There is no shying away from the fact that 2017 has seen some of the most aggressive retail store closings since the last recession, and by some projections, we may even outpace store closures figures from 2008. However, simply looking at top level numbers for store closings only tells part of the picture of what’s happening in retail. There is no doubt that the industry is undergoing a correction brought on by Ecommerce, but at the same time the store remains an essential pillar in retail, albeit in a changing role.
For those retailers growing their store footprint (yes, there are retailers aggressively opening physical store locations), the store is becoming a bastion of consumer experience focused on supplying to customers what online cannot.
That experience might be the thrill of the hunt (TJ Maxx, Marshalls, Homegoods), white glove service (luxury malls continue to do well in 2017), or even the fact that some products customers just must experience in person before you buy (ULTA, Bath & Body Works).
These retailers are doubling down on the store, but doing so intelligently to drive growth. It’s worth noting that these retailers are not only seeing sales growth in store, but also have realized that there is a correlation between brick and mortar stores and the online sales that occur from people’s couches nearby. The presence of a local store has the tendency to anchor customers to the retailer, even if they buy primarily from that retailer online. When stores close, there is a often a drop in online sales in those markets.
This is why an entire segment of e-retailers are jumping in to the world of brick and mortar. The reason, customer acquisition costs are lower and lifetime value is higher when compared to pure-play online retail. Just ask Bonobos, Warby Parker, Casper or even Amazon who are well-aware of the ‘network effect’ stores have on their new and repeat customers.
Do these stores look different than the 1000s slated to close this year?
These retailers have found disruptive ways to drive store growth by leveraging the store as a strategic advantage by doing two things:
1) Emphasizing the store experience in a way that can’t be duplicated online (show-rooming inventory and employing future-looking technologies)
2) Empowering the store with data and insights about local markets thus deepening relationships with connected consumers
Those traditional retailers, thinking that perhaps they’ll close ALL their stores and become online only, should think twice. We’ve all seen retailers proceed with the closing of all their stores with intentions of becoming Ecommerce only, then a few months later go out of business.
Evidenced by retailers who are opening new and innovative store formats, the store remains a cornerstone of retail. However, retailers must become smarter about how they leverage these assets and drive store innovation when for many, the store itself remains largely unchanged in the explosion of technology we’ve experienced in the previous decade.
It’s time to disrupt the store!