Shoptalk recap: Are stores flying or dying?
For the movers and shakers who gathered at the inaugural Shoptalk conference this week, an existential question still remains unresolved: Are stores poised to soar in the digital stratosphere or are they circling the digital drain?
“Stores are incredibly challenged,” said Ron Johnson, CEO of Enjoy, the online services startup he founded this year following his stunning success with the Apple Store and shocking disappointment at J.C. Penney.
“Over the past 20 years, stores have been in a relative decline,” he added, referencing the faster growth posted by Amazon.com and recent reports of soft quarterly earnings and closings from brick and mortar chains.
But Jerry Storch, CEO of Canada’s Hudson’s Bay Company, which operates Saks 5th Avenue, Lord & Taylor, Gilt and Germany’s Galeria Kaufof, as well as its eponymous stores north of the border, would beg to differ.
“That narrative is all wrong; 90.2 percent of sales are still in stores,” he told a packed audience. “Amazon still only controls 1.5 percent of U.S. retail sales.”
Mr. Storch described a new status quo in which nearly all transactions are digitally influenced or involve at least one digital touchpoint. “Eighty-two percent of online retail interactions involve stores at some point,” he said, while “seventy percent of digital interactions create a store visit.”
Mr. Johnson said the business model for Enjoy – which sells, delivers and sets up high-consideration consumer purchases like home automation and electronics – is investing in high-quality hires instead of bricks and mortar.
“Our customers order items digitally and receive a hand delivery and high-quality personal experience, at home,” he said. So far Enjoy is offering services in San Francisco, New York, Los Angeles and Chicago markets, with plans to widen that to 10 markets in its second year. He expects to be “profitable at the market level” by next fall.
The two presentations offered contrasting views about the future of stores. While Mr. Storch’s Hudson’s Bay has been doubling down on high-quality department store brands and seeking to digitally empower them, Enjoy’s Johnson is avoiding brick and mortar like a disease, preferring a high-quality field force who can deliver an in-home experience that is Apple Store-inspired.
- Flying or Dying: Whose View of Stores Rings True for The Future? – Tenser’s Tirades
- Shoptalk
- Enjoy
- Pondering the store’s future in the age of web buying – The Associated Press
Ron Johnson (left); Jerry Storch (right) – Photos: James Tenser
DISCUSSION QUESTIONS: Are brick and mortar stores poised to soar or hit the floor? Do you agree with Hudson’s Bay strategy of adding more physical retail assets and empowering them digitally? Or is Enjoy channeling the future with a pure online service model?
Lance ThornswoodSr Director, Omnichannel, JCPenney
Lance ThornswoodSr Director, Omnichannel, JCPenney
Lance ThornswoodSr Director, Omnichannel, JCPenney
Lance ThornswoodSr Director, Omnichannel, JCPenney
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18 Comments on "Shoptalk recap: Are stores flying or dying?"
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Co-founder, RSR Research
Interesting … Brian and I are working through some data on retail growth strategies and we’re finding that retailers who are doing well see a valuable and valid future for stores along with digital channels. Those who are not doing as well in overall sales are betting their futures on digital channels.
Since Mr. Johnson didn’t exactly set the world on fire at J.C. Penney, it’s no wonder he thinks digital is the future. Hudson’s Bay is doing a bit better, I think.
Separately, I think it’s really important that we stop quoting the “10 percent” number as gospel. When Neiman Marcus is consummating 26 percent of its sales online, Nordstrom 19 percent, Macy’s 12 percent and Walmart 3 percent, it’s clear that the “average” is pretty meaningless.
President/CEO, The Retail Doctor
Ron Johnson would have to say that after the damage he inflicted on brick-and-mortar retailer J.C. Penney. Retail offers a variety of ways to sell right now. I think the amount of online retail is understated and the potential upside of brick-and-mortar is also understated. And no, I don’t look to Ron Johnson as the oracle, he’s human like the rest of us.
Chief Amazement Officer, Shepard Presentations, LLC
It makes sense that brick-and-mortar store sales decline. Online is taking those sales away. It is important to note that overall sales aren’t declining. Just where the purchase is made (in-store or online) is changing. The best retailers will strike the balance between brick-and-mortar and digital. Some are already doing it.
Principal, Retail Technology Group
Stores will not “soar” unless some new paradigm shift takes place. Stores will share their loot with commerce. An equilibrium will be reached in which there will be fewer physical units doing well and there will be a larger e-commerce business for omnichannel retailers.
As I have said before, for any one retailer, sales in an omnichannel model are a zero-sum game. The stores will lose sales to their e-commerce brothers and sisters and there will be fewer of them. I think Ron Johnson has it wrong. As to HBC, that strategy may backfire. There are fewer prime real estate locations and even fewer for a department store format. Unless HBC has a real estate secret sauce, increasing real estate assets won’t work.
Principal, Anne Howe Associates
President and CEO, ProLogic Retail Services
Physical stores continue to be the preferred environment for presenting goods and services to potential buyers. The retailer can showcase products in their optimal setting, giving shoppers the best possible experience in a controlled space. The shopper can fully experience the product — through sight, sound and touch — without the intrusion of a home visit.
Storch makes a strong point that over 90 percent of sales take place in stores and that the vast majority of digital interactions involve a store visit. Online communication with shoppers is highly important for demand generation, product research and answering questions, but the digital services will enhance the store experience, not replace it.
Director, SaaS Marketing, Zebra Technologies
Creating a great shopping experience that draws the customer into the channel is what all retailer should strive to accomplish. The retailers that devise vibrant shopping paths that engage shoppers across channels in a manner that is consistent with their brand, their unique charm and that fits with their product offerings will be the ones that get more out of each channel, be it store or online vehicle. Experiment with that combination of stores, online and connected properties, pop-ups, et al. that drive retail sales. This is when retail gets fun.
Principal, Your Retail Authority, LLC
Human beings are still tactile and as long as that remains, there will be a place for stores. Are the stores poised for it? Absolutely not, for most. There are a few brands out there who are getting it right.
I tend to lean in the direction that staple goods, which we buy regularly and don’t really need to touch or interact with, will be consumed digitally. But we still need a way to discover new products and services as well as those that require more pondering of the senses. Stores need to learn how to do this.
Just as an example, and I get no payola from them, have you ever been to PIRCH? They get it!
For my 2 cents.
Principal, Cathy Hotka & Associates
The answer is YES — stores are flying AND dying. There’s no getting around the fact that online stores have way less chance of out-of-stocks and improve the customer’s ability to compare products. And it’s indisputable that customers will want to see items in person, try them on and try them out. The smart strategy will be to nurture commerce in every way that consumers want it.
Global Retail & CPG Sales Strategist, IBM
Stores will ALWAYS serve a place in society. They are social outlets for people, as well as therapeutic, let alone a shopping tool. These aspects won’t go away. More and more pure digital retailers are opening stores. Long live the stores!
CEO, President- American Retail Consultants
This is a good contrast of differing views on stores, but as was duly noted, retail stores are required for their physical presence and eventual consumer decision making. Amazon only has a few percentages of the entire market, but that doesn’t change their impact on the importance of omnichannel marketing and the online presence in the consumer decision making model. Stores are here to stay, but their importance is changing as our retail models continue to evolve.
Sr Director, Omnichannel, JCPenney
Having worked in organizations run by both Ron Johnson and Jerry Storch, I have a lot of respect for both, but I’ve got to side with Jerry on this one.
I don’t see brick and mortar dying: the physical store is adapting to a new reality where the vast number transactions are now influenced by digital — and where brick-and-mortar still has a very vital role in displaying product, enabling face-to-face customer interaction, warehousing & fulfillment, and, oh yeah, also selling merchandise directly to consumers who can take it home right then and there. Cool, right?
10 years ago it may have looked like eCommerce v. Brick-and-Mortar, but now it’s the synergistic experience of both that will define retail success going forward. We should come up with a new way to talk about that combination. I dunno, maybe we could call it “omnichannel” for like, all channels working together. Just throwing it out there…
Scientific Advisor Kantar Retail; Adjunct Ehrenberg-Bass; Shopper Scientist LLC
Managing Partner Cambridge Retail Advisors
Retail Tech Marketing Strategist | B2B Expert Storytelling™ Guru | President, VSN Media LLC
Principal, The Feedback Group
Makes total sense. Some items make more sense in the digital realm while others will thrive more in a traditional retail environment. But there is clearly room for both and and some of each will survive and thrive while others will drown and die.
Fall in love with a problem, not a specific solution.
Digital and stores are solutions; the problem is adding value to consumers. Yes I know, you have leases, and AMZN is killing you with free shipping and your margins are in trouble and so many things. And yes, it s**ks. But somewhere in your company and among your customers there’s got to be some joy and love. Go and find it. Don’t look for answers outside of yourself — think deeply about why you exist.
Retailing is where the rubber meets the road and I know you know this.
Consumer Center of Competence Leader, IBM