Barely a day passes without another news story reporting the
demise of retail. Whether it be Borders shutting up shop, the Just
Jeans Group closing stores, or the worst retail results in 50 years,
you’d be forgiven for thinking that our shopping precincts were
turning into wastelands.
While it’s difficult to argue that
at a macro level the retail outlook is rosy, everywhere you look on
the streets, there are examples of retailers who are booming – just
ask someone standing in the Zara queue snaking around Bourke St in
Melbourne, or struggling to find a parking space at Westfield Bondi
Junction.
And the activity in the retail sector is not merely
a transactional process, either. The latest Engager™ results from
Hall & Partners | Open Mind show just how engaged we are with
retail brands - with Woolworths and Coles proving more engaging than
the likes of Coca Cola and Heinz. They may not be the most loved
brands in the country, but boy, are we engaged with them – they’re
an intrinsic part of people’s lives. This is also a relationship
Australians are really starting to draw on, especially as the
supermarket giants increasingly stretch into new areas (for example,
mobile phone and insurance services) and further expand their private
label ranges.
Like life in general, the key to survival in the
retail world is adaptation. Charles Darwin’s theory of natural
selection could have been written for the retail world.
But
retailers shouldn’t simply be looking to survive. They should be
looking to thrive. Arguing about the lack of GST for online purchases
smacks of furiously treading water to keep up with others, when
really retailers should be adapting and using their natural strengths
to their advantage.
Adaptation can take many forms, but for
bricks and mortar retailers battling against the growing pressure of
online (and now mobile) purchasing, it boils down to three broad
strategies:
1. Differentiation
2.
Emulation
3. Replication
Differentiation
is about doing what can’t be done online. Most obvious is the
physical interaction that online can’t offer: with the products
themselves, but perhaps more importantly, the human-to-human contact.
But as the online shopping experience gets ever richer – the launch
of augmented reality virtual dressing rooms by a British online
retailer being the latest advancement - for many categories this
isn’t enough. It’s about being more than just a place to buy
products. It’s about providing immersive brand experiences,
entertainment (live music, catwalk shows), or complementary (but not
necessarily complimentary) services such as food and drink,
hairdressers, child care. The best retail experiences are where the
store is a real ‘destination’ – Niketown, the Apple Store,
Abercrombie & Fitch.
Great destination retail experiences
recognise the social emotion of shopping, harnessing shared
experiences and creating places where people want to hang out with
their friends. The new breed of shopping centres, Westfield Sydney
being the prime example, have embraced the idea of creating a
destination, with top-end (rather than simply functional) food
offerings, comfortable seating areas and pop-up stores.
In our
work, we see time and time again the power of the herd: what we see
and hear people doing around us has a huge impact on the behavioural
choices we make - and that very much includes brand choices. Any
retail managers worth their salt should be looking for ways to
encourage shoppers to share their experiences and actions with
others, giving them an experience worth talking about.
Emulation
is about looking at what people like about online shopping and
emulating that in an offline environment. Endless inventories,
detailed product info, 24/7 access, filling ‘dead time’, third
party reviews and crowd-sourced recommendations are all things that
draw people to online (not just cheaper prices) and are all things
that can be replicated physically.
Companies such as RedRoom
have taken the online DVD delivery idea and dropped DVD booths into
key 'top up shop' locations. In Seoul, Tesco Homeplus has used QR
codes to create a virtual store at metro stations, so people can shop
while they wait for a train. Adidas' new NY store has a virtual shoe
wall that displays products in 3D on a touch screen display, allowing
the shopper to spin, zoom in, view specs or promo videos of thousands
of products. Also in the US, Westfield has launched an in-mall
shopping app that fuses web-available store inventories (via Google)
with mall-specific store information (location, phone numbers
etc.).
The final strategy of replication
could also be called “If you can’t beat ‘em, join ‘em”. It
is about complementing your physical stores with a strong online
offering. But crucially, it is about creating a shopping experience
maximized for the web environment and for the needs and expectations
of the online shopper.
It is not about chucking your inventory
online.
And it’s not about giving people a limited
experience online to avoid cannibalising your physical sales. If
people want to shop online, let them - and make it easy and enjoyable
for them. But create a genuinely engaging in-store experience so they
also want to visit you in person. Nespresso has got this spot on –
their shops provide the caffeine-rich, indulgent experience of Brand
Nespresso, and then the online ‘club’ provides the ongoing
engagement and the route to purchase more capsules.
An
engaging retail experience can be a key factor in building brand
engagement. And in lots of cases, retail offers the most engaging
opportunity for interaction. In many ways, the rise of online
shopping has given the bricks and mortar stores the freedom to focus
as much on these engaging experiences as they do on actually selling
their wares. And if not the freedom, it should certainly give them
the impetus to do so. Just as advertising is really about generating
saleability rather than sales, so too should physical retail
environments.
In the natural world, adaptation is based on
random variations, with the variations that provide a survival
advantage being the ones that endure. While the survival of the
fittest idea rings true in the retail world as well, most businesses
can’t afford to get there through random variations. Only with a
thorough understanding of your shopper and the path to purchase, can
you ensure that the variations you introduce will give you an
advantage and not just be a random irrelevance.
Nick
Palmer is research director at Hall
& Partners | Open Mind.
This article first appeared in
Ragtrader's sister title AdNews.