Although ecommerce seems to pose an existential threat to bricks-and-mortar retail stores, those who are positioned to exploit changes in consumer behavior can triumph, a new study argues.
“We believe that stores can survive and even thrive in this hyper-competitive landscape by offering appealing experiences that give shoppers a reason to spend more time — and dollars — in physical stores,” say the researchers for Colliers International, a global commercial real estate services firm.
Today’s consumers are less impulse-driven and are more “contemplative” and discerning about what they buy, it says. They also exploit more media channels and communication tools when shopping, and rely on a wider variety of retailers and brands.
Retailers must learn to do much more than simply compete directly with ecommerce retailers, Colliers says. “Rather, retailers must rethink how they engage shoppers with more interesting, compelling experiences that leverage the inherent benefits of physical stores over the virtual world of online shopping. It’s no longer a focus on sales per square foot, but on experience per square foot.”
In 2006, some 76.3% of spending by those under age 25 was channeled to traditional retailers. In 2016, that figure dropped to 61.2%, Colliers notes.
“This is especially true in sectors like apparel, homewares, beauty and food, where well over half of consumers are relying on more retailers than they did five years ago,” the researchers observe.
When it comes to non-food shopping, the average consumer now regularly uses more than five channels or tools. These include physical stores, social media sites, websites, magazines and catalogs. By comparison, this number was under four as recently as 2011.
The report vividly depicts how the definition of “omnichannel” in retail has morphed to mean shoppers who are using multiple channels of digital communication to research and shop for products of all kinds, instead of referring to an omnichannel supply chain model.
As a result, Colliers says “retailers need to adopt approaches that resonate with their target audiences across these different mediums – engaging shoppers on social media, making shopping easier with effective omnichannel strategies and most of all, integrating platforms and tools to provide consumers with a clear, consolidated view that highlights content and community.”
Finding the Solutions
Strategies recommended by Colliers include adopting an Internet-enabled hub-and-spoke model for store locations.
Credibility and reach in the past required a wide geographical spread of stores. By employing a flexible hub-and-spoke model, retailers today can now have large flagship stores in key destinations, smaller stores selling a limited product range, and an effective online platform.
Retailers also need to take into account that consumers are now diverting their spending to non-traditional retail categories that offer an experiential element, such as dining and drinking out, subscription services and travel.
As online shopping becomes more inspirational and social, Colliers says retailers should try to draw shoppers into stores with events like fashion shows and social spaces like coffee shops.
“It’s also important to create relaxing, enjoyable environments where shoppers are happy to linger,” throughout the store, the researchers stress.
Seamless consistency across media channels also is essential, they say. “Creating uniformity and integrating systems across channels allows consumers to buy anything, anytime, anywhere. Purchasing options like click-and-collect, reserving online and ordering via in-store kiosk for delivery will all become more important.”