Retail was one of the biggest business topics of 2017 due to the drama of store closings, bankruptcies, and struggles of the once-mighty retail icons – and with the liquidation of Toys-R-Us, 2018 looks to be no different. But for those in the industry the drama is a way of life- retail is always in a state of change. The merchandise, technology, formats, competitive landscape, and ultimately the shopper are in constant flux. Retailers have always had to fend off attacks to their business like Wonder Woman deflects bullets. And for traditional retailers, the last 15 years have been the equivalent of an alien invasion- accelerating the pace of change.
Amazon and the so-called pure-play ecommerce retail invaders have grown disproportionately, stealing share from physical retailers and forcing them to respond in kind. Investment in ecommerce strategies, omnichannel initiatives, and IT have taken precedence over investments in physical stores. Meanwhile, anxiety-provoking headlines persist as retailers close stores to bolster their balance sheets, and many chains are flirting with mergers and acquisitions, and experimenting with new partnerships to prepare for what’s next. This leads to one significant consequence- existing physical retail experiences are in a state of neglect!
Delighting both shoppers and investors requires looking forward while watching your back. Growth means being reactive AND proactive simultaneously. When it comes to physical retail investment on experience, shoppers are not seeing much on the proactive side. Nearly a third of all U.S.-based shoppers (31%) view shopping in stores as a chore, while 17% say they’d rather wash dishes than venture into a store, according to a study by Capgemini. One has to ask how much missed opportunity comes from retail dissatisfaction- tired, uninspired, underwhelming experiences that shoppers choose to avoid.
The convenience and selection offered by online retail is compelling, but the demise of physical retail has the specter of a self-fulfilling prophecy. In order to kick-start growth, retailers must “get real” and embrace the store as an under-leveraged asset. Similar to autonomous cars, significant retail change from digital innovation will eventually scale, but breakthroughs like Amazon’s (and now Walmart’s and Kroger’s) elimination of cashiers, and Lowe’s robot sales assistants are years away. Current stores will technologically evolve, but their retail design has to be kept current and aligned with shopper trends to be continuously relevant.
Getting real requires identifying opportunities to out flank and outpace competitors by creating physical experiences that stay fresh while being easier and more exciting to shop. Retail getting real means cutting through the theory, speculation, and hyperbole to design innovative experiences that perform today. Integrating technology is a necessity, but few retailers are investing in reimagined store designs, and those who are tend to be updating finishes more than upgrading experiences.
Design today must be more than contemporized finishes and new signs. Online shopping has significantly changed the role of design in stores because it has changed the business challenges. These range from needing to inspire new reasons to visit to accommodating new operational requirements for ecommerce returns and BOPIS. And the way merchandise is presented, and even the purpose of sales associates, suffers from legacy approaches no longer aligned with shopper needs. According to a 2017 study by Zebra Technologies, at least half of all shoppers say they believe they can get better product information via their smartphones than from store associates. Retail environments must respond to these types of insights with designs that address new behaviors and preferences, not just continue to present merchandise and run promotions.
To start, a common mistake seen in current store design is the dissonance that occurs between a retailer’s visual and verbal experience online and their physical stores. Merchandising and storytelling that occurs online must reflect the store and vice versa. Store design can creatively bridge the gap. New design approaches mean initiatives and campaigns can be brought to life effectively through store fixturing and easy-to-execute display concepts that employ the third dimension not available on a screen- maximizing their effectiveness. Also, data and insight driven store planning that embraces changing shopper behavior, like new missions that are not predicated on traditional trip drivers, can create better adjacencies and identify which departments and categories to highlight.
The power of “new” also should not be underestimated. For shoppers newer isn’t just better, it’s an expectation. Not providing a continuous stream of newness in the experience for shoppers heightens FoMO – fear of missing out – which may drive them to more up-to-date retailers. The opportunity cost of doing nothing to redesign an innovative retail experience is significant, but hard to quantify. Ecommerce sites that change with every visit have upped the ante, and so traditional remodel cycles for retail spaces- what to change and why- have to be strategically overhauled in response.
Retailers compete in a world where there are no longer rules-of-thumb or universal truths. The retail time machine is alive and well. Step into a Hobby Lobby and it’s 1979, then go next door to Target and it’s 2020. The fact that both are successful illustrates that knowing your shopper is more important than banking on technology as the answer.
At ChangeUp we believe in reinvesting in core retail tenets and not expecting the latest technology to be a substitute for being a great retailer. As much as stores today are touted as “experiences” they still have to sell merchandise- that is at the center of “getting real”. It’s best to begin by clarifying the why, identifying the who, designing the what, and excelling at the how- in essence, being an outstanding merchant who understands their customer.