further, busy consumers often find online shopping more efficient because they can get several items during a single shopping spree. However, Linda Palanza, chief operating officer at OneView Commerce, offers a solution for physical stores in the form of appointment scheduling. She explains that a consumer can browse the retailer's website and identify a number of items she's interested in, for example dresses, and schedule a time to go to the store, giving associates time to gather the items, potentially even source them from other locations, and have them available when the consumer arrives. This is a way to make the most of the consumer's time and even leverage associates' expertise to make recommendations for additional purchases, for example shoes or accessories that would go with a particular dress, creating a personal shopper experience.
A unique benefit of physical stores is that they allow for relationship-building between consumers and associates. Robert Blatt, CEO of MomentFeed, believes that this relationship can be leveraged to encourage consumers to visit stores by sending them personalized invites that come directly from the associate who normally helps them.
Finally, for retail organizations to ensure the longevity and success of their brick-and-mortar locations, they need to bridge channel silos and create an omnichannel experience with data from different channels shared and leveraged to create a very individually targeted exchange. "You need to put the customer at the center of the experience, so stop thinking in channels," stresses Netsuite's Jenkins.