Retail: Here Today, Here Tomorrow
We all shop. No matter where we live, what we do or how we do it, we need “stuff” and the only way to acquire it (short of growing it ourselves) is to purchase it (or have someone purchase it for us). So, whether it is a task we complete or delegate, at the end of the day – we have been “shopping.”
Trillions in Value
In 2017, the US retail industry generated $1.14 trillion in value-added and generated 4.8 million jobs which translates into 5.9 percent of US gross domestic product. The largest category? Automotive, valued at $212 billion; grocery stores secured second place, at $167 billion; general merchandising arrived in third place at $161 billion. The industry also supports $1.5 trillion in the wholesale sector, contributing $2.2 trillion through US manufacturing industry.
The fastest growing sector for retailing is e-commerce and by 2020 it is expected to reach a value of $523 billion, with a growth rate of 9.32 percent each year. By 2020, 270 million shoppers will use their mobile devices to research and purchase products (in 2015 the number was only 244 million).
Requiem for a Mall
In 2018, former JC Penney CEO Mike Ullman determined that only 25 percent of America’s 1200 shopping malls would survive the next five years. In 2018, retailers filed for bankruptcy at record high rates and included Nine West, Claire’s and Toys R Us.
According to Rick Caruso, developer of The Grove Mall (Los Angeles), “The indoor mall is an anachronism that is going to continue to fail because it is disconnected to how people want to live their lives.” Malls remain a collection of retailers with a few dining and entertainment options thrown into the mix.
Malls developers must have missed the memo that found that people want to be personally involved and engaged and looking for an “experience” with shopping a by-product of the activity. The mall developer will have to find ways to encourage and motivate people to spend time in the space by creating experiences that people want to enjoy.
Merger: Recreation, Work and Shopping
To take malls off life support, Oliver Chen (Cowan and Company) recommends:
- Make shopping convenient. Take the friction out of shopping (think Amazon and Walmart’s car pickup).
- Curate for relevance by creating a culture that enables people to interact with each other.
Mall space additions/enhancements could easily include libraries, museums, historical societies, meeting rooms for community groups, community college classrooms, vocational training, offices for government agencies and elected officials and opportunities for public forums and discussions.
The spaces could be used for gyms and fitness centers, medical and dental services, as well as healthy food courts with grocery stores featuring farm to table choices and cooking classes and wines/spirits tastings.
Channels of Distribution
Research suggests that the future of shopping is omnichannel. At this time, almost 90 percent of all shopping is done in stores with online sales reaching approximately 10 percent of retail sales, clearly indicating room for growth.
Retailing is far from dead. Currently there are over 1 million retail establishments across the US, and retail sales have grown at approximately 4 percent annually since 2010.
Many retailers are closing while others are expanding. Costco opened 23 new stores in 2015 and 31 new outlets are planned (17 in the USA). Dollar General is adding 900 stores, and Dollar Tree, Family Dollar, Aldi, Lidl, Five Below and Hobby Lobby are opening new locations. According to Business Insider, 2100 new stores will open in the coming year.
The IHL Group report, Retail’s Radical Transformation, determined that for every retail closing, two new stores were opening. The food, drug, convenience and mass merchants/warehouse category reported 3.7 companies adding new stores for every one being closed. IHL has determined that stores will be involved in 81 percent of all retail sales in 2021.
Each generation has its own shopping process. Generation Z and Millennials are likely to continue in the traditional mode; however, Millennials are likely to feel frustrated by the same/same shopping format and seek out new experiences. Generation X and Baby Boomers are struggling with the shopping/acquisition system as well as the post-purchase experience (i.e., writing a review, returning).
Consumers expect retailers to address and resolve/eliminate the pain points. Shoppers (especially Millennials) expect brands to offer technology throughout their shopping experience, taking the guesswork out of the pre-purchase experience.
In order to attract new consumers while keeping the older generations engaged, retailers have to access what they are doing and how they are doing it.
Heads Up Retailers: Points to Consider
- Underutilized assets. From space(s) and inventory to labor and technology, is there too much waste in the system
- Losing the human touch. Are customers appreciated? Are they being thanked for taking time from their busy lives to spend their money in your store, buying your merchandise?
- Mishandling brands and interrupting consumers. Are you using pop-up ads within a news story, interrupting the reading of a potential consumer? Do the ads on busses, subways, and highway billboards tell a story or just fill up space?
- Fears (data privacy and security). Shoppers are annoyed when an algorithm sends email ads for shoes or a trip to France, immediately after they just purchased shoes and made the airline reservation. It is unnerving to watch companies they have never heard of reach into their personal data and scope out their wants and needs.
Show the Customer You Care
Consumers seek the best shopping experience and do not care about you, your brand or your store (in whatever shape it takes). Retailers need to pivot and be flexible, ready to engage the customer whenever and wherever the customer is in the purchasing sequence. Retailers should be doing deep dives into their customer databases, and design customer-centric experiences, rebuilding loyalty in the age of the empowered consumer.
It is up to the retailer to develop a seamless experience and not concentrate on product features. This can be achieved by considering:
- Multichannel buying experiences by developing savvy e-retail experiences and quick shipping that is seamless.
- Blending on and off-line shopping by comparing options online, buying online and picking up at the store or using encouraging shoppers to use their smartphone to check prices while in the store and willing to discuss pricing options (or to explain your pricing strategy).
Research by Price Waterhouse Cooper found that 73 percent of buyers say positive brand experiences are key drivers behind their purchase decisions. Price matching and exclusive offers might reel in a few buyers, but there is more to developing customer loyalty than a focus on price.
Robbin Report. Retail Radicals. 2019 Program
Each year, the Robin Report team curates a group of retailers and their brands who are designing new ways to satisfy the wants and needs of consumers, identifying products and services that will make lives better, safer, more efficient and/or more entertaining. Started by Robin Lewis, considered a retail industry guru, Lewis is also an author, speaker and consultant to retailers and consumer products industries
The Event Curated. Retailers and Their Brands
Hunsicker is Founder and CEO of CaaStle, a revolutionary B2B technology platform empowering retailers and fashion brands to strategically participate in a new sharing economy. CaaStle allows retailers to offer clothing as a service (CaaS) to their consumers and the opportunity benefits the retailer and the customer. The customer is able to experiment with the brand by renting (and, perhaps, ultimately owning) garments by accessing a rotating collection each month. Brand partners include Ann Taylor, NY&Co, Express, Rebecca Taylor, American Eagle, Gwynnie Bee. CaaStle was recognized by Fast Company as one of the world’s most innovative companies – 2019.
With over 40 years of experience leading the strategic integration of architecture, planning and merchandising, marketing and branding in the retail, entertainment and hospitality industry, Roche (and his crystal ball), plan the spaces/venues for the ultimate shopping experience.
We can thank Roche for creating the shopping environment for Le Bon Marche and la Grande Epicerie as well as Selfridges Group, Bijenkorf’s department stories (Netherlands), the Rotterdam City Center and the Meadowood Resort and the Wine Reserve in Napa Valley.
Roche designs spaces that rewards the visitor, “If they are coming to your store, giving you their time, you have to give them something in return – such as a place that is attractive. Design is more than what something looks like, it is woven into what you do.”
The retail experience should be friction-less. Timmins has determined, that the successful in-store experience will provide an environment that is social, inspirational, entertaining, involved, convenient, and a distribution center. The space will be inspired by local culture, created through artful intelligence.
If it has anything to do with retailing, Cohen has seen it, done it, reviewed it, taught it or done it. He has focused on retailing since graduating from Columbia University (1971, MBA; 1969 BS Electrical Engineering). For over 20 years he has been a c-suite executive, associated with Sears Canada Inc., Softlines (Sears Roebuck & Co), Bradlees Inc. and Lazarus Department Stores. He has also been associated with Abraham & Strauss, The Gap, Lord & Taylor, Mervyn’s and Goldsmith’s Department Stores. Since 2006 he has been a member of the faculty of Columbia University’s Graduate School of Business, teaching courses in Retailing Leadership, Retail Fundamentals and a Master Class in Creating a Retail Enterprise.
Over 300 people attended the one-day conference, including retail industry executives, software developers, retailing researchers, academics and journalists.
According to Ian Gomar, Partner, Chief Marketing & E-Com Officer, of Chief Outsiders, there is a future for retailing. We can look forward to increased personalization, and a speedier response to the needs and wants of the consumer. Through the increased use of algorithms and machine learning, we will be able to make our buying decisions easier and consistent with our lifestyles and budget.
Gomar has determined that advertising messages will be based the demographics of the consumer because the retailer knows where we live as well as our lifestyle, search and buying habits. Everything will be connected, so we can easily make acquisitions through our smart phones, home technology, car, and tablet. Products will be shipped on speed, frequently within an hour or, if we prefer, we will be able to pick up the merchandise at the store. It is also likely that drones will fill the sky with our packages from Amazon and perhaps our fries from MacDonald’s and blasts from Sonic.
No longer will we have to remember breakfast cereal for the kids, or beer for the poker party. Our ongoing wishes will be satified by subscription – based services, and renewed as consumed. Stores will have a smaller foot-print and substitue superior service and unique assortments, replacing underutilized spaces filled with stuff that no one wants or needs.
On a personal level I am waiting to install the Star Trek Replicator – programmed to make the perfect martini. The fax machine will get a dusting, so that I can order a hot pizza with cauliflower and anchovies, ready to eat as it falls out of the slot.
Now that recreation, work and shopping have merged, what will happen next? For additional information, click here.
© Dr. Elinor Garely. This copyright article, including photos, may not be reproduced without written permission from the author.