New Retail Playbook
The New Retail Playbook: Reimagining the Store
E-commerce won’t kill retail stores but will challenge them to change
If you build it, there is no guarantee they will come. The new retail playbook calls for retailers to rethink the four walls of the store and create a destination for shoppers. As e-commerce continues to make a footprint on retail, physical stores will not be killed off. Instead, they will be challenged to change by upending their strategies to marry the best of digital with the best of physical.
With a larger portion of shoppers joining the online movement, thanks to burgeoning new technology such as voice-enabled purchases and home delivery, it’s time to reimagine the shop. Based on findings from Daymon’s Private Brand Intelligence Report 2018, here are five strategies to bring the future of retail stores forward.
For modern shoppers, loyalty is a thing of the past. Many of the products and services that were once confined to a single retailer are now available everywhere, which means retailers need to encourage greater connectivity with consumers to build a relationship that motivates them to come back for more. German discounter Aldi put this strategy into practice in 2017 when it asked shoppers to share their ideas for the ultimate pudding dessert topping on Facebook for a chance to have it rolled out as a new product across stores. This type of connectivity encourages shopper loyalty because it ensures shoppers have a stake in the results. Considering seven in 10 engaged shoppers want to give feedback to help improve the shopping experience, now is the time to up the ante by creating new customer touch points—think innovation incubators, in-store cooking classes, design workshops and more.
Personalize the Store
If products and services are going to be successful, they need to be tailored to the specific lifestyles and needs of shoppers. The good news for retailers is that investing in personalization can pay off in a big way; but of course, the foremost roadblock is cost. However, private brands can help mitigate risk because they are positioned for scalability and profit, thanks to their inherent flexibility and unique position as a retail-controlled brand.
Daymon’s research shows that shoppers are acknowledging the experiential attributes of private brands, with 81% saying private brands address their specific local needs at least as effectively as—if not better than—national brands. Progressive retailers are already thinking in these terms. Take Dylan’s Candy Bar in New York City, for example, which has a dedicated area that uses 3D printers to deliver customized private brand candies in real-time, while encouraging shoppers to linger and learn more about this innovative technology exclusive to this location.
Make It Experiential
We are living in a world of overstimulation, so how does a retailer break through the clutter? The answer is dimensionalized experiences. With 59% of shoppers seeking engagement while they shop, it’s time to tap into this desire for discovery and multisensory interactions to transform their journey. Sligro, cash-and-carry retailer based in the Netherlands, has introduced experiential elements to reinvent traditional departments with digital coffee-tasting stations. Shoppers can use the stations to sample coffees while learning more about their origins with the simple touch of an interactive table. However, experience doesn’t end at the shelf. Retailers should look to incorporate AR, VR and other curated experiences both in and out of store to elevate and differentiate from the pack.
Fresh just got a lot more interesting. What used to be thought of as the produce department is now a much bigger idea and offering that extends across the store to include new and unique products and services. In fact, six in 10 shoppers cite fresh as being a determinant of store choice. Nontraditional retailers have caught on, which has led to a spike in fresh offerings at value, mass, drug and convenience shops. To outdo the new competition, retailers must abandon conventional thinking and approach fresh through a holistic lens.
Alexela Oil, an Estonia-based petrol station, illustrated this modern interpretation of fresh when it introduced local farmers market stands at its stores and allowed farmers to book stands for free and sell their local goods. Other retailers have also taken fresh to the next level, with fresh-focused restaurants, trend-forward prepared foods, meal kits, meal-prepping parties and new fresh services such as the produce butcher.
Time is the new currency, which means that doubling down on convenience is a winning bet. Retailers need to redefine convenience for the current “I want it now” culture—especially since, according to Daymon’s research, stores can witness a 48% attrition rate on average due to convenience-related frustrations, such as checkout. Apparel retailer Uniqlo provides an example of how to approach convenience differently by tapping c-store partners such as FamilyMart and Lawson to set up pickup services for their online orders in stores nationwide. Frictionless commerce can also be implemented by investing in relevant curation, streamlined omnichannel and seamless mobile integration.
While physical stores and e-commerce may seem like adversaries, the truth is they are just two parts of the retail ecosystem. Digital may be at the forefront of today’s conversations, but brick and mortar will always provide an experience that no digital advancement can replicate. The name of the game is now reimagining physical retail to pave the way for the store of the future.