How This Pandemic Will Change Retail For The Better
Photo by: Riley Snelling©
Amidst recent events, there has been mass discussion and speculation around the future of retail. Ironically, despite our desires to be socially together again, I’ve found that the narrative of a retail apocalypse has stayed the same with a focus on the decrease or elimination of physical stores. The truth is that the concept of stores is not going anywhere. Yes, big retailers like Macy’s, JC Penny and Neiman Marcus are finding themselves in a tough spot, but ultimately the desire to experience retail in-person will not dissipate. There will always be people who want to socialize while discovering clothes and trying on make-up, and people who need a sales associate to guide them through their fit and fashion.
Many other retail professionals are already vocalizing the same point, and emphasizing that it needs to evolve. So, rather than debating its existence, I’d like to illustrate how this pandemic in particular is going to ignite change in the industry, and what that change may look like.
Since stay home and shelter in place orders have gone into effect, every person around the world has learned how to shop online, if they didn’t already. We knew that this was bound to happen eventually, but the adoption rate has now been accelerated, with ecommerce sales up 25% and buy-online-pick-up-in-store up 62% in the first few weeks of quarantine. The purpose of a physical store is no longer be about the transaction. In fact, I believe some stores may not perform any transactions at all and rather, the new store model will be a combination of showroom and e-commerce fulfillment.
The showroom will act as a display for customers, which can be reached via a video call with an employee, in-person or via virtual reality display. And some stores will either massively reduce inventory to focus on being a showroom, or will increase their back of houses to cater to fulfilling a greater number of e-commerce orders.
So the question then lies in how these retail stores are and will be pivoted to address the changes in consumer behaviour ignited by the catalyst of this pandemic?
1. The stores will come to customers.
In the same way that teachers are bringing school to their students, there’s an opportunity for retail associates to bring the store to their customers. This can be done via video sessions with store employees, which is a practice that Chinese based platform ShopShops has been doing for a while now. And we’ve even seen small boutiques such as McMullen in Oakland and Hampden in Charleston take on initiatives such as Facetime appointments, IGTV try on and styling sessions and curated, hand delivered shop services to interact with their customers during this time.
Virtual reality is another technology that is on the rise and becoming increasingly popular. Storefront recently launched a VR service by partnering with Obsess, an augmented and virtual reality service for e-commerce and retail brands. These initiatives provide customers with a better brand experience and ensure greater order value the same way that going to a physical store does.
2. The focus will be on brand experience.
Given that more and more transactions will be made online, brands should consider shifting their focus on making retail stores all about the experience. If all retail sales were measured on an omni-channel basis (i.e. not separated by physical and ecommerce channels), then the purpose of the retail store could be fully altered to focus on brand experience. There’s an opportunity to use physical space to create fun and interesting interactions for customers, ensuring greater lifetime value in each customer. Canada Goose is an example of a brand that did this recently in their home of Toronto. Local running stores have done this for years by hosting weekly runs, training events, guest speakers and customer get-togethers. Runners can easily purchase sneakers on Zappos for two-day or overnight delivery, but the customer experience and relationship to the local store is unmatched.
3. Store space will be utilized for additional ecommerce fulfillment.
The importance of having a physical space cannot be understated. According to a 2018 Google Shopping survey, 61% of shoppers prefer to shop with a brand that also has a physical location. There are two directions retail may go when it comes to inventory in the future. The first being the more widely discussed, which is that there will be far less inventory as more transactions take place online. Alternatively, and where brands hold existing leases with large square footage, there’s an opportunity to revamp the layouts to have larger back of houses to act as more localized ecommerce fulfillment centers, including curbside pickup which has gained increasing popularity in the last couple of months. Brands like Nordstrom, Walmart and Whole Foods/Amazon are already doing this. Consumers shop at these stores, but they are also used as fulfillment centers for quicker e-commerce deliveries. This is a technique that should be adopted by all retailers. It is difficult for many due to the adjustments that need to be made with ordering systems and inventory management, but if the time is taken to figure it out, there could be massive benefits long-term.
Retail was already changing, but now the necessity for change is even more evident. With more and more transactions taking place online, brands will have to shift their store focus towards experience, e-commerce fulfillment, and utilizing technology and their experts to bring the store to their customers.
