Great expectations: Recalibrating retail as we know it
By Evan Magliocca, brand marketing manager, Baesman Insights & Marketing
It is simultaneously the most exciting and most stressful time to be in the retail industry.
Technology is the ladder needed to finally reach our customers, but it's also the tidal wave overpowering even the strongest retailers.
Customers are the catalyst of that torrent.
Our hopes and ambitions rest on reaching them, yet they dangle the Sword of Damocles over our heads —always on the verge of abandoning brands at any moment: Sears, L Brands, Abercrombie & Fitch, and J. Crew, to name a few.
As an industry, we chatter about focusing on the customer obsessively. We roll out new ways to shop and interact at a dizzying pace. Despite all those efforts to create a desired reaction, retailers continue to crumble. It's not a lack of investment, willpower, resources, or technology. We have all of those.
Maybe buried in all our customer personas, UX flows, and traffic analysis, there are some underlying issues we haven't come to terms with quite yet.
The customer is powerful — and knows it
It may seem like common knowledge, but C-suite executives across the country have failed to acknowledge the power of the consumer — or they have at least shrugged it aside in favor of short-term benefits to the brand.
You see this most often when it comes to shipping prices. Executives love the revenue generated from shipping; they clutch it close to their chests, loathe to offer thresholds or free shipping for everyone.
The world is driven by dollars and the customer knows that now. More importantly, the customer has choices today that enable him or her to withhold dollars when unsatisfied.
Withholding money as protest works, and it's not usually for macro reasons. Usually the customer couldn't find a product easily, he or she waited in line a long time, the price was too high, shipping wasn't free, or the customer couldn't shop the way he or she wanted. Those protestations are small to the brand, but they're significant to the individual.
Ask department stores. Known for over-abundant product, laggardly service, and over-sized labyrinths that they call stores, department stores make customers work too hard. Why root around through Macy's, Sears, or K-Mart when the same process could take half the time and none of the frustration elsewhere?
Brands shouldn't see lapsed customers as just moving away from the brand — they should see the act as intentional, as a form of protest for an issue that customers perceive with the brand. And they should find a solution.
Product and price are still paramount
As marketers, analysts, and designers, we all think we can change the world. In many ways, we really can, but product, quality, and price are still the most important aspects for customers.
Millennials especially understand the correlation between price and quality — much to the detriment of retail profit margins. They want them to equal out. What's a fair price? It's all relative.
J. Crew has seen declines recently; they're often viewed as too high a price point for the product. Yet Bonobos isn't.
The difference is quality. J. Crew has denigrated its brand quality over years of poor performance, fashion misses, and stripping products. Bonobos offers highly-tailored product focused obsessively on comfort and fit with fashion-forward styles and patterns. The price, then, is worth it for Bonobos based on the offering, whereas J. Crew continues to fall flat and rely on discounting to move inventory.
Shopping is awful; buying product is fun
For all the talk about experience, the act of shopping is rather painful.
Traveling to the store, getting stuck in traffic, long lines at checkout, overcrowded malls, out of stock product, poor service — that's not fun. But buying is.
Can we really blame customers for not wanting to spend time trying to get to a store, or waiting on long load times and poor site navigation? Time is precious today — why waste it?
With this in mind, retail can have one of two focuses moving forward: convenience or experience.
If the focus is convenience, get customers in-and-out as quickly as possible. Limit assortment to avoid delays; lines need to be short and quick with painless payments at POS.
The downside for brick-and-mortar is that ecommerce will almost always win on convenience. It's impossible to beat the fact that I can shop from my couch. But foot traffic needs to increase, so why should customers spend precious time coming to your store? What compels them to get in their car, or convince a parent to drive them? Why deal with traffic to experience your store?
Is it trying on product? That's not enough with free returns and better product photography, not to mention the soon-to-be augmented reality to find your size.
Is it to feel product? That's also been overcome by ecommerce. Technology nativists have no apprehension anymore and retailers have done better to enhance those qualities online.
Is it the store experience? It hasn't changed in half a century, but it's the crux of driving foot traffic in the future.
You want customers to come to your store? Give them new. Give them exciting. Give them something they can't find anywhere else. Give them an experience they never imagined in which product is secondary, but emotion, enjoyment, and exhilaration are integrated with brand culture and image.
Store experiences need to be big, bold, and enticing for the experience alone.
While many brands are testing out new digital components in stores, very few brands are currently taking steps to revolutionize an outdated model.
Nike has been testing new store concepts for some time, but the concepts have never materialized into a larger roll-out. Nonetheless, Nike is trying to turn the store format on its head through innovative experiences.
Some concepts have focused on product trial areas with actual sport environments to let the customer be immersed in a specific atmosphere. That includes basketball courts with digital sensors displaying real-time feedback, soccer turf to test out shoes, and tracks allowing customers to ghost-race their previous times through a track-wide digital display.
So, the question becomes: how do you roll out innovative features like these at scale? While that question still looms over retail, Nike is clearly ahead of the pack when it comes to understanding what customers are searching for in new store experiences.
It's time to reset expectations
In retail, we sometimes get caught up in our own issues so far down the rabbit hole that we can't get an accurate view of the overall landscape. We test, refine, and optimize constantly, but we need to rethink some general principles. Customers still want a great product at a fair price, plain and simple, but the shopping experience my grandma had doesn't work in the 21st century. It's time to reset some of our foundational understandings about the industry.
Retailers aren't powerful, our customers are — and they know how to wield it. Once we embrace thatand listen to our customers, we'll find our way.