There has been plenty of press lately about “The Retail Apocalypse.” Retailers who were once regarded as market leaders are now closing stores by the hundreds, and others are shuttering their businesses entirely. While “The Death of Retail” makes for sensational, eye-catching (and often, click-baiting) headlines, in reality, many retailers are in fact growing, as is the retail sector as a whole. As Paula Rosenblum pointed out in her recent Forbes rebuttal of the dramatic headlines, retail sales in the first quarter of 2017 actually increased by 4.1% over the first quarter of the previous year.
Why, then, are some stores wilting away while others blossom? Although there are many factors at play, innovation is a key determinant: retailers who successfully adapt to changing consumer and market trends the fastest will be the ones who ultimately come out on top.
1. Weak Web Strategy
Times are changing: a 2016 survey found that, for the first time, consumers had made more purchases online than they did in stores. (WSJ) Retailers who lag behind in online experience have suffered dire consequences. One example is Gymboree, which recently announced that it was closing hundreds of stores and filing for bankruptcy protection. Online sales represent less than one-quarter of Gymboree’s overall revenue, and its web systems are “dated and unsupported,” according to James Mesterharm, the struggling retailer’s Chief Restructuring Officer. (Total Retail) Engaging features like ratings and reviews, social sharing, detailed product images and videos, and enticing discounts and promotions are now common, and consumers expect them everywhere they shop.
What you can do: Why are Gymboree and The Children’s Place closing hundreds of stores while other children’s wear retailers are thriving? Investment in the online customer experience and a flexible, robust e-commerce platform is one important factor that sets successful retailers like Tea Collection apart. An e-commerce platform that streamlines the activities needed to operate an online store with integrated tools for managing SEO, marketing, content, and more, creates a solid foundation for efficient e-commerce operations.
2. Poor Omni-Channel Execution
Whereas omni-channel commerce is on most retailers’ minds these days, many still struggle to manage multiple channels efficiently. True unified commerce ties in ALL of the retailer’s channels, which may go beyond physical stores, e-commerce sites, and catalog sales to include marketplaces like eBay and Amazon. Nowadays, shoppers are making more of their purchases online: between 2010 and last year, Amazon’s sales in North America quintupled from $16 billion to $80 billion! (The Atlantic) When discussing recently announced store closures at The Children’s Place, Betty Chen, managing director of Mizuho Securities, said, “Alternative sales channels may become more critical in the future. The Children’s Place continues to grow the wholesale business with the rollout of a replenishment program with Amazon.” (Forbes) Even the Swedish furniture giant IKEA has hinted at selling on Amazon recently. It is quickly becoming an imperative for retailers to list their wares on the world’s largest online marketplace.
What you can do: While many retailers realize that they can’t avoid Amazon any longer (if you can’t beat ‘em, join ‘em), those who have begun merchandising their products on the site often struggle to manage the new channel. Many outdated e-commerce systems don’t allow retailers to oversee marketplaces like Amazon in the same system as they manage the rest of their business. An e-commerce platform that’s built with omni-channel retailing in mind enables retailers to manage all of their products, orders, customers, and promotions in a single place, reducing the risk of errors and making the whole process faster and leaner.
3. Underinvesting in Stores
After everything that’s been observed about the importance of e-commerce and online marketplaces, are physical stores still relevant at all? Absolutely! However, the role of the store is evolving. For example, showrooming, the term used to describe browsing in a store and then buying online, was once perceived as a threat by many retailers and industry analysts. Forward-thinking retailers now see it as an opportunity. They know that omni-channel shoppers spend 4 % more during in-store shopping trips and 10 % more online than customers who only used a single channel. (Forbes) Many retailers have unduly shifted their focus and investments from brick-and-mortar stores, leaving physical locations to be both uninspiring and inconvenient to today’s shoppers. Retailers who have been slow to adopt new technologies like mobile point of sale and clienteling are lagging behind in delivering the quick, convenient service and engaging experience that today’s consumers demand.
What you can do: Stores offer several distinct advantages over other channels: one of the most important is retail staff. Store associates are the human face of your brand, and if they are equipped with the right tools and technology to serve their customers better, they will then have a measurable and long-term impact on overall sales. What’s more, sales associates who use tools such as clienteling can not only make the in-store experience more personal but can also continue to grow the brand-customer relationship in-between visits, leading to lasting results.
Are you ready to face your biggest retail challenges? The business of retail is evolving at a rapid pace, and retailers who adapt quickly are the ones who will ultimately survive.