After waves of closings swept through some of the biggest retail chains in the US, the viability of brick-and-mortars has come under prolonged scrutiny. The past decade or so has been a rocky time for retail. Many media sources have portrayed it as a harbinger of the “retail apocalypse.”
That may be a tad dramatic. It doesn’t exactly leave room for the whole picture. If you are a brick-and-mortar retailer… yes, you might have reason to worry — but there is something you can do about it.
Adapt or Die
Sixteen US retailers filed for bankruptcy in 2018, with more following in 2019. While it’s nowhere near the 50 retailers that filed for bankruptcy back in 2017, the major players involved (including Sears, Payless, Mattress Firm, and David’s Bridal) have continued to stir up concern. But not all brick-and-mortar stores are doomed to fail.
There is no doubt that online sales are eating up a healthy portion of the market share. In 2018, e-commerce reached 14.3% of the total US retail sales, according to Internet Retailer. That’s a nearly 10% increase from the 5.1% e-commerce claimed in 2007.
However, that still leaves a staggering 85%+ to in-store sales. In his 2018 Forbes article, consultant Steve Dennis boldly states (in the title): “Physical Retail Isn’t Dead. Boring Retail Is.”
He’s right. As Dennis points out later in the article, in-store sales hold the lion’s share of consumer dollars, and he projects that it will continue over the next several years:
“…according to most estimates, about 91% of all retail sales last year  were still transacted in a brick-and-mortar location. And despite the anticipated continued rapid growth of online shopping, more than 80% of all retail sales will likely still be done in actual physical stores in the year 2025.”
Further, he states that physical store openings grew by 50% year over year. Because, despite closings and bankruptcies throughout the retail space, there are plenty of companies that are thriving. And the reason they’re doing well? They didn’t dare to stay the same. These companies knew better than to protect the status quo (when surely it will not protect them). Instead, they decided to adapt. Evolve. Innovate.
Innovators In the Retail Space
Whether by soothing a pain point of in-store shopping, integrating the storefront into online shopping, or completely reinventing the experience, these companies have found ways to encourage in-store activity with success. It’s all about taking the information and technology we now have, thinking on it, and asking, “How can I apply this to make the experience easier, different, and — most importantly — better?”
Here are some of the answers retailers found in their quest to improve customer experience and keep the storefront relevant…
Target’s tactic to keeping its stores alive? Use technology to make it simpler to find products and deals, and navigate the store with ease. Ever since the coupon-only Cartwheel app merged with/became the Target app in 2017, its in-store capabilities have expanded tremendously. Basic features like buy online & pick-up in store (with the option for drive-up service) won’t surprise any tech-savvy shopper. But the expanded usability of the app streamlines many shopping activities:
- A live aisle map including bluetooth beacons that read your location in-store makes it easy to find products with a GPS-like feature.
- A barcode scanner allows you to scan any item with your phone and find coupons and other deals on that product and similar ones.
- The shopping interface allows you to browse and check product inventory in specific stores, with the option to find out-of-stock items in other nearby stores or have them shipped to your preferred store, free.
- Target-specific coupons and deals can be combined and saved with manufacturers’ coupons all within the app, using a single barcode for all coupons in a single transaction.
- Users can load their Target RedCard onto the app, enabling mobile payment in-store or online. When coupons are loaded, they are built into the same barcode as the one used for RedCard payment.
- Push notifications alert shoppers to online-only deals and other sales, finding a much more direct route to consumers’ eyes than email marketing and other methods. Offers and up-sells from their “Buy $X of these items, get a $X gift card” deals keep customers buying and returning for more — whether in-store or on the app.
An (originally online-only) clothier with a focus on menswear and finding the right fit, Bonobos has done what many successful e-commerce brands are now doing: opening physical retail locations. The draw? Their stores offer a specific service that gives consumers a compelling reason to visit.
Bonobos “Guideshops” are dedicated to helping people find the right fit. Employees are then able to order the product with the exact measurements the consumer needs and have them delivered. This effectively removes inventory cost while giving Bonobos a valuable in-store experience. It makes perfect sense. How does an online retailer solve the “trouble with buying clothes online”— essentially never knowing for sure if you’ve got the right fit? By opening a store to rectify that exact issue.
Here’s another example of a company expanding beyond e-commerce and taking to the streets. Amazon has launched 2 unique store concepts in the past few years. One is focused on creating the quickest and most convenient shopping experience possible, while the other uses the mountains of shopper data they are able to collect to better elect and curate merchandise.
Amazon Go, a convenience store with 11 locations across the country, offers a cashierless shopping experience. No lines, no waiting, just browse, take it off the shelf, and go. The store is able to scan the products a customer has chosen as they walk out of the store and charge them on the spot via the Amazon Go app. Shopping can’t get much more streamlined than that.
Amazon 4-Star is centered around the fact that, now more than ever, people’s shopping decisions are based heavily on reviews. As the digital age’s expanded version of “word of mouth” recommendations, it may even be the most powerful tool a retailer has for persuading a new consumer to give their product or service a shot. In fact, 93% of consumers base their online shopping choices on reviews.
Naturally, Amazon has quite an advantage with its veritable storehouse of ratings and helpful reviews. So they chose to make use of that in a physical store. The stores feature products bearing at least a 4-star review (as the name suggests), and are merchandised to encourage random browsing — a great way to claim sales when a customer is simply “looking around.”
The first store opened in NYC in September 2018, with a second in Berkeley, CA following shortly after. Time will tell how viable these pilot stores prove to be, and whether more are to come.
In Fall 2018, Nike reopened its NYC flagship store, calling it “House of Innovation 000.” And fortunately, the 68,000-sqft store lives up to its name. The modular store has moveable walls that can be quickly converted for events, able to shift and evolve as needed. But that really is just the beginning…
Perks for Nike Plus members (a free digital membership program) include access to a members-only lounge, free courier delivery, exclusive access to certain products, and the ability to consult with Nike experts in-store to discuss product options, getting the right fit, and customizing products. They can also reserve shoes to try on via the app and find them waiting in a locker at the store.
In addition, the Nike app enables shoppers to check out instantly with their phones and grab a bag on the way out. It also offers a “Shop the Look” feature in which guests can scan a QR code associated with a mannequin and purchase the entire outfit (or parts of it) and have it brought out by an employee or delivered to their dressing room.
Taking a similar approach to Amazon 4-Star (albeit more highly targeted) Nike’s Speed Shop within the store applies shopping data to merchandising a grab-and-go section of the store. It specifically draws from shopping habits in the immediate geographic area. This project is the second of its kind, following the “Nike By Melrose” store that opened in LA last summer.
Overall, it sounds like an experience well worth having. And that type of attitude is exactly what drives people into the store. It becomes an attraction, rather than a quick trip to grab an item or two. “This store is built to come alive for members,” said Nike Direct President Heidi O’Neil. And by the looks of it, it does.
The Hallmarks of Innovation
What do all of these retail innovators have in common? They took risks. But more than that, they took a step back and looked at what has changed in the retail space and the world around them since the earlier days of brick-and-mortar stores. They used the new information, observations, and technology to solve customer problems and build a better customer experience. And the way to keep pace with these innovating maestros? Always be on the lookout for unique and imaginative ways to apply new data and technology. The world is changing all the time, creating opportunities faster than we’re able to see them. The least we can do is look.
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