The way we are shopping and consuming is changing, and changing at pace!
We used to drive, en mass, in our cars to large supermarkets that promised us a world of a one-stop shop - why not treat yourself to a new duvet and towel set, whilst buying your weekly veg?! As our lives got busier, and the internet offered us greater choice, it made sense to compare and bulk-buy items online, with the odd top-up shop in your local convenience store. Now, promiscuous beings that we are, we flirt between discounters where we are guaranteed good prices, online where we can easily compare prices, and we might even order a Deliveroo 'for one' mid week (or is that just me...?!).
Retailers need to recognise the signs of rapidly-changing shopping habits and understand their role in this ever-changing environment. It is clear that those that haven't anticipated or fully embraced the changing trend, are now losing. And losing at a rapid rate... it's like a game of skittles and we're heading for a strike.
By not adapting to these evolving shopping habits, retailers are now being forced to consider cutting costs or worse still go into administration. Recent examples such as Mothercare ‘s proposed store closures, Toys R Us’ liquidation in May and House of Fraser’s closure of 31 stores are all indicators that traditional retail is not reacting fast enough. Even our sacred institution of M&S is not safe from the cull as they are closing a third of their stores!
Yes, cost-cutting is one way to optimise profit and protect further losses, especially in the context of rising business rates*. Indeed, from time to time, periods of entrenchment is required as has been the case with Tesco - Dave Lewis' strategy of entrenchment in 2015 is paying off as the ship is turning. However, focus should not be turned from top-line growth and how to win in the current climate.
A quote I think sums this up well is by James C.Collins in his book From Good to Great:
Greatness is not a function of circumstance. Greatness, it turns out, is largely a matter of conscious choice, and discipline .**
Retailers need to offer more than simply products.
Consumers these days are looking for experiences. This is something that bricks and mortar actually has an advantage of over online retailers.
Think about Toys R Us - surely they should've been all about play and the enjoyment of playing?! Instead shoppers were met with toys on shelves in boxes with 'do not touch' or 'do not open' signs, and bikes on racks.
Mothercare should be about nurturing and trust. Mums are probably not only seeking products, but also advice and guidance on their mothering needs. Perhaps they could start a subscription service of products and / or advice at different stages of pregnancy through to early years to capture loyalty?!
Here are three companies doing experiential in retail well - selling more than just a product:
Sainsburys
Sainsburys are doing a great job at offering in-store experiences with their sushi counters and now even partnering with Ben & Jerry's to offer ice cream parlours! Why is buying sushi from a counter with chefs behind it any different from buying the pre-packed sushi I've seen near the sandwiches in a Morrisons store? I don't know...but it is, and I'm paying a premium for it! And while I'm there I'll probably pick up some things for dinner.
Lush
Lush stores are also doing well by creating an experience in store (UK sales +30%, Companies House). You even know when you are close to a Lush store for the distinctive aroma - whether you love it or hate it. Staff are friendly without being overly annoying, and consumers can interact with the products and the products feel freely accessible to touch and smell.
Lululemon
Lululemon has proved it’s more than just a brand selling products. It has built a relationship with customers through living and breathing its values. From managing running clubs, to hosting yoga sessions in stores and partnering with healthy-eating start-ups in store.
These are all great examples of bricks-and-mortar retailers that have moved with the times.
4 things to make experiential work in retail:
1. Customer service - with the power of social media and everyone having a voice, you cannot afford to offer poor customer service in-store. Instant, face-to-face support is an advantage bricks and mortar stores have and they should be exploiting this.
2. Partnerships - working with others who have strengths in different areas is an advantage. Don't be afraid of working with others in your space- embracing it may lead to far greater wins.
3. Personalisation – In-store offers the opportunity to provide personalisation - whether through ordering exactly what Ben and Jerrys ice cream combo you want in Sainsburys, to a shop assistant's advice on the best running gear for you.
4. Sticking to your core values - it wouldn't work if Lululemon collaborated with McDonalds or cinema offers, it does however work with offering healthy food brands in stores.
Sources / Credits
*Read more about business rates impacting retail here
** Good to Great by Jim C.Collins
https://www.talkingretail.com/news/industry-news/sainsburys-trials-ice-cream-parlours-11-06-2018/