While online-centric millennials receive the majority of the blame for the demise of brick-and-mortar retailers,...
one expert casts more of it on retailers who, for decades, ignored the evolving consumer. That being said, technology strategies can help stop the bleeding.
Steven Dennis, retail consultant and president of SageBerry Consulting, spoke at the recent MITX eCommerce Summit and outlined how to improve retail sales in seven steps.
Traditional retailers don't have a catch-all approach for keeping up with the growing influx of e-commerce competitors that are engaging the mobile customer, Dennis said, noting that they need to turn their physical location from a potential disadvantage to an advantage over online retailers.
"Brick-and-mortar retail isn't dead," Dennis said, to the audience of nearly 300 at the e-commerce summit. "But boring retail is dead."
Step 1: Harmonize
While Dennis' seven steps can apply to e-commerce and nontraditional retailers, the emphasis is on how traditional stores that are seeing slimmer margins can evolve with the times.
When figuring out how to improve retail sales, creating a harmony of online and offline is a good place to start.
"Retailers that started in the physical channel and bolted on an e-commerce business now have these silos of data," Dennis said. "They've focused on trying to be everywhere rather than being in the spots in the customer journey that are the most important."
Dennis cited Best Buy as an example of a traditional retailer that adapted and harmonized its physical retail components with its online presence.
"Three or four years ago, people thought Best Buy would be the next to go out of business," Dennis said. "Best Buy realized that stores can be real assets if you figure out how to operate them and have it work in harmony with the digital operations."
By aligning its showcase rooms in its stores with its online catalogue, Best Buy achieved the synergy Dennis outlined.
Step 2: Digitize
For traditional retailers, one of the more obvious steps to improve retail sales is to interact and recognize where your customers are -- and a substantial number of them are online.
According to the 2018 TechTarget IT Priorities survey, more than 35% of respondents associated digital transformation with accessing new customers, while more than 58% of respondents associated it with improving customer experience and loyalty.
"Many companies are familiar with the idea of digital first and being digital to the core and thinking about your products from a digital perspective," Dennis said, "because that's how your customers are thinking about it."
Step 3: Personalize
Perhaps the biggest shift in the retail industry has been the growing amount of data and information available on potential customers. Those retailers that didn't use that data to their advantage were left behind.
While mass mailing of catalogues and coupons used to be the method of choice, newer brands have started to treat customers as individuals and market to them directly rather than delivering the same message to everyone.
"This reflects the idea that no customer wants to be average," Dennis said. "If you flash back just 10 years ago, brands were more in charge and customers didn't have as much power. That's obviously flipped, and most customers do their own research and get anything they want at any time."
These mobile and e-commerce capabilities eliminated the need for a customer to be beholden to a physical location, and purchasing can now be done on a whim. Without those shackles, brands tied to a physical location are losing out on mobile-based customers.
"For traditional retailers, it's still seen as too easy to do the mass marketing, one-size-fits-all approach," Dennis said. "It's about adopting a mantra of treating different customers differently."
Step 4: Localize
The arrival of the smartphone fundamentally changed how consumers shop, research and interact with companies. The ability to shop around and find the best price or search for the highest quality item are newer experiences. Companies now need to find the customers interested in purchasing rather than the customer needing to find the store.
Steven Dennispresident, SageBerry Consulting
"This is the promise of CRMs and personalization," Dennis said. "The mobile device allows companies to be much closer to the customer at the moment of engagement."
The growth of mobile shopping continues to rise, according to data from Google. Roughly two-thirds of smartphone users use their phones to research something they just saw on an advertisement, while 'near me' searches have doubled in the last year. This mobile research extends into the stores as well; 82% of smartphone users consult their phone while in a store, according to Google.
Step 5: Socialize
In addition to smartphones, the growth of social networks and peer-to-peer review sites has been a disruptor for how businesses interact with consumers. When figuring out how to improve retail sales, companies have to consider word of mouth more than any time before, as word of mouth can quickly become the word of the web.
"Sites like TripAdvisor or Yelp are becoming a habit, and it turns on its head how marketing works and what companies can control," Dennis said.
Step 6: Amplify
As consumers are bombarded with advertisements and information more than any time before, differentiation can be a useful tool for improving retail sales.
"On the web or at the mall or a drive down the street, a lot of the stuff looks the same," Dennis said. "There are similar storefronts, presentations and websites. The idea of being amplified is, how do you become unique or relevant and be able to do that at scale? It's not a new idea, but the reality of noise that exists and the competition out there -- there's a premium on being better at this."
Dennis outlined several examples of retailers differentiating themselves, whether it is brick-and-mortar retailers equipping reps in stores with more digital capabilities or adding services like spa treatments or wine tastings to grow foot traffic.
On the other side of the coin, e-commerce retailers are entering the physical retail space, most obviously with Amazon's Go stores, but also with other e-commerce-based retailers like Warby Parker adding physical locations.
"The pure play of e-commerce models don't work without some sort of physical component," Dennis said.
Step 7: Radicalize
The last step physical retailers need to think about when deciding how to improve retail sales is throwing caution to the wind and embracing change.
For some retail industries, the change in technology upended their business models, and no amount of radicalization could have saved their stores.
"Once you could download books and music, that's clearly a problem for stores like Borders," Dennis said. "It happened so quickly, and because of the massive investment in inventory and physical stores, it was a hard thing to deal with."
But consumers can't digitally download groceries, clothing, entertainment equipment and luxury items -- yet. These products need to physically arrive, and whether that's through the mail or an in-store pickup shouldn't bother a prepared retailer.
"Most retailers were afraid to change," Dennis said. "They were afraid to take risks and innovate. They had these mental barriers on what was worth doing and watched the last 20 years happen to them."