PHYSICAL RETAIL: CRISIS OR IDENTITY-CRISIS?

We hear about another one almost every day: another major retailer closing stores or going bankrupt.  We see constant updates that Retail as we know it is over and that shopping is moving online. We have glimpses of technology completely reinventing the retail experience. We already see some major changes within large retail chains as technology is implemented.

However, based on what we’ve learned at MMR Research with our retail clients, consumers don’t seem to be on board with this new vision of retail just yet. While shopping online is on the increase, it is still far below in-store levels.  

Online is Augmenting, Not Replacing, In-Store

Recently, we confirmed that nearly all women are in a retail store (mass merchandise, drug store, grocery store, etc.) every week. In fact, the majority are in more than one retail store each week. While at least half are also shopping online weekly, online shopping is not replacing in-store shopping, but is happening in addition to store visits. In fact, only one percent shopped online but not in a store. Shoppers’ priorities when they are in stores depend on the category, but always at the top of the list are good customer service and a pleasant experience. When it comes to apparel and home goods, customers like to browse and they like to shop with friends but what makes a critical difference is the ability to return items easily in the store. For groceries, the experience can be just as important as the quality of the products. Our own research showed us that shoppers are not yet particularly interested in new in-store payment or shopping assistance technologies. Despite much noise in the business press, shoppers do not seem ready for a more “online-like” experience in stores.

Planning for the Near-Term Future

So, how do retailers best anticipate the changes to come?  First, retailers need to know their customer base. Know why and how they shop in your stores, in your competitors’ stores, and online in your category. Armed with this knowledge, retailers can strive to augment the in-store experience so that the value of that in-person interaction shines.

Additionally, retailers should strive to capitalize on human interactivity moments so that shopping inside the store offers advantages that cannot be replicated online. Online shopping can be more convenient and less expensive, but there are times that the human touch makes all the difference and a positive in-store experience can be a game-changer. Likewise, technology can help augment the in-store experience but should not be the focus of the experience. Since most of us can’t go 10 minutes without checking our smartphones these days, integrating mobile apps into the shopping environment is a natural extension of shopping behavior. However, relying on mobile apps or other technology for customer service is a slippery slope with customer service being such a key factor in retail choice and satisfaction.

Personal Experience: The Importance of “Human”

As a researcher, I have more perspective on the consumer experience than some, but I am first and foremost a person – and a parent as well. My daughter recently pointed out a bicycle that she wanted while we were out shopping. I decided to buy it for her birthday, so I snuck a picture of the bike’s product card. A few days later, I went to order it online so she wouldn’t see it, but it was out of stock. I called the stores closest to me, and they were also out of stock. One employee directed me to a nearby store where he had seen one left that was tucked away in the warehouse. When I called the recommended location, the employee who answered the phone checked the system and told me that there were none in stock. I mentioned that his colleague had recently been to that store and had seen one in the back. He agreed to search the warehouse and called me back to tell me that he had found it. By then it was just one day before her birthday, and he went the extra mile to make sure it was put together and ready to be picked up the next day even though the store policy was two days. He even called me again to let me know when it was ready to be picked up. That employee made my day – and my daughter’s. When it’s time to buy my bicycle to go riding with her, I won’t even bother to go online.  I’m going directly to the store with the employee who was so helpful.

Find the “WHY”

There is a reason WHY a customer walks into a retail store rather than shopping online. There may be one big reason (such as my example of the bicycle being out of stock online) or there may be several factors coming together. Retailers need to discover and understand those reasons, and then make sure to offer an in-person experience that aligns with them. Retailers also need to enhance the in-person experience wherever possible. When a customer walks away from a store thinking “that made my day,” there is no doubt that that retailer can thrive despite any new shopping channels or technologies vying for shoppers’ attention.