Omnichannel success = maximizing the box
Through a special arrangement, what follows is a summary of an article from Retail Paradox, RSR Research’s weekly analysis on emerging issues facing retailers, presented here for discussion.
At some point, mature retailers in mature markets will not be able to drive enough growth to satisfy investors purely by opening new stores. But omnichannel retailing may hold the key to making existing stores more productive.
Here are just a few ways to drive revenue growth out of existing stores:
Store as physical touch point for online order pick-up and returns. A lot of retailers are doing this today, and even more are looking to do it in the future. The right balance has to be struck between ensuring that the store gets a shot at the incremental trip vs. annoying a customer by forcing them to trudge through the entire store to get their online order.
Store as local DC. I’ve heard retailers pushing back against landlord’s rent hikes, saying, "You’re not driving traffic to my location." If people don’t come, then why should the retailer pay more? Well, it may be that retailers need to bring the products to where the traffic is — the home. If stores are considered more holistically as part of a supply network, it will enable the retailer to drive more overall customer value by being faster and more responsive to local shopper needs.
Store as call center. Store associates can gain a lot more interaction time with customers if they sometimes fill call center roles, which also helps them get better at customer service. Associates can also connect local callers to local resources. This is an invaluable way of building local relationships — relationships that translate into a greater willingness to come to the store to meet that helpful associate in person.
Store as customer service center. REI offers bicycle repair services and Best Buy provides the Geek Squad. I firmly believe every retailer can come up with services to accompany their products. Executing on this is not easy, but if you want to drive additional value out of existing stores, services are a great way to drive repeat visits as well as build that local relationship with the local consumer.
There are many more ways to rethink the store to drive more revenue. Some will require investments in order to generate a return. Some will take time. What’s expected from store associates will have to change.
But the traditional brick & mortar way of thinking — "Marketing must drive traffic to my stores" — may have to be retired. Stores asking, "How do I utilize my store location more in order to drive sales?" have an opportunity to differentiate themselves. "Selling stuff" will always be the primary objective of a store, but how that store achieves that objective — omnichannel is changing that. For good.
Discussion Questions
How can omnichannel strategies improve the productivity of existing stores? Which suggestions mentioned in the article are your favorite?
Services. Services. Services. Did I mention, “services?!” Nikki mentioned ones that are definitely working. How about educational classes? DIY does them. How about grocery cooking classes? At least one international company does that.
Also, structured interstore transfers. Balance promotional item inventory better. Unload the stores with too much and bring it to the empty stores, or do a better job of instructing the shopper of which store has the product. This is done to an extent now, however this could become far more convenient.
Agreed that “selling stuff” is a primary objective and requirement for stores in order to pay for the physical space. What is going to have to change is the “stuff” that the store sells—and how.
Nikki Baird has outlined some excellent ways that stores can change to engage consumers and drive more sales, and a lot of the “stuff” that will drive sales is services, not individual products.
Consumers also need help in buying connected solutions. Case in point: AT&T flagship stores have a car in the store. They don’t sell the car, it is there to enable consumers to realize how they can connect their digital lives (and sell more AT&T services).
The biggest barrier to all of these omni-channel strategies is the talent to execute. Stores as call centers and stores as service centers requires recruiting and training very different talent than the clerks on the floor today. It will also require paying them more than the minimum wage.
As it’s likely stores reach a threshold due to retailers having an e-commerce presence, in fact many retailers (e.g. Barnes & Noble, J.C. Penneys, Macy’s, Staples, etc.) are actively shrinking their physical footprint, the store needs to adapt to the growing role and convenience that e-commerce plays in our daily lives. Each of the above ideas has merit, but as we are evolving towards a service economy, store as a customer service center makes the most sense to me.
The store as physical touch point and as local DC (which in my mind go hand-in-hand) is certainly the most practical and widespread of these strategies. Judging from the high adoption rate it seems to be working so well that it is practically becoming a necessity.
Offering something unique and helpful in your store—like the Geek Squad or REI’s bike repair—is an excellent way to drive business while encouraging customer loyalty and interaction. It can be difficult to decide what your store should offer so I suggest paying attention to your store associates and your customers: What do people ask for help with? What would make their shopping experience easier or more enjoyable? Going directly to your front line with these questions will ensure that you create a customer service center that is worth the effort.
The first step in climbing on board the omni-channel retail business practice is knowing exactly what your particular options are. It stands to reason that market awareness and company strengths are the first priorities to selecting a profitable venture. A review of the company’s information technology (IT) haves and needs for the market plan is and will always be directly applicable to the critical path of omni-channel market ventures. Reducing the overall number of software packages and getting rid of those with data files that are incompatible with the company’s point-of-sale and finance systems will save countless dollars that can then be used to scale up and modernize the IT infrastructure. In short IT is the key for this and will largely contain the reasons for passing and failing.
For sellers of products that require setup or after-market maintenance, the store-as-service-center dimension holds interesting promise for boosting the top line. Bikes need fixing, laptops need upgrading, suits need tailoring, shoes need re-soling, chainsaws need sharpening. In addition to the direct revenue, each service encounter creates two visits—drop off and pick up—which opens the door to buyer-seller relationships and incremental sales.
Digital technology holds promise to make services work better than ever. I’d favor online status checks for work in progress (similar to “where’s my package?” for online deliveries). A text or even a robo-call when a job is ready for pickup can be another nice touch. Retailers can bank customer knowledge to automate later relevant follow-ups, like “Time for your bike’s annual tune-up” or “Get that lawnmower ready for the season.”
Services may hold the key to same-store revenue increases and higher sales per square foot in categories where they make natural sense. Making them profitable presents a new challenge for retailers weaned on “stack ’em high, let me fly” merchandising. Success will require employees with both technical acumen and customer service instincts. Practices and deliverables must be defined and trained. Prices must be perceived as fair. Systems must enable employees and customers to make every encounter successful.
Each of the other three omni-channel strategies defined here has its own merits and opportunities. None are easy to implement. I suspect all will be demanded by shoppers sooner than later.
It has to be easy, engaging and relevant for it to be used by the customer and profitable for the retailer.
I love it! Maximizing the Box!”
The first step is to determine what the BOX does better than online. And what it does better is NOT sell goods. So, let’s look at the BOX and declare “Its primary purpose is everything that touches customer that does not include selling merchandise.”
My suggestion is customer service. What is more frustrating for a customer than not resolving service issues? Nothing! Make the primary purpose of the BOX a place for customers to resolve their difficult problems. The results are two fold. 1. The staff will approach customer service as if it is their number one priority, rather than a bother from angry and frustrated complainers. 2. Solving a problem for a customer makes that customer considerably more loyal and engenders trust of the retailer.
My second choice is make the BOX a physical touch point. That goes hand-in-hand with the first. Making a connection taking care of a customer goes much farther than the customer mindlessly buying merchandise and only interacting with a cashier.
Retail “Site Maximization Strategy” has evolved from a category killer/fill the box approach (think adding Rx and fuel to drive traffic, or cafes and natural foods to expand ring) to an omnichannel survival asset for home delivery, BOPIS, showrooming, etc. as depicted in the article.
While some goods lend themselves to skipping the physical store entirely with subscription services and other home delivery scenarios, most retail environments can better adapt to their shoppers’ evolving needs for convenience by thinking more broadly about how their store asset can add value. The wonder of our profession is that there are about 6,942 different strategies that can accomplish this, depending on the geography, product line, competitive environment, etc. What fun it is to witness this evolution.
I think they are all good suggestions—the top one in particular. This also depends then on having a good online presence, a website or a social media profile at the very least, so customers can find the store online. Customers are shopping as much online as offline (if not more), but I think many appreciate having an actual shop to go to for help. Many shops could therefore benefit from directing calls there, both for customer service and other enquiries—but like others have said, it will require rethinking the staff, training, hours, and pay.
The purchasing paradigm is shifting. Time was, a shopper would go to a store to buy groceries, or a mattress, or clothing, or anything. The same dynamic was at play for every category: shoppers went to stores to see the wares, order and buy. Today, that model has exploded and every category has a slightly different dynamic, which incorporates both digital and bricks and mortar touchpoints.
The role of the store will vary depending on the category; for example, for higher ticket items, shoppers will be looking for showcases and service centers; for fast-moving consumables, more of a fresh just-in-time order and pick-up may be in play.
I love any concept that allows the consumer the opportunity to actually interact with the store staff—hopefully in a positive way. In today’s stores, interaction is generally ringing the register or unlocking a fitting room door. Hardly a touchpoint and hardly makes an impression.
Retail should be looking for ways that the store staff can be useful, enhance the experience and bring out deeper relationships. That is what breeds loyalty.
For my 2 cents.
Physical stores have a big potential to provide resources that online simply can’t. Many of them come down to the human factor and can really improve customer happiness and loyalty.
I really like the store as customer service center because sometimes sending products back for repairs is tricky. Being able to go into a store (or have them come to you!) and get the service you need is a perfect solution.
Doing more with less rarely leads to exceptional. Making a store into a call center or warehouse will make working in such stores even less attractive.
How about actually selling the merchandise instead of trying to glom on multiple operations the store staff is ill-prepared to deliver on?
Stores as a physical touchpoint for online order pickup and returns—that’s my favorite. Nikki is correct that retailers continue to implement this tactic, but in order to truly benefit from an ominchannel strategy, retailers need to make sure that in-store pickup and online order returns to the store offer a seamless customer experience.
There’s much to be gained from a customer having a positive experience on a return item. LoyaltyOne research in January of this year shows that nearly eight out of ten Americans (79.3%) say a positive experience returning a gift to a store that they rarely visit would motivate them to shop more often at that store, and 83.3% of respondents say they would share information about a positive gift return experience with friends and family. However, 60.6% of consumers say they would stop shopping at a retailer after a poor gift return experience and 86.9%, say they would share a negative return experience with friends and family.
When it comes to in-store pickup, consumers value not having to wait for their purchases and avoiding shipping costs. But the convenience of in-store pickup, as Nikki mentioned, is negated by having to wait for an associate to find the order, or traipse through the entire store.
YES YES YES.
I think which suggestions make sense are segment- and almost retailer-specific. It’s about using all the touch points to build and sustain a relationship so as to become the store of first choice. A great article, and the sooner we stop thinking of channels as separate businesses the better. It’s sort of like thinking of someone differently depending on if you’re emailing them, talking on the phone or seeing them in person. It’s the same person!