Physical retail locations vital for true shopper engagement

by | Dec 13, 2017

While many traditional retail stores are closing physical retail locations, such as Kmart, Sears, JCPenney, Macys, that doesn’t mean the retail store is dying by any stretch of the imagination. In fact, there are 4,080 more retail stores opening than are closing this year. Take that, Warren Buffett!

According to the report, “Debunking the Retail Apocalypse,” for every chain with a net closing of stores, 2.7 chains show a net increase in physical retail locations in 2017. Further, just 16 chains account for 48.5 percent of the total number of stores closing, while five of the 16 — RadioShack, Payless ShoeSource, Rue21, Ascena Retail, and Sears Holding — were 28.1 percent of the total closings.

Meanwhile, more online/e-commerce retailers are opening stores and pop-ups, such as Bonobos, Warby Parker, Frank & Oak, and of course, Amazon.

The online giant has not only opened a retail grocery store in Seattle and taken over hundreds of Whole Foods stores, they’ve now opened their sixth brick-and-mortar store, this time in NYC. It works like both a showroom and a regular store, allowing shoppers to order books online to be delivered to their homes, or buy in-store books via the Amazon app (Prime members get to pay online prices, while non-members pay full retail).

Amazon isn’t the only one breaking new ground. The big box stores — primarily Target, Walmart, and Best Buy — are offering new services like buy online pickup in store (BOPIS), curbside delivery, and in some cases, even home delivery. Smaller grocery stores like Kroger have begun offering home delivery as well as curbside pickup, with an additional fee, of course. Walmart has also begun offering discounts to shoppers if they use BOPIS as well.

Brick-and-mortar stores and other physical retail locations (such as pop-up stores) are now and will continue to be a vital component of retail for the foreseeable future. Remember, at this point e-commerce sales still only account for around 12 percent of retail sales (and growing). The majority of sales of goods in the U.S. still happen in retail stores and studies have shown that the demographic with the largest spending power right now, the Millennial generation, still love shopping in stores.

Can you add more value to existing stores?

As I said a few months ago, retailers that are opening more stores are focused on value delivery to consumers,” often in the form of low-price goods. Not cheap goods, per say – Bonobos, Warby Parker, Frank & Oak, and Amazon are focused on high quality for good value, not necessarily a low price.

In more and more cases, though, it’s not just about value, it’s about experience and shopper engagement. It means providing top notch support and additional services to consumers. And by offering some of these services, you can extract some additional value from your stores. Here are a few things you could do to add value for each of your physical retail locations.

  • Offer home delivery. Supermarket chain Kroger has begun offering home delivery for a fee. Customers order online and their products are picked, bagged, and show up at their house four hours later. One article stated the cost is $11.95 for home delivery, so it may be a bit costly to do every time. But imagine how much parents with young children would appreciate not having to leave the house when a child is sick or they’re too busy.
  • Offer curbside pickup. The article also quoted a $4.95 for curbside pickup at Kroger. I can think of a lot of people who would gladly pay $5 if they didn’t have to walk into a grocery store and fight the crowds. Walmart offers free curbside pickup if you order more than $50 worth. Again, orders are placed online, they’re picked and bagged, and then a pickup time is scheduled. The customer drives up, the order is loaded, and they drive off.
  • Buy online, pickup in store. Also referred to as BOPIS or BOPUS, this means the customer has to actually walk into the store. But it does one thing that even the curbside pickup doesn’t offer — intra-store delivery. Best Buy will ship a piece of equipment from a store across town if customers don’t want to make the drive themselves. And it’s faster and cheaper than home delivery, and it allows stores to upsell items or sell accessories to the original purchase.
  • Share knowledge.. Sephora, No. 1 specialty beauty retailer in the world according to Euromonitor International, got to the top in part due to sharing their own deep knowledge of the category, as well as their customers’ tips and tricks using their products, all over YouTube, Instagram and other social channels. Do you have products or services you can teach your customers about?
  • Hold special events. Bookstores have readings and author signings, music stores have open mic performances and jam sessions, grocery stores offer cooking lessons, and clothing stores have fashion shows. Home improvement/hardware stores often hold classes on projects that range from building a birdhouse to planting a tree to changing an electrical outlet. Of course, these are all done with tools and items available at the store, so it’s also a great sales tool. By providing experiences for your customers, you help them feel closer to your brand as well as find a new community of people who share their interests.

The retail store isn’t dying; they’re transforming from shelves and square footage to the four-walled centers of consumer experience. It may be hurting some retailers that are having a hard time adjusting to the new reality. But as specialty retailers are proving, retail experiences are a path to growth and success.

Follow SPS Commerce on FacebookLinkedIn and Twitter. You can also get retail and supply chain news, resources, expert tips and other valuable updates delivered directly to your inbox weekly for free by subscribing to the SPS blog.

Ready to experience infinite retail power?

Ready to experience infinite retail power?

Learn how SPS solutions support retail and enable a more agile supply chain or contact SPS today for a consultation.

Peter Zaballos

Peter Zaballos

Senior Vice President & CMO at SPS Commerce
Peter brings more than 15 years of experience in product development, marketing and business development in enterprise, mobile computing and consumer internet businesses. At SPS Commerce, Peter leads the product strategy and marketing programs to support the company’s growth and presence in the retail supply chain market. Additionally, he serves as an advisory board member for two consumer web service firms, Glad2.com and SquareHub.com, where he focuses on branding, positioning and message development.
Peter Zaballos

0 Comments

Submit a Comment

Your email address will not be published. Required fields are marked *

Did you like what you read? Get updates like this delivered directly to your inbox.

Subscribe to our blog to receive weekly retail and supply chain news, valuable resources, expert tips and more.