An Analyst’s Perspective: Retail’s Big Squeeze…The Need for Store Transformation Reaches Critical
The store as it exists today is designed to support a shopping process that is obsolete. Don’t believe me? Hear me out.
Stores are designed to keep shoppers in them as long as possible in order to maximize the opportunity to sell to them. Retailers and academics alike have done plenty of research that shows that the longer a consumer stays in a store, the more she’ll buy. That was fine when stores were really the only place to buy things, but now it’s not. What was once okay is now an inconvenience. Consumers can avoid the “stay long / buy more” trap by simply buying online.
At the same time, even when consumers do shop in stores, digital channels have taken over more and more of the path to purchase. Retailers used to anticipate that shoppers would walk into a store as a blank slate, to be shaped by the combination of store design, product assortment and display, and helpful employees. But over time, these have all been eroded, in part by online, and in part by retailers themselves as they sought to cut labor in stores and replace them with more self-service.
Redefining the Role of the Store
Where the store might once have played a role in everything from triggering awareness of a need, to educating a consumer about a category, to selecting the right product within a category, to purchase and even post-sale service and advocacy, many of these steps have been replaced by online content. Blogs, social channels, digital advertising, online ratings and reviews, and even the online information that retailers and brands provide themselves have all chipped away at the value that the store contributes to the shopper journey, shrinking the store’s role down to the transaction only.
After a holiday season that pummeled stores, and that after a year of store struggles, retailers have a very basic question they must answer about their stores: what role should the store play in the shopping process?
If retailers truly believe that the store’s future role should be relegated to supporting only the purchase transaction and very little else, then the future of retail is bleak: round after round of store closings, contraction of the store footprint itself, and the continued relentless shift of everything inspirational and experiential to online, to the point where stores become collection points with a sprinkling of impulse items.
An Omni-channel Paradox
The irony is, consumers themselves, for all that they are driving this shift, don’t necessarily seek its outcome. Millennials and Gen Z both have expressed a desire for in-person experiences and interest in a continued, expanded role for stores in their shopping journeys. It’s just that stores have not kept up with their expectations – not by a long shot.
So the alternative is to re-imagine the store to support a modern shopping journey. That means rethinking retailers’ assumptions about why consumers come to stores, and redesigning the store experience to support not only this shift in behavior, but also to play a more seamless role in a shopping experience that only very rarely will start and begin in a store with no digital interactions whatsoever.
RELATED: STORE READINESS ASSESSMENT WEBINAR
While it seems like more and more retailers are getting on board with the idea that stores must be more than “tweaked” and that “investing in digital in stores” is not enough, I have not really seen it sink in how much change is headed towards most retailers’ stores. And worse, many don’t seem to understand where to start in even how to think about transforming their stores, let alone actually undertaking the journey.
Store Readiness Assessment: Help with Transformation
That’s where we come in. RSR has partnered with Aptos to create a Store Omni-Channel Health Check. It’s an assessment of how well your stores support omni-channel shopping processes today, and provides a glimpse into areas where the alignment is poor, along with pragmatic suggestions for things you can be doing to transform your stores.
RSR has been providing benchmark research to the industry for ten years, but most of it has focused on strategy and technology alignment. This Omni-Channel Health Check focuses on tactics – things you could do “tomorrow” (assuming you could roll it out to stores that quickly). Our objective, as always, is to help retailers to navigate the road to transformation ahead of them. For stores, the issues seem to get bigger and deeper with every monthly same store sales report – and it’s time to do something about that.
If this sounds like something you need, whether for your own peace of mind or to fight the internal fight for resources to focus on stores, take the assessment now – we’ll have an aggregated report out in April, and a set of personalized results for you in about 2 weeks from when you take the survey. And if you have any questions, don’t hesitate to let me know.
Editor’s Note: Nikki Baird is Managing Partner at Retail Systems Research, an industry market intelligence firm specializing in the impact of technology on the extended retail industry. She focuses on trends impacting the consumer-retailer relationship, along with their supply chain and marketing implications.