While the climate of brick-and-mortar retail stores might appear dismal given the continuing collapse of major chains (such as Toys R Us and Sears), the fact is that stores and businesses continue to be opened every day. However, the future of retail seems clearly dependent on retailers forging a new business model that includes an online experience. Downsizing with a streamlined curation of products augmented by a digital shopping experience may save the brick-and-mortar environment and make it continue to thrive.
The coffee behemoth Starbucks has already adopted this approach by removing nearly 200 products from its stores, while Target and Kohl’s have additionally reduced their in-store inventory, specifically by downsizing their in-store product number in order to showcase popular items, while at the same time increasing their selections online. This approach has resulted in not only an increase in point of sale payment processing for retail outlets, but also in online credit card processing.
Fighting Brand Confusion
The saturation of the retail market by companies selling nearly identical products creates an air of brand confusion for the consumer, as well as uncertainty in regards to exactly which product to purchase (when confronted with twenty different versions of the same thing, shoppers tend to freeze, unable to make a decision). Stocking fewer items which have been curated in order to create a shopping experience tailored to your specific shopper will not only remedy this problem by cutting through the deafening noise inherent to this retail landscape, but will also reduce operating costs. Competing with Amazon shouldn’t be your job; instead, you need to curate a collection of products that appeal specifically to your target customer.
Before reconsidering your product offerings, you need to have a clear understanding of your brand identity and your target market. If your customer is a hip, urban twenty-something with an interest in vintage stereophonics, then anything unrelated probably shouldn’t be on your shelves. Secondly, an evaluation of recent sales will assist greatly. Once you have a clear overview of your weakest and strongest selling items, it will aid in streamlining your inventory. Additionally, review those products which sit in the middle. Are there other retailers within your area that sell the exact same things? If so, this competition may be lowering the percentage of your return (or perhaps you’d care to feature these items solely in your e-commerce store, augmenting your target shopper’s options and experience in the process).
Speaking to e-commerce and its pairing with the retail experience, Aseem Chandra, Vice President of Adobe Experience Manager and Adobe Target, states:
"With shoppers' expectations rising, the proliferation of data and new touch points, and increasing competitive pressures, retailers must focus on delivering the most relevant customer experiences possible in order to succeed . . . It is no easy feat to deliver engaging content and powerful personalization at scale without the right tools and technology (but) by incorporating artificial intelligence and machine learning technologies, retailers can automate exceptional experiences for each individual consumer across every interaction."
In layman’s terms, in the age of mobile devices, the future of physical retail lies not only in curating a streamlined, targeted inventory, but also in providing your brick-and-mortar customer with an augmented digital experience customized to them. While shoppers tend to view online transactions as relatively hassle-free (except for making returns), they also still desire the tactile immediacy of physical retail shopping. This means, it’s time for you the retailer to bridge the gap.
Enhancing the Shopping Experience
Envision a brick-and-mortar store in which the moment a customer enters they are digitally greeted on their mobile device with offers tailored specifically to them. This retail store would allow the shopper to easily access product data via the store’s proprietary app as it pertains both to physical and online inventory. This environment would be augmented with AI allowing the staff to know shoppers by name and to assist them (using collected data profiles) in efficiently providing exactly what a patron may desire. Further, the shopper is encouraged to share their purchases on social media platforms in order to receive a store incentive for future purchases, while their online contacts are encouraged to visit the physical or online store to receive a limited-time discount. Savvy retailers have already adopted this “future” store in order to drive sales in both their in-store and online environments.
The tactile experience of shopping in the physical realm shouldn't be discounted, regardless of the continued rise in ecommerce. Innovations in pairing the two may be the key in not only increasing profit margins for both a company's brick-and-mortar and online entities, but also in creating an entirely new and engaging shopping experience.
Says Michael Klein, Director of Industry Strategy for Retail at Adobe, "This type of personalization continues to be the Holy Grail in retail - consumers expect highly personalized experiences and brands must address this. Automating personalized experiences, in-store and online, with machine learning and AI will benefit retailers and consumers.”
Nordstrom is already utilizing a similar concept, which combines social data and merges it with its own in-house program, in order to create the discussed omnichannel shopping experience.
While retail is changing, remember that (according to the U.S. Census Bureau) only 7.8 percent of the total retail sales in the first quarter of 2016 were attributed to e-commerce - meaning that 92.2 percent of total retail came from brick-and-mortar stores. The percentage of online sales has continued to grow, but brick-and-mortar retail still remains vital and is nowhere near death. In fact, with the application of intelligent downsizing, customized product curation and a tailored omnichannel shopping experience, savvy retailers can look forward to a new and healthy lease on life for years to come.