There are few in retail circles who would argue that the role of the Store is the same as it ever was. With the rate of change accelerating like never before, consumers are throwing new challenges at retailers faster than they can implement solutions.
It’s no wonder that many retailers seem to be in a perpetual state of paralysis: first it was Covid-19 generating a ten year acceleration of digital commerce adoption; now a deceleration towards pre-Covid digital growth rates, combined with late 2021 inventory swing (collected to initially avoid supply chain shortages) has caused a surplus of merchandise so great, that it is contributing to many western economies teetering on the brink of recession.
The idea of the store as a laggard is nothing new. We let it be that way because it worked. However, the last few years have brought into focus the impact that the static store can have on retail businesses and there is undoubtedly an opportunity to adapt the store to the changed landscape it now occupies.
To do so effectively, retailers will need to adopt agile, flexible and often unfamiliar ways of working to ensure ongoing alignment with the expectations of a continually changing customer base. With increased consumer expectations for convenience, transparency and personalization, the opportunity to augment the store, if done correctly, has the potential to yield significant operating efficiencies and cultivate meaningful brand loyalty too.
Beyond 2022, a store equipped to support digitally initiated commerce workflows (from fulfilment to customer service and everything in between) will become the minimum viable product. Retailers that meet this and excel in areas beyond the baseline are those that will outperform their peers.
If you’re still reading I am likely preaching to the choir and you’re asking ‘so what are we to do about it?’ It’s a good news – bad news situation.
Bad news, there is no silver bullet or big technology project that can solve all of the challenges, it’ll take some smart humans too. The good news, however, having spent time with hundreds of global brands and retailers, we’ve distilled this thinking into a single place.
Below are three tips for retailers looking to reimagine and reinvent the role of one of their most valuable brand assets – the store.
UNDERSTAND WHAT THE CUSTOMER WANTS
In a world where discovery happens online and everything is available at our fingertips, it’s important to understand why your customers still go to the store.
The best retailers are gathering consumer insights (real data) to identify what role the store plays in the consumer journey and optimise accordingly. For some, the convenience and immediacy of the store is critical. For others, it’s a high touch and personalised buying experience. For most, it’s a unique blend that calls for a blended solution.
Well trained store teams, fast and flexible technology and data informed decision making are almost always part of getting it right. If you asked your entire team why customers visit stores, would everyone give the same answer? And, more importantly, would it be the same answer your customers provide?
Getting closer to your customer and understanding the way they think is step one.
MEASURE THE RIGHT THINGS, AND THEN SOME
While KPIs like conversion, sell through and earnings before interest, taxes, depreciation and amortization (EBITDA) undoubtedly matter, they aren’t the end-all, be-all for top performing retailers. Once you’ve figured out why customers go to the store, the next step is to figure out how to measure and improve your performance against their expectations.
Once retailers understand why their customers are visiting their stores, it’s important to be able to take a step back, look at the big picture and ask yourself: ‘do we really have the technology in place to continue to monitor our performance against these expectations?’
For every measure of fiscal performance or operating efficiency there needs to be a measurement for customer store satisfaction. Maybe it’s as simple as a Net Promoter Score, or maybe it’s something more advanced and revealing.
For example, if you were to compare online sales to retail sales within defined proximity ranges to the store (i.e. five miles vs ten miles vs 25 miles), you could find out just how far customers are willing to travel for the store experience. And, within that customer segment, what are the variances between the digital customer, the store customer and the customer who shops both – now wouldn’t that be interesting to know?
If you’re looking for advanced metrics to better understand how the store impacts your customer base, that’s step two.
INVEST IN THE RIGHT TOOLS FOR THE RIGHT EXPERIENCE
So how exactly should retailers be thinking about their stores in today’s changeable retail environment? It’s a big question, with many possible start points, but for us, we’d always start with data.
For modern-thinking, future-looking brands, the importance of being able to aggregate data (be that real-time inventory, transactional or even customer data passing it back and forth from digital channels like social media) is the key to success.
Take Point-of-Sale (POS) technologies as an example over the last few years. POS has come a long way since the rather perfunctory function of previous generations. No longer is POS simply a tool to complete a transaction (sales or returns) and the associated reporting, modern POS today represents the key to seamless, unified commerce, enabling activities such as endless aisle, click & collect, store fulfilment of online orders, clienteling and loyalty.
For example, ask yourself this: do your store associates have the training, tools and processes in place to meet new, more exacting customer expectations? Are there reliable, flexible, modern commerce tools in place to transact how customers want? Or, are your systems user-friendly and accurate enough to make navigating product availability easy for an associate to search and educate a customer on the spot?
Today’s retailers require technology with the infrastructure, agility, flexibility and scalability to join all the digital dots together if they are to maximise the potential of their stores and deliver a truly seamless, memorable customer experience.
Recognizing this and looking towards solutions that unify all aspects of the fulfilment process and customer journey is the third step to consider.
The changes the retail industry has witnessed more recently (accelerated by the pandemic) are no different to periods of change seen in the past – they are simply the latest in a long line of retail transformations and disruptions.
While the store of yesteryear may have been resigned to the annals of retail history, today’s stores are enjoying somewhat of a renaissance, in large part due to the new technology available.
With retailers today needing to rethink traditionally held ideas around assets and operations, it is no longer simply a matter of digital Vs. physical. Critically, it’s about how a brand can leverage all its merchandise, all of its customer data and all of the channels at its disposal to deliver that truly remarkable, seamless customer experience.
Although the function of the store and the technology needed to operate it are fundamentally changed, today’s stores still have a key role to play in the retail narrative, and are still very much at the forefront of this latest retail revival.