iMedia Connection

How brick-and-mortar retailers can survive

The data is in, and it's clear: Shoppers want to share their data with retailers, and the future of brick-and-mortar hinges on retailers bringing elements of the personalized online experience in-store as part of an omni-channel relationship.

But first, let's look at the numbers. An RIS News and Cognizant survey last year found that specialty store shoppers younger than 45 prefer digital personalization (via devices) to traditional in-store methods. Shoppers older than 45 are less comfortable with the digital approach, but it's safe to say they'll grow more comfortable -- the story of digital commerce in a nutshell. And as for younger shoppers, they're always the future of retail.

Similarly, an Accenture study recently showed that while 86 percent of shoppers have concerns about data-tracking, virtually the same percentage acknowledge the benefits of it, and 64 percent would prefer personalization to not having their data tracked at all. Nearly three-quarters -- an eye-opening number -- said they prefer to do business with retailers that personalize their marketing.

Considering that digital personalization is still relatively new and that big data has tremendous untapped potential it's clear that personalization will only grow. So where does this leave brick-and-mortar? A recent MediaPost column declared

"Gone will be the brick-and-mortar malls we know today. Instead, retail destinations may have limited merchandise, stocking only a few samples for customers who still want to touch and feel products. Stores could operate primarily using screen images and scanners to show, swipe and sell."

It added that omni-channel shopping -- in-store, on devices, on TV, etc. -- will drastically reduce the role of physical stores. But while the advantages of a multi-channel presence are clear and growing, they don't yet justify this "limited merchandise," "few samples," and "screen images" prediction.

We see a more diverse future. A recent Mu-Sigma report noted:

"Retailers would do well to realize that customers do not always shop to just acquire products. They often shop to gratify other deeper needs -- a need to engage all five senses, to socialize and to commune, and at times to simply be out in public."

And it adds that shoppers will still visit some stores with large lists of items that must be purchased in-store. They still crave engagement with brands and making commitments. And that impulse buying and the need to actually touch certain products will never be replaced by a UPS delivery.

If we agree that the future of in-store retailing will combine the best (and necessary) features of walking the aisles with the convenience, power, and excitement of digital brand engagement, here's what the omni-channel future looks like. It's about personalization at every level.

Personalization at the digital level

Shoppers love and trust their smartphones, and if they're in your store, they want to love and trust you too. Proactive retailers are refining opt-in systems that identify you when you walk in and alert you to sales and deals based on your expressed shopping habits. Research has shown that shoppers prefer this kind of information while in-store rather than via the web or email -- and why not? The context -- physical and mental -- is more logical.

And personalization for sales and deals doesn't have to be the only kind. We're surprised that more full-service retailers and large grocery stores don't use digital technology to help you chart your course through the store. Imagine entering your planned shopping list online (like on Peapod) and getting a store map with directions (like on Google Maps).

Yes, retailers might balk at making the in-store shopper path too easy, fearing a loss of impulse purchases. But the benefits are worth considering for an easier shopping experience. Time saved doubling back could be spent browsing and, given permission, the retailer could offer coupons or suggest interesting alternatives based on the online list. All sorts of research could be done on shoppers' intended purchases vs. their actual purchases, especially if those shoppers consent to being tracked or observed on video during their visits.

Personalization at the human level

Many analysts today suggest that retailers will have to improve the quality of in-store service in coming years. This can be done in concert with digital technology if shoppers offer an email address for access to their accounts -- for example, at Apple Stores. As data about a shopper's purchases accumulates, the salesperson/shopper interactions can become more and more fruitful, and the relationship will deepen.

Even without this, the contents of a shopper's cart can spur additional sales immediately if salespeople are trained to make quick suggestions about related merchandise, or if the store's database can suggest them before checkout is finished. "I'll hold these items while you go try on the tops that go with that skirt" is an excellent soft sell, and the suggestions could be texted right to the shopper with images for immediate reference or as a later reminder.

Personalization at the store level

There's a strong feeling that large retailers will have to continue exploring new store formats -- typically smaller and with more targeted merchandise -- to add convenience and a sense of personalization. Target and Walmart are among the many retailers testing formats that are personalized to geography and neighborhood preferences, and examples like the Brooklyn Walgreens that offers beer tastings to drive sales of its packaged beer show how targeted a single store can be.

And here's the upshot of these experiments: they show the ascendance of the store's own brand today. What makes a smaller Target different from another small neighborhood retailer? The name on the marquee and if it's backed up by shopping experiences like the ones suggested above, it helps to chart a path to the continued relevance of brick-and-mortar retail. It's about personalization, and it depends on the integration of digital technologies with the beloved habit of going shopping.

Michael Komasinski is group managing director, Americas Retail, at SGK. 

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