Winning retailers focus on convenience, consistency, customized value
Toys R’ Us is an example of a “category killer” that did not make the cut. Sears will enviably fall by the death of a thousand short cuts that diminished its relevancy for today’s customers. However, the big “retail apocalypse” has not happened as predicted. America’s top retail chains will in fact add 5,000+ stores this year. Quite simply, those retailers who lived in the past died. Those who thrive are evolving on a very simple premise: increase relevance for today’s customer.
Why this is important: Bricks and mortar retail is not dead. It still accounts for 85% of sales. In order to thrive, today’s retailers must evolve from a product centric past to a future focused on increasing relevance by providing greater value add customers.
Bricks and Mortar isn’t dead, it’s evolving in a “phygital” world
What many seem to forget is that customers still purchase 85% of products are via a journey intersecting with a store related experience. Then why are so many malls struggling to drive traffic? Why are some of the previously successful retailers now closing stores?
Old dogs and retailers can learn new tricks and strategies. Case in point, Walmart. While Walmart still does business out of thousands of stores, they now realize that today’s consumers flow between digital and physical in their shopping journey. Those retailers that are thriving are evolving a combination blend of “phygital” strategies that make shopping seamless for customers, whenever and where ever they choose to shop.
Rising customer expectations for relevance
Today’s global ecommerce retailers can literally offer consumers everything. Consumers are not lacking choice when it comes to products, or places to purchase them. However, customers are expecting more than product, or even free delivery. They are demanding more value in ways that are relevant to them.
Customers are increasingly “situational shoppers”. When pressed for time they might chose online, or click and collect. When they want to understand how products fit their needs and lifestyle, they head to stores for hands on experience. However, as a function of their digital experiences, customers are now accustomed to new levels of convenience, consistency and customization. They expect their digital experience to seamlessly transfer across to physical stores, and back to digital when they leave the store. In short, customers expect retailers to connect with them, on their terms, and to make it easy.
Three critical areas of Relevancy retailers must solve in order to thrive
The single most critical aspect of today’s retail success requires abandoning the historical legacy of focusing on the point of the “sales transaction”. For today’s customer it is about their end-to-end experience, not where they make a particular purchase. Retailers must solve for three critical dimensions of increasing relevancy in today’s “phygital” environment:
Convenience – Growing importance of the “micro trip”
Online is not convenient if you have to wait for the delivery truck, or worry about “porch pirates”. The fastest growing segment of “phygital” retail today is BOPIS, or click and collect. Customers are increasingly making “micro trips” that take less than 5 minutes for one or two items, which are increasingly purchased online.
The smart retailers are rapidly evolving infrastructure to merge ecommerce and physical shopping to make BOPIS faster and more convenient. They are also transforming stores to be functionally relevant and efficient by adding drive through pickup, kiosks, and secure lockers. Relevancy means letting me choose how I want to engage today.
Consistency – Digital DNA that makes seamless possible and relevant
Historically, retailers focused on selling products, not customer relationships. Today’s customers looking for “seamless” journeys, expecting that their experience will transfer from digital to store, and back online. They also expect the experience to be consistent. If they start a shopping list online, they expect it to follow them to the store.
To achieve individual consistency requires retailers must literally develop the digital DNA of individual customers. They need to know who is shopping where when. They need to have systems that keep track of customer profiles, orders and previous purchases regardless of device, or where the customer engages. Relevancy means knowing who I am, remembering my history and making it very consistent across all platforms.
Customization – Customized, personal experience differentiates
Traditional bricks and mortar retailers must continue to evolve customer experience in store. Nike and REI stores are great examples of engaging customers in their lifestyle, enabling them to tryout actual products first hand. Nike is also a great example of letting customers literally design and customize their shoes and gear online.
Relevancy is many things, but is starts with knowing the customer’s preferences and tracking them. It also involves providing more than just features. Even the smallest retailers can employ rich content that goes beyond features to show how customers use the products and why the benefits are relevant. Don’t just show me what is on the shelf – help me customize solutions that fit my lifestyle.
Survival requires creating relevancy that earns customer relationships
Customers can buy products anywhere. The winning retailers are investing in the dynamics of creating experiences that are relevant, and engagement that transcends products. The future formula for winning in a phygital world is convenience, consistency and customized.