The holiday shopping season proved to be a strong one for retailers, with year-over-year growth of 3.8%, with 2.9% growth in-store, and 16-19% growth online. The continued rapid expansion of digital versus physical stores have forced many retailers to attempt complex pivots. As a result, major brands like Macy’s and Nordstroms have have experienced some unfortunate results.
However, new evidence is starting to indicate that physical stores aren’t dying; instead, their role is evolving and in many ways, reemerging. As website design and functionality begins to standardize, innovation is returning to the physical store and reinvigorate the customer experience. Consequently, more online retailers are actually investing in physical locations to drive sales. For example, Amazon is experimenting with different store-based revenue models, including its recent acquisition of Whole Foods, while Warby Parker is aggressively expanding its physical presence.
The strengths of brick-and-mortar retail are beginning to showcase themselves. The most obvious advantage is one that online outlets simply reproduce: discovery. And the most successful physical retailers are capitalizing on this.
What Is Discovery?
Waking up to fresh-baked cookies, pulling a shiny new laptop out of an unopened box, and feeling a cashmere scarf of the rack - what do these three things all have in common? They are tactile, multisensory experiences that we all have with novel objects in our lives. Discovery is important - it’s why wrapping presents makes recipients happier - and the more we can do to create joy around discovery, the better overall experience shoppers have.
How consumers discover products is enormously valuable, and the importance of discovery carries over into brands. Retailers the size of tech juggernaut Apple to the up-and-coming Madewell have created a best-in-class product and brand discovery process that share the following characteristics:
- Sensory engagement: touch, smell, and taste are all senses that require a physical presence to engage. Kith’s sneaker stores take a unique approach, combining high quality shoes with a more robust shopping experience augmented with ice cream. Samsung’s new store is a figurative playground of sights, sounds, and experiences, which all serve to create lasting memories, positive sentiment, and a lifestyle-focused value proposition for every shopper.
- Interactivity: customers love interacting with the products they want, and just as importantly, interacting with products helps create a lifestyle element to every brand. At the deluxe level, think about the store Adidas recently opened in New York. For a much more practical example, you can look to B8ta’s store layout, as well as their overall business model for an example of how to make interactivity the center of a customer’s experience.
- Personalization: shoppers have become increasingly demanding, but have also come to value personalization and craftsmanship in everyday items. Coach has capitalized on this by allowing customers to create their own bag in person, customizing it within Coach parameters, and discovering how the bags, themselves, are made. This gives patrons an intimate connection to both the brand and products.
- Vision: one thing the most innovative retailers do to set themselves apart is to create a vision for their customers. Painting a vision for consumers helps them weave products and services into their daily lives, transcending transactional value and becoming a true lifestyle brand. The more immersed a brand becomes in a customer’s life, the more loyalty and advocacy they return.
These are all ways in which physical stores excel at product and brand discovery, and four unique attributes that ecommerce can’t yet offer.
Discovery Is Key to Winning Customers
The challenge facing physical retailers is competing with the sheer convenience of shopping from your couch. Brick-and-mortar stores will have to navigate between the complexities of matching the ease of ecommerce, building consumer trust with pricing, and differentiating from digital and physical competition.
To truly stand out, the physical retailer can capitalize on the unique in-person experiences that online shops cannot replicate. By focusing on the experience of product and brand discovery, companies both large and small can employ a targeted strategy that appeals to consumer demands while driving positive sentiment, lasting memories, and overall customer joy. The strategy of discovery-first marketing has the benefit of driving sales in such a way that doesn’t overexert employees, ensuring happiness for staff and patrons.
Winning in retail isn’t just about sheer gross revenue, it’s also about profitability. While certain retailers are poised to have successful revenue growth in 2018, an over-reliance on steep discounting will ultimately cut into their margins. Smart retailers will invest in creating a world-class discovery process while using discounts strategically.