Evolution of Retail

Amazon has changed the way we shop and the way brands sell; that is without a doubt. Prime free two-day shipping might be the single biggest innovation since the iPhone, but it’s come with its issues for brands. It’s making us fundamentally change the way we do business.

As recently as 15 years ago, shopping looked like this:

My family would drive the two hours from Longview to Dallas to visit NorthPark mall to go to Nordstrom or Neiman Marcus and get special items we couldn’t get where we lived. There were plenty more like us. Everyone visited big-box retailers and department stores to get everything. Further, when you were buying something, the price was the price; you didn’t shop around that much on your purchases unless they were big ones like a car.

Now, it looks a little different:

I can shop for anything I could ever need from the comfort of my bed or couch. When people do visit retailers, they’re constantly checking their phones to find the best price, and if you don’t have that best price, they’ll go find who does. However, for many purchases, retail outlets still represent an important part of the buying process. People want to be able to touch and feel the product, try it on in the case of clothes, or see the size of it in the case of other products.

That represents a paradox for retailers. The value of stores used to be in convenience because they were physically close. How do we create value out of physical stores, but also fight against people looking in stores and buying on their phones?

  1. Experiential Retail

One of the best ways to create value with a physical store is to create an experience inside your store. Change the relationship in-store from a transaction-based one to an experience-based one. Two great examples of this are Yeti and Neiman Marcus.

Yeti, a high-end cooler with a cult-like following, launched their flagship store this spring, designed by their agency, McGarrah Jessee. Inside, you can get barbecue, listen to live music, learn about their partners’ incredible adventures around the world, and experience the product in unique ways. The fact is, the Yeti store is much more than a store. It’s a step into the world that Yeti has created.

Their flagship store is an advertising tool. It’s a further step into their brand.

Neiman Marcus launched a new store in Fort Worth recently. For those who don’t know, they’ve been losing significant money over the past couple years, even to the point of considering a sale to a private equity firm. They’ve struggled to pivot with the digital revolution. With their new store in Fort Worth, they have a fresh look that may keep them afloat. Instead of a giant store full of racks and racks of sizes, they cut down on the size of the store and focused on the power of discovery that an in-store experience can bring. For example, instead of normal mirrors at the makeup and sunglass counters, they now have AR enabled mirrors that can show you different looks on your face and allow you to save them to your phone to compare them and buy the right products. They changed the dressing room too. Instead of mirrors, you can now take 360 degree photos of each outfit and view them on a touchscreen in the fitting area.  The new Neiman Marcus store is now focused on discovery, not purchase. It’s an experience, not a store.

  1. Service Focus

Another way to pivot in your retail store strategy is through exceedingly great customer service. Amazon can’t give advice on every single product on their website, and sometimes great customer service can keep someone shopping in your store.

In 2012, Best Buy was losing money, a lot of money. They hired a new CEO, Hubert Joly, who began a new philosophy called “Renew Blue.” He started by expanding Best Buy’s online capabilities, but he also completely changed their in-store approach. Best Buy has had the Geek Squad for a while, but if you were buying almost anything else, they struggled to give advice on their products. Hubert’s goal was to change that. Best Buy turned their employees into experts in their given departments. Combine that great customer service with the fact that they match prices, and you have a winner.

Of course, there are other ways to keep your retail store relevant. Nordstrom does it through a combination of legendary customer service and a constant rotation of pop-up shops and up and coming new brands. Walmart does it through sheer convenience and low prices.

But, the main point is retail is changing, and we have to change with it. How do we create more value than the “we have a store, and they don’t” philosophy?

 

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