Has Your Store Strategy Kept up with Your Omnichannel Strategy?
We are well into 2016 and the new year has brought a host of highly publicized store closures from Macy’s to Walmart, and there may well be other announcements coming. The continued demise of Sears, and bankruptcy talk swirling around The Sports Authority which could result in the closure of nearly 200 of it’s 450 stores, only add to the sense of gloom. Take a look at your retail stock holdings (if you dare!) and you’ll see most of them have lost 30% or greater of their value since the late Fall. The volatility of the sector is as great as we’ve ever seen.
There are many forces at play that are continuing to drive “seismic shifts” in the retail marketplace, but the greatest continues to be the journey from a traditional brick and mortar retail model, to a seamless omnichannel model. To this end, we believe many retailers should double down the analysis of one of their largest assets: the store. How these assets are used to gain competitive advantage brings to mind a series of strategic questions we believe retailers should be asking:
1. The store itself.How many stores should we have? What is the role of the store? Retailers have been painfully reminded that the customer migration to e-commerce quickly exposes poor performing stores, if it wasn’t evident already. Many retailers simply have overreached and have too many stores, and we expect more closure announcements throughout 2016. In addition to rationalizing the store base, we also believe the role of the store must be redefined within the context of the brand. Should the store be simply a showroom with inventory shipped to customers? Check out Argos in the U.K. for a great example. Or should certain stores within the portfolio be an experiential showplace where customers may want to linger, shop and experience the brand? Check out the Starbucks Roastery in Seattle. A last point: remember your not-so-secret weapon, your people. Amazon is certainly the colossus that is creating pain for all brick and mortar retail. However even with Amazon Prime free shipping or same day 1-hour delivery, retailers with brick & mortar locations can offer something Amazon can’t, and that is great personalized service. The well-trained and knowledgeable associate can be the differentiator that keeps your customers engaged and coming back.
2. Data. What data do you have, and how are you using it? How can you gather meaningful data on your customers’ shopping behaviors and turn this into higher conversion rates both online and in store? Some retailers are innovating in this area with RFID and “smart” mirrors and fitting rooms, but the pace of innovation and investment must accelerate. In-store analytic technologies exist that can provide shopper path, engagement, traffic and conversion data which are very powerful tools in the hands of strong merchant, stores, and e-commerce teams. This should be a key focus for any retailer attempting to increase the ROI of their store base.
3. Minding the store itself. Is your omnichannel experience really seamless? How well do your stores perform on the basics? We continually see execution failures as one of the greatest problems in retail, and it only gets magnified in an omnichannel environment. Promises get unfulfilled when customers can’t locate the Buy Online Pick Up in Store desk due to poor or no in store communication, limited staff availability, or merchandise which cannot be located or is out of stock. Spend a day in your customer’s shoes – you may well be shocked at what you find.
It’s time for retailers to double down for an intense review of their store base to determine how these assets can support their omnichannel strategy, versus simply becoming tomorrow’s store closure headline.