Retail businesses are among some of the most affected by the introduction of the internet. There have been countless articles written about how brick and mortar shops are scaling back and losing customers, with the Retail Pulse Report for 2015 describing some gloomy figures for the US market: “January 2015 saw a 7.7 decline, on average, in both sales and traffic in US Physical location, compared to the same period in 2014”.
In the UK, things don’t seem to be doing much better, with FootFall registering year on year declining numbers throughout the last few years.
However, it’s not all doom and gloom: none of this means that the high street shop is completely doomed. The reality is, though, that the retail business models that we have known since forever now are being forced to change, or to be more exact, to innovate.
Some companies are already on it: the FT recently reported that Bass Pro, an outdoor sports chain, opened a new 535,000 square foot emporium, in downtown Memphis Tennessee. What is different about this place, in an era where shopping malls seem to be declining and online retailers like Amazon and Alibaba seem to be growing steadily every year? The big difference lies in the fact that this store has been designed from the ground up to provide a different shopping experience: shopping as entertainment.
“The pyramid may be an extreme example, but many of its features are present in smaller Bass Pro shops, one reason why the typical customer lingers in them for almost two hours — four times the average time spent in shops, according to Paul Martin, managing director of KPMG Boxwood, a consultancy.
“People try the product and have an experience that brings it to life,” he says. This leads to higher sales. “The conversion rates [the number of visitors who buy something] with this in-store experience are much higher and shoppers’ basket sizes are also a lot bigger.”
Besides providing products that are of good quality or at a good price point, now retailers have to also think about providing an experience, which in some cases, can even become more important to the customer in itself than the product on offer. Shopping has now become convenient, social and fun.
The PwC report Total Retail 2015: Retailers and the Age of Disruption put it very clearly:
“As online shopping continues to grow at the expense of store visits, the premium in the future will be on creating unique, brand-defining experiences that keep customers coming back— whatever the channel.”
Limited editions, store exclusive items, surprise discounts, and other techniques are already being employed by some retailers, to entice customers to get off of their sofa and come in store to spend more money. Another popular option is integrating technology into the shopping experience, such as shopping apps and the ability to choose a product online and pick it up in store.
In sum, retailers need to innovate and be open to change, if they want to keep their stores open or risk disappearing in the next decade.