If you work in retail and are lucky enough to find a moment to stand still, you might feel the ground moving beneath you. That’s because the seismic shift from traditional retail to omnichannel dominance has quickly gone from headline fodder to harsh reality. Consider:
So does all that spell the beginning of the end for traditional retail? Not quite.
In fact, while these challenges are universal, they’re much more pronounced in the United States. That’s because the US has been “over-stored” for quite some time, with 7.3 ft2 of retail space per capita compared to 1.3 ft2 in the UK and 1.7 ft2 in France and Japan. While the sharp increase in store closings absolutely should raise alarms and force brands to reconfigure strategies, the relative severity in the states is at least partially rooted in an oversaturated market.
The fact is, retailers have always competed on shopper convenience and market presence, which for a long time meant staking claim to as many shopping malls and intersections as possible. But the rising competitive threat posed by non-traditional retailers like Amazon and subscription services has fundamentally changed the definition of convenience and pushed the market into digital territories, rendering the “every corner” strategy less effective.
With that said, traditional retailers can still survive—and thrive—in today’s competitive landscape, particularly if they follow some key best practices.
1. Keep the in-store experience at the center of your innovation efforts
Bordering on cliché, it bears repeating: today’s customers buy products, but they’re seeking out experiences. And that’s especially true of the increasingly important millennial shopper. Even with the trends cited above, customers will always visit stores—but you have to make a continuous case for why they should visit yours. More and more brands are trying to make that case by converting traditional storefronts into shopping destinations with experiential components like:
While those tactics may increase foot traffic, converting shoppers into loyal customers still depends on your ability to uphold operational standards, deliver great service consistently, and meet each customer’s product needs. When launching large-scale customer engagement initiatives like the ones cited above, keep an eye toward the basics to make sure they don’t get lost along the way.
2. Evolve and sync up your omni strategy as it expands across touchpoints
The in-store experience is the cornerstone of your brand’s success—but any gaps in the rapidly changing customer journey will quickly chip away at it. A recent Harvard Business Review study showed 73% of customers use multiple channels in their shopping journey—and customers who had an omnichannel experience logged 23% more in-store trips and were more likely to recommend the brand in the next six months compared to those who used a single channel.
But staying competitive doesn’t mean you need a 5-star mobile app or an e-commerce site rivaling Amazon. Building out those channels definitely matters, but it’s not always feasible for brands to shift to a tech-focused strategy so drastically. Even if that’s the case, you can still create quick impact by:
3. Prioritize your loyal customers (and convert non-loyals in the process)
There’s no overstating the value of a loyal customer. A Gallup study revealed fully engaged customers—defined as emotionally attached and rationally loyal—represent an average 23% premium in terms of share of wallet, profitability, revenue, and relationship growth compared to the average customer.
For an idea of how the financial impact of loyal customers plays out across an organization, look no further than Macy’s. In a recent interview with The Wall Street Journal, the company’s new CEO Jeffrey Gennette explained that roughly 10% of Macy’s 43M customers account for 50% of their sales.
That kind of disproportionate business impact puts brands in a precarious position—having to balance the retention of loyal customers with efforts to grow into new markets and convert non-loyals. While knowing which differentiators inspire loyalty and hitting on those qualities consistently will lead to more loyal customers over time, you still need to take a pragmatic approach when it comes to retention efforts. At the very least, brands should know the average value of loyal customers to understand what’s at risk and escalate potential issues to ensure they receive top priority in service recovery situations.
There’s no such thing as a fail-safe retail strategy, but best practices like these can make the omnichannel landscape less daunting. To learn more, download our ebook: The ultimate guide to omnichannel experiences.
VP, Client Insights