Shalini Verma :
This has once again stoked the existential debate about physical stores. Recently, Toys ‘R’ Us broke the hearts of millions of children by announcing the closure of their stores in the US – the company that built its business on the pester power of young customers who don’t necessarily know how to read and write but can recognise a Toys ‘R’ Us store from a mile.
This has once again stoked the existential debate about physical stores. Some pundits have been quick to pronounce the speedy demise of brick and mortar stores as Amazon and other online stores chip away at brick and mortar retailers’ profits. The elephant in the retail store is – what are retailers doing to reinvent the shopping experience in physical stores?
Customers are not just looking to complete transactions. They can buy products from the comfort of their living room, watching the Game of Thrones on TV, casually browsing through an online catalogue. The product they choose to buy is just a click away. Why would they bother to drive up to a store just to buy something?
Let’s face it. Many stores are struggling to fathom what went wrong. Their relationship with customers has turned stale, if not sour. What with poor store layout, claustrophobic changing rooms, long queues at the cash counters and store associates who are busy, customers simply turn to their phones to compare product prices and features. They are looking for the X factor in their shopping experience but all they get is a clearance sale.
If you walk into a store having a sale, you feel like you have walked into a war zone. You try to choose the right clothes from a rack that was left in a state of disarray by those who made it before you, and when you step inside a changing room after waiting in a queue, you realise you have the wrong size or colour. You pop your head out of the changing room, and call out to your designated in-store helper who happens to be your spouse or mother. Then you realise you have to be considerate to others in the queue, and so you start the hunting process all over again. You step out of the store only to stare at a lineup of other stores that are screaming “me-too”. Customers are increasingly looking for more than discounts. They need wardrobe inspiration, style advice or more convenience.
With this growing realisation, manufacturers have started to bypass retailers to set up their own stores because they would like to control their brand experience. This poses a problem for multi brand stores and an even bigger problem for big-box stores.
This does not mean that physical stores have lost their relevance for the “point-and-click” shoppers. Others have faced similar threat of obsolescence. Cinema halls were almost written off when they faced successive threats from DVD players and cable TV. They quickly evolved into multiplexes for families to enjoy an immersive movie experience complete with popcorn and soda.
We are inherently social beings, and we still like to touch, feel and smell products before we buy them. The virtual experience cannot really replace the “real” thing, although virtual is slowly creeping into brick and mortar stores with the help of augmented reality and virtual reality that add some measure of personalised experiences. Customers can change the retailer’s app into store-mode to look at recent customer reviews of a washing machine they intend to buy.
Retailers working hard to reinvent the shopping experience are experimenting with store formats. Nordstrom has added a merchandise-free store called Nordstrom Local to its chain of department stores and discount outlets. This Los Angeles-based 3,000 square-foot store has no products. Instead, it is positioned as a neighbourhood hub in Hollywood for offering services such as alterations, tailoring, online purchase pickup and style consulting.
There is plenty of room for improvements. The changing rooms need to be more like dressing rooms with smart mirrors to let customers try on different colours or sizes available. Store associates need to be trained to become stylists or advisors. Our online experiences will inevitably influence the design of physical stores to better understand buyer behaviour, using embedded data-driven technologies. Online and physical stores can together provide a composite experience. For example, Bonobos that focuses of better-fitting menswear, allows customers to try out its full line up, and order from within the stores, but have their purchase delivered at home.
Retailers’ dogged focus on sales per square foot has inhibited their ability to inject fresh ideas in the store. However, companies like Apple and Lululemon that have focused on in-store experience have seen higher sales per square foot through more engaged customers. In UAE, F&B retailers are experimenting with food trucks and pop up stores, while luxury brands rely entirely on experience. Retailers have only touched the tip of the iceberg, and their future is bright if they start to tell their brand story by placing in-store experiences front and centre.
(Shalini Verma is the CEO of PIVOT Technologies).
