Flooring the Customer: Retail 2.0, The Rebirth is Coming
“High expectations are the key to everything” – – Sam Walton
On a recent shopping trip, I went to three separate stores and had difficulty finding what I was looking for. On each of these occasions I talked with a staff person and they told me about an option that either wasn’t apparent to most customers, or that I hadn’t considered.
Yes, the online retail business is stealing a growing percentage of market share, but people-to-people interaction still matters. The problem is that it’s mattering less, and pricing competition is making the people-to-people option a luxury.
Our mobile devices are freeing the retail experience from the confines of the physical storefronts and traditional online locations, allowing shopping to take place virtually anywhere.
In the emerging customer-centric approach to retail, retailers will need to come up with new ways to engage their customers and find ways to lower barriers to purchase. Most importantly, retailers must be prepared to make a sale whenever and wherever a customer is ready. Here are a few thoughts on how they can make that happen.
Retails Downhill Slide
Recently Sears announced the closure of 120 of its Sears and Kmart stores. This was one of a number of similar announcements during the past year as online retailers become much more skilled at stealing market share.
The 2011 list of store closings is a very long list that includes the following:
- 405 – Blockbuster
- 633 – Borders
- 200 – GameStop
- 189 – Gap
- 160 – f.y.e.
- 117 – Anchor Blue
- 117 – Foot Locker
- 100 – Talbot’s
- 71 – A.J. Wright
- 69 – Metropark
- 63 – Friendly’s
- 60 – Rite Aid
- 52 – Destination Maternity
- 50 – Abercrombie & Fitch
- 50 – Hot Topic
- 45 – Big Lots
- 45 – Family Dollar
- 43 – Select Comfort
- 43 – Sonic Drive-In
- 35 – Denny’s
- 32 – Great Atlantic and Pacific Tea Company, Inc. (SuperFresh, Pathmark Super Market)
- 30 – Ultimate Electronics
- 28 – Dominos
- 25 – Superfresh (Great Atlantic & Pacific Tea Company)
- 20 – Lowe’s
- Many, many more
Store closings hurt local communities in a number of ways, primarily with the blighted look of empty storefronts and plummeting sales tax receipts. But a dead Main Street adds to it a sense of declining options, fewer ways to meet the neighbors, and a growing detachment from that all-important sense of community.
Many of the empty storefronts still have large retailers paying the rent in the background, so property owners have little incentive to find a new tenant until the lease finally runs out. It also leaves owners with a delusional view of the property’s true value.
When it comes to sales tax, the system is severely broke, giving preferential treatment to online sales. It can be reinvented, and the issues surrounding sales tax are solvable, but they need to be dealt with on a national level and this is not likely to make it onto any of the dockets in a presidential election year. One approach for solving this issue can be found here.
With declining sales tax receipts, local communities have very few options for engineering their own solutions.
For these reasons, combined with increased competition from the online sector, tradition retail is not likely to recover – ever.
However, every problem creates an opportunity, and the stage has now been set for a new era of retail, what I call Retail 2.0.
Flooring the Customer
People love to shop at places that are new and different. They love to be surprised by their experience, and they are willing to pay for those surprises.
Gone are the days where stores could simply warehouse products for consumer to buy. Retailers need to provide customers with a feeling of excitement and exclusivity; in short, they need to be floored by their experience.
Traditional shopping centers have become stagnant. Sure, some of the displays change along with the merchandise, and occasionally a store is replaced by another store, but the pace of life today is much faster than the glacial speed that transforms the fashion racks at Macy’s.
We don’t remember an evolution. We only remember a revolution.
Inside this ocean of lackluster thinking lies a few shining examples of what the next generation of retail will look like. Retail 2.0 will form around phrases like “experiential entertainment,” “active engagement,” and “interaction with experts.”
Here are 9 different examples of how this grand experiment is beginning to unfold:
1. Experts Shops – People love to talk to the experts and find answers for those nagging questions that create a cloud of uncertainty around most consumer products. The Apple Stores are a perfect example of an “experts shop” because each of their employees is a true expert on the products they sell. While Apple uses several other elements to attract and engage buyers, the expert-to-consumer relationship is a key feature.
Other companies like Amazon and Google are looking to replicate the Apple experience, but they will have an uphill battle. Unless something major changes, Google will ultimately fail with their retail experiment because they have no respect for two-way communications. If you’ve ever tried to contact Google to get an answer to a problem you’ll know what I mean. In the end, retail is all about two-way communications.
2. 3D Mirror Tech Shops – Imagine walking up to a mirror and visually “trying on” 120 different outfits in 15 minutes to find the perfect wardrobe combination to match your personality and the image you’re hoping to portray. Intel is currently experimenting with 3D Mirror technology where an avatar that closely resembles a customer, and move with their movements, can be clothed and re-clothed numerous times as customers search for their perfect outfit. While this technology is still in its infancy, look for some version to make its way into most clothing stores within a decade.
3. Body Scanner Tech Shops – The key to a perfect fit is clothing that has been custom tailored to your exact specifications, and what better way to achieve that than to have your body scanned and your dimensions fed into some sort of clothing printer.
Leading the charge is Brooks Brothers, a company that already uses body scanners seamlessly. They offer mass-customized suits at their New York City retail store using a 3D body scanner to collect customer measurements. Style, fabrics, and design features are selected from a computer screen in consultation with a trained sales professional, who facilitates the discussion of fit preferences, such as loose or form-fitted clothing. Brooks Brothers uses a proprietary custom pattern-making system to create an individual pattern based on the body measurements. The garment is manufactured remotely and shipped to the store where a single fitting ensures customer satisfaction. Scan data and patterns for each customer are stored for future orders.
Further research is being conducted at Cornell University. Clothing printers are still a ways off.
MERM – Mobile Electric Retail Minivan
4. Mobile Shops – Rather than having customers come to you, move your store to the customers.
One example, MERM (Modular Electronic Retail Minivan), shown above, creates a mobile retail market wherever people are gathered – at sporting events, theater, concerts, parades, or even busy street corners.
When MERM is in driving mode, all the inner space is used for storing inventory. When it’s switched to retail booth mode, the shelves can be easily unfolded for display outside the car, making adequate space for the vendor to stand inside. This feature minimizes the size of the car and thus reduces its energy consumption. Also, the compact size enables the user to drive in narrow urban streets.
Instead of opening a retail store and trying to get customers to walk in the front door, mobile retail has the flexibility to find the markets, anytime day or night.
5. Pop-Up Shops – If new products come and go, why can’t the stores that display them do the same?
Pop-Up Shops, in their current iteration, have a tendency to pop up unannounced, quickly draw in the crowds, and then disappear or morph into something else, adding to retail the fresh feel, exclusivity and surprise that galleries, theaters and Cirque du Soleil-adepts have been using for years.
Look for many new variations on this concept. Much like mobile retail, Pop-Up Shops can easily move to where the customers are.
6. Docking Shops – The idea of Docking Shops were first envisioned for rural communities where the customer base is too low to warrant a permanent location. But a one-day-a-week storefront in five or six communities might be a perfect arrangement.
For this reason, I’m predicting a new form of shopping center will spring to life – Docking Shops. With a stationary common area at its core, the Docking Shops will be the central gathering place where multiple businesses can “plug-in” and set up shop.
RVs, trucks, vans, and other large vehicles will be converted into traveling dental offices, tax preparation centers, chiropractic clinics, and mobile retail storefronts. As they “dock” with the Docking Shops, merchandise and service areas will expand into the common area creating an “open bizarre” feel for the shopping experience.
Most of the traveling storefronts will be one or two person businesses, nomadically traveling from city to city on their business adventure. Others will work a regular circuit, showing up on the same day each week, building a loyal customer base.
7. Complementary Digital Curation – Information about your brand preferences, past purchases, sizes, shapes, colors, and overall shopping habits is a double-edged sword. For privacy advocates, any storehouse of personal data is a recipe for future disasters. But for those looking to improve speed, convenience, and their overall shopping experience, digital curation has the potential to offer an unparalleled shopping experience.
Customers can volunteer for this experience, and retailers would love to have them, but the current privacy-transparency battleground has created too many unknowns for this to be used to its fullest. That will change in the future as the rules get defined.
8. No-Inventory Demo Shops – One of the major expenses in traditional retail have been maintaining inventories and shelf space. Look for a new breed of retails shops that carry no inventory, only product demonstration stations with the ability to order on the spot (and receive a discount).
While most people think in terms of cooking demos with chef’s talking about the food and cookware that they’re using, the Demo Shops will extend to everything from athletic equipment, to toys, to hardware, to appliances, and much more.
Most will be pay-to-play product placement stations with experts on hand to answer questions. Look for tech companies like Apple, Amazon, Google and Microsoft to pave the way for these kinds of storefronts.
9. Google Goggles Retail – Still in early testing, Google Goggles is an experimental technology that will enable our smartphones to
1.) identify a product,
2.) find the entity selling it,
3.) make the purchase, and
4.) have it delivered – any product, any where, any time.
This technology has the potential to turn the world around us into our marketplace. If we can see it, we may be able to buy it and have it delivered to our home.
So rather than traditional storefronts, some retailers may hire models to walk up and down the street, trying to get people to “click” on them and buy their clothing or whatever they’re selling.
Final Thoughts
When it comes to retail, consumers are in control. They decide what to buy, where to buy, when to buy, and how much they’re willing to pay.
In a connected world, where information is fluid and transparent, retailers must become actively engaged in the global conversation. If not, their customers will begin the conversations without them.
Physical stores still provide the best way to create a high-value relationship with customers and build a branded experience.
Bricks and mortar stores are not going away any time soon, but the value they add to their communities and the variety of products they offer will remain in transition for the foreseeable future.
