Retail
is changing. How consumers research products, shop and buy
are changing. Some of this is due to
mobile shopping, some is due to consumers’ ready access to product information
online and some is simply due to some retailers cutting back staff – forcing
consumers to do their own product information gathering. And shoppers are becoming better informed –
according to a 2012 Motorola Holiday Shopping Study, 61% of retail store
managers surveyed said they believe that shoppers are better connected to
product information than their in-store associates.
Given this changing retail world, a
question retailers need to answer is: do
you have a strategy and plan for this evolving marketplace and the experience
you deliver to your shoppers in store and online?
Mobile
shopping is growing
– maybe not as fast as some predicted, but it is still growing at a healthy
pace. In 2012, according to eMarketer,
$25 billion in purchases were made on phones and tablets – up 81% vs.
2011. While mobile sales were just 11%
of total ecommerce sales, eMarketer predicts this will reach $87 billion by
2016. According to a recent study from
Adobe Systems, 55% of tablet owners use the device for buying products vs. just
28% of smartphone users. And while, more
was spent on tables ($13.9B) vs. phones ($9.9B), shopping on tablets was more
likely to be done at home. According to
a 2012 Viacom study, only 36% of tablet owners use their device when shopping
in store.
The use of tablets and smartphones
as shopping information and purchase devices will continue to evolve and
reshape retail as both manufacturers and retailers develop content, apps and
better ecommerce tools. According to the
2013, Shop.org/Forrester Research State of Retailing Online survey, 51% of the
retailers surveyed, stated their top priority for 2013 is site optimization,
including checkout optimization, user experience, and product detail page
enhancements. Additionally, 43% of
retailers surveyed stated that mobile and tablets are among their top three
priorities for 2013.
Different
Brick and Mortar retail strategies are evolving – Retailers need to react to this
evolving world. While ecommerce only
reach 5.2% of total retail sales in 2012 (source: US Census Bureau), it is
growing at 17.7% per year. Many
retailers have concerns about “Showrooming”, where consumers shop at retail and
buy online to save money. Given the
rapid growth of ecommerce, retailers appear to be adopting one of four
strategies to win shoppers and their purchases in their traditional brick and
mortar stores.
Multi-Channel Retailing – many key retailers, especially
the big box stores, are rapidly working to create content-heavy marketing
experiences that integrate consumer shopping touch points across stores,
retailer websites, social media and email.
Macy’s CEO, Terry Lundgren, refers to their efforts as “Omni-channel” –
combining multichannel marketing with new capabilities to fulfill purchases across
their system from both fulfillment centers and fulfillment stores.
Multi-channel retailers are working
to make sure that in-store shoppers have an easy shopping experience with
ready-access to helpful and knowledgeable sales associates. One retailer in particular working to improve
in this area is Best Buy. Best Buy is a
frequent stop for consumer showrooming before buying online. They are at risk of losing their business if
they cannot solve this problem. Best Buy
is working to confront showrooming by creating better in-store experiences that
will convert shoppers to buyers. As Best
Buy CEO Hubery Joly put it recently: “Once customers are in our stores, they’re
ours to lose”.
The key to the multi-channel retail
strategy is to offer the right combination of helpful product information, product
availability and a good price for the shopper who is ready to buy now. In stores, this means knowledgeable store
associates who can help the shopper find the right products. Online, it means product selection tools
including product reviews, product comparisons, plus upselling and cross
selling recommendations to boost total sales.
Experiential Retailing – These retailers have also chosen
to give shoppers a great shopping experience, but the path to loyalty has less
to do with product information and availability as it does with the experience
itself. These are typically high service
retailers that stand out in their category by creating unique and desirable
shopping experiences that leaves the shopper wanting to shop in that store
again. While most retailers are looking
to enhance their retail experience, there are those who have chosen to create a
real difference. In grocery retailing,
smaller retailers like Stew Leonards (CT) and Jungle Jim’s (OH) have created
highly unique experiences. But bigger
chains such as Wegmans, Loblaws, and Publix stand out in their experience and
service concepts. Specialty stores such
as Starbucks, Sephora, Build-A-Bear and Bass Pro Shops all provide truly unique
experiences. Petco uses puppies and the
opportunity to interact with them in store to engage shoppers and create
emotional connections.
The challenge and opportunity for
retailers choosing this strategy to identify the key experience activities that
combined with store merchandising practices will help them stand apart and
engage their shoppers.
Lowest Price – This strategy focuses on the
price-driven shopper. These retailers’
business plan, consumer communication and merchandising are all focused on
offering goods at a low price. The level
of sophistication varies from the highly integrated multi-channel marketing
efforts of Walmart to the much simpler approach of Dollar Stores. DSW, Stein Mart and Harbor Freight Tools are
examples of this strategy. This is not a
high-service model. Staffing is kept low
and shoppers often have to discover products and product information on their
own. Shoppers are willing to shop there
to save money – trading in service and experience for savings. The key to this strategy is to consistently
deliver great prices. These retailers
will successfully compete with other business models by continuing to offer low
prices every day on popular products.
Walmart got in trouble and started
losing shoppers when they redesigned their stores and tried to offer upscale
fashions in addition to everyday low prices.
They cut back many departments shopped by men to add space to categories
that women would shop. The result is
they eliminated thousands of low price SKU’s across many categories – and lost
the shoppers who came to Walmart to buy them.
Walmart has since changed their strategy and has been adding back many
of the categories and SKU’s they previously dropped. A renewed focus on offering and communicating
low prices across key category has helped them regain shoppers and sales.
Do nothing new – The last group of retailers is
noted more for inaction in this new world rather than responding to the
changes. They continue to use the same
go-to-market strategies that they have for years rather than choosing one of
the three strategies above. They are
losing shoppers to the tech-savvy multi-channel retailers, the much more
engaging experiential retailers or the value of the lowest price
retailers. Stuck in the middle without a
clear reason for shoppers to go there, their only strategic advantage is often
the convenience of a particular store location.
Getting lost in the middle of these winning strategies, these retailers
will slowly erode sales and market share.
Examples include Sears/Kmart, Sports Authority, Barnes & Noble and
The Gap.
Refine
Your Experience
Which of
these is the best strategy to win in the evolving world of retailing? The best strategy is the one that
differentiates a retailer and attracts and keeps loyal shoppers. The first three strategies all offer this
opportunity. The winning opportunity is
to embrace one strategy and stick to it to create the shopper experience that
keeps your shoppers coming back to your store.
GrowthSpring Group is a marketing strategy, market research, and
innovation firm focused on accelerating your sales and profit growth. We help
you identify new business growth insights & opportunities and execute
winning strategies & plans. www.GrowthSpringGroup.com
