I popped into a department store recently for the first time in ages. I thought I could just dash in and buy a new pair of black socks. But as I entered the 200,000-square foot space and stared down the long, polished corridors leading to the escalator, through additional corridors, and finally (hopefully?) to my destination, dread overcame me. So much for just dashing in quickly. I decided to buy the socks online instead. Like most modern shoppers, I simply did not have the time or patience to go through the traditional shopping ritual for something so trivial, when e-commerce promises a quick transaction, fair price and delivery to my doorstep. I pulled out my smartphone in the parking lot of the department store and purchased my black socks in less time than it would have taken to navigate to the same socks inside the store.
Why are we surprised economists predicted the demise of big retailers? E-commerce offers any item one could ask for at the click of a button. No need for the physical store anymore, right? The reality is, 90% of retail sales still occur in physical stores; consumers still desire in-store shopping with its tactile experiences and human interaction. Formerly exclusive online retailers, like Amazon and Warby Parker, recognized that e-commerce has a hard time replicating these visceral experiences, and they have been moving into the brick-and-mortar space. Retail is not dying. It’s undergoing a transformation to better suit the needs of the modern customer. Retailers are beginning to merge the strengths of online retail with the time-honored values of face-to-face customer service.
So how are stores carving out their space in the new digital world?
Rethinking Brick and Mortar Stores
It would appear that consumers are no longer happy with the megastore shopping experience, and retailers are noticing and responding. Studies show that consumers want a positive in-store experience with a welcoming environment where they can linger and interact with products without the pressure to buy. Stores are adjusting to accommodate these customer preferences by linking retailers’ digital and physical brand. Megastores are drastically downsizing and new types of stores are emerging.
• Experience Stores Can Prime Customers for the Final Sale
Experience stores are brick and mortar locations where customers can touch and interact with a curated set of products, with no pressure to buy. An extreme example is Samsung’s New York location, where they don’t even sell products. This seems counterintuitive to the basic definition of a store, but retailers are tapping into consumers’ need to physically interact with products, feel comfortable, ask questions, and visualize a certain product fitting into their lives. Retailers are realizing that the power is not in displaying shiny objects in pretty packaging on rows of shelves, but rather immersing the customer in an experience with those shiny objects that will eventually lead toward the main goal – the consumer taking out their smart phone to complete the purchase.
• Pop-up Stores Offer Key Advantages to Small and Large Retailers
These are small, temporary stores focused on featuring a small selection of products. These are popular with exclusive online retailers seeking to engage with customers face-to-face. Advantages of pop-up stores include low overhead, the ability to change merchandise and displays frequently to keep the experience fresh and current, and of course, increased sales.
• In-store Pick-up Services Provide Quick Services and Additional Chances to Buy
In-stores pick-up services are not new, but they conveniently connect the digital shopping cart with the physical store. These services allow customers to browse and buy online, then pickup purchases at physical stores within a few hours of purchase. Once the customer is in the physical store, there is more opportunity for the retailer to engage with the customer and additional opportunities for further transactions.
Improving Customer Interaction with Smart Technology
Retail changes have not been limited to the size and type of stores; customer experience inside the stores is also transforming. In the past, stores excelled at the art of selling and creating meaningful customer experiences. As stores grew larger, those merits faded, to the dismay of customers. Retailers are returning to their roots, but with a twist. It’s difficult for a few sales associates to give top-notch service to every customer at the same time. New in-store digital tools are filling this void, offering immersive experiences that translate seamlessly to and from e-commerce encounters. Though tools are being developed at a feverish pace, there are a few key players being utilized in stores.
• Digital and interactive devices
Digital screens and signs can include features such as giving specific product information, linking to personalized customer information, or acting as checkout points. Augmented reality (AR) technology takes it a step further and enhances in-store and product interaction by allowing customers to engage with their phones or store devices in a way they never have before. Wifi-connected AR “Magic Mirrors” allow customers to view themselves with products and even connect with friends to get real-time feedback.
RFID (radio-frequency identification) tags have been around for a while, but with recent advances in technology, they are seeing a renewal in popularity. These tags, enabled with wireless technology, not only improve inventory management but can also be used to collect data about customer interactions while connecting to in-store applications like interactive displays and self-checkouts.
These location devices can be used throughout the store to detect customer smartphones and/or product RFID tags tracking customer behavior and product movement. The data about those behaviors can be gathered and translated into personalized and enhanced customer engagement while customers move throughout the store.
With the successes of digital commerce, we are now seeing a shift from product-driven to consumer-driven focused experiences. One area where e-commerce has recently exceled is in offering personalized recommendations, thanks largely to an influx of customer preference data backed by behavior data, AI-algorithms, and marketing automation tools. Brick-and-mortar retailers are now starting to leverage these digital marketing successes and incorporate them into customer’s in-store experiences, with the goal of boosting customer satisfaction. Data can be processed, providing feedback either directly to the customer via their smartphone or to the sales associate assisting the customer. For example, clothing retailers can offer personalized styling services in-store based on the combination of the customer’s digital behaviors and the expertise of the sales associate. Imagine walking into a store with a curated rack of clothes waiting for you to try on!
Retail is in the middle of a major makeover, so we will likely see even more changes coming in the years ahead. Instead of the death of the store, imagine stores modified to better embrace consumer desires. Instead of directly competing with e-commerce, brick-and-mortar retail has the unique opportunity to embrace the successes of the digital side to open up a multi-channel brand experience for its customers. Ultimately, the digital transformation of retail will lead to better engagement with customers and increased sales.
Follow Kimberly Smith on LinkedIn