Physical stores are under pressure

May 5, 2017

Digital retailers are entering a new territory – they now threaten traditional retailers at their own game by opening physical stores on the retail market. Now the question is, how traditional retailers avoid getting beaten at their own game.

Traditional retailers risk being left behind

The digital development has a great impact on our shopping habits since many purchases happen online. Despite that, legacy retailers have had the advantage of providing a physical shopping experience, which many customers still prefer.

You would naturally think that traditional retailers with lots of experience in the retail industry are the leading companies when it comes to providing the demanding customer experience – but that is not the case. New players are trying to reinvent the brick-and-mortar experience. The biggest disruptors are e-commerce brands that open physical stores and use technology in a new and innovative way.

Is Amazon Go the future?

Amazon is one of those e-commerce brands, who is trying to innovate the physical stores. They have utilized technology as a way to reduce friction in the shopping experience and taken it to a whole new level.

Their disruptive model is simple: Walk in, grab what you want, and walk out. Customers do not have to wait in line or interact with a sales associate since the entire process is run by an app.

In this way, Amazon is trying to leapfrog over existing technology. Time will tell whether the Amazon Go model will gain a foothold on the marked, but for now, the concept is just a test store in Seattle.

It may seem like stores without in-store associates are the future. But Micah Solomon, blogging at Forbes.com, does not think that is the case. According to her, the reason why we go shopping is based on four motives:

  • To get what we are looking for
  • To have a break from the rest of our day
  • To have an experience
  • To interact with other human beings

With this perspective in mind, retailers must adopt technology as a tool to provide customers with an even better purchase experience – including the social dimension.

“Online has variety, price, and convenience. It’s difficult for any brick-and-mortar retailer to trump that, but the levers they can pull that are difficult to match online are experience, entertainment, and education

Jim Cusson, president at retail branding agency Theory House, in an interview with eMarketer Retail.

Crack the code on the physical shopping experience

New digital solutions make it possible for retailers to improve customer experience and thus their business.

E-commerce has price and assortment, but it is hard to provide a personalized experience during an online transaction or in a store without associates. That is the key to growth for legacy retailers. Many customers crave the discovery that happens in the store, and the social aspect by interacting with in-store associates.

Innovative solutions are the key

Retailers’ big question is: “How can we fulfill the demands of the customers and still provide them with a unique experience?” A large part can be solved by focusing on the relationship with the customers and by utilizing options provided by the digital transformation that has the potential of reducing friction in the shopping experience.

One solution is to provide the employees with a tablet with a mobile Point of Sale system. This gives the customers an opportunity to pay everywhere in the store and thereby increase the customer experience by avoiding waiting in line.

“Don’t be afraid to experiment. When you think about technology, let’s employ technology that the shopper actually desires and benefits from, and not something that just makes your POS [point-of-sale] system more efficient for you. Focus on the experience. It’s the one lever you can pull over online, and it’s your strongest lever to pull.

Jim Cusson, president at retail branding agency Theory House.

Put customers’ needs in the center of your attention

It is also important to focus on the overall experience that both include the physical store and the possibility to buy online. This will provide customers with a holistic experience whether they are shopping in-store or online. At the same time, it reflects the fact that customers to a greater extent look for products both online and in-store before they decide what to buy.

In the eyes of the customers, it is no longer enough just to buy an item and then leave – it has to be an experience. On the long run, it is therefore not sufficient only to focus on change and development. It always has to be in relation to the customer’s needs and wishes.

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