It’s no secret that bricks & mortar retail is under siege. In the past five years there have been a record number of store closures across North America and Europe with no sign of recovery.
And it’s no wonder many retailers are looking for that silver bullet and no shortage of technology providers selling bullets.
Technology is neither the cause of retail’s downfall nor the silver bullet to save it. It’s no secret that customers want convenience. The ability to shop anywhere, anytime on any device. And the internet gives it to them. So let’s not blame technology.
For some retailers, the problem is quite simply the product. If not unique, it can easily fall into the commoditization trap. Online aggregators allow for easy product feature and pricing comparison. So unless a brand carries a luxury label or has meaningful differentiators, such as a proprietary component or spectacular personal service, chances are the brand will play the pricing game with the proverbial race to the bottom.
For others, the real-estate noose presents the problem. Mall based stores find themselves trapped in expensive leases with trickling traffic as “anchor” stores are shuttered and their dead space yet to be reimagined. With malls themselves becoming less the destination, bricks and mortar stores must offer a compelling reason for customers to visit and purchase in person versus more convenient online options.
Publicly traded legacy stores face additional problems compounded by the demands of quarterly reporting. Cost cutting has burdened these organizations often resulting in stores badly in need of a face-lift. The ability to enhance the customer experience with sexy digital technology such as Magic Mirror™ - that allows customer to visualize what outfits would look like on them (without the inconvenience of undressing) - is an unrealistic luxury for these stores in survival mode. And many other retailers have made a desperate reach for technology that they hope will increase in-store dwell time and lift overall receipts. But if the technology doesn’t link to an on-strategy, unmet customer need that their brand strategy can effectively deliver against then it’s just lipstick on the proverbial pig. So, again, let’s not blame technology.
One or more of these issues have bricks and mortar retailers scrambling to reinvent their stores to be more relevant and productive while at the same time, constantly updating and optimizing their ecommerce sites. Research shows that the most lucrative shoppers shop omni channel. However, few retailers can yet offset offline sales softness with online revenue resulting in lower sales and profits overall.
Interestingly, former pureplay online retailers,whose business models have revolutionized their industries such as Warby Parker, Casper and Everlane,continue to move into bricks & mortar. Warby Parker has opened high-street stores across Canada and the U.S. as has Casper and Everlane. Michael Preysman, founder and CEO of Everlane, swore for years that his online clothing company would never go into physical retail. Last December, I received an email announcing their first location in SOHO.
So, what is going on?
Well, the pendulum swings both ways–that’s what.
Customers have demonstrated their desire for the convenience, massive selection and competitive pricing of online shopping. However, at only 15 percent of all retail sales, online retailers now recognize that their customers want more and that experiences are also an integral component of shopping for the majority, 85 percent, of customers. So, they are investing to create a physical connection with their customers. This physical expansion is an experiential layer that solidifies their base.
The question facing all bricks and mortar retailers is what purpose should the ideal physical space fulfill and what role can technology play to support the brand purpose and ultimately the stickiness between customer and retail brand?
Successful retailers harness in-store and online technology to support an unmet need that their brand is strategically best positioned to address. Such as eliminating checkout lines with Amazon Go. Or, the True Fit ® size guide, with sizing inputs from other brands,that reduces online returns. Or Nordstrom’s, best known for their personal customer service,scaling online using BEVYUP ®
Customers also want digital communications with content relevant to them. Artificial Intelligence combined with Machine Learning is fast becoming a game-changer in influencing customer behaviour and customer satisfaction in an omni channel environment.
Savvy retailers understand their customer intimately and the role their brand plays in his/her life. A tight partnership between the Chief Brand and Technology Officer is fundamentally important to assessing whether technology is the right investment for a brand and how that technology should be employed to enhance brand equity and customer stickiness going forward.
At the end of the day, as is always the case, the customer will be the ultimate judge.