The amount of information collected from an in-store POS is vast. Coupled with e-commerce data gathered from online transactions, retailers can glean a pretty accurate picture of who their customers really are: their tastes, sizes, socio-economic status and demographics.
Artificial intelligence (AI) is being used to correlate all of that information to provide an efficient, personalized experience that caters to shoppers’ preferences.
Numerous companies are investing significantly in the technology; Meticulous Research predicts the global AI in retail market will grow 35.9% between 2019 and 2025, reaching $15.3 billion.
AI can help discern the patterns in consumer behavior that can answer the questions on every retailer’s mind: how do we keep shoppers coming back?
AI for shopper convenience
Using AI to make sense of customer information can help retailers create efficient shopping experiences, whether that’s at a physical retail location or online.
These types of retailer-directed experiences are particularly appealing to millennials, the first digitally native generation.
In general, the fact that millennials gravitate toward digital-first approaches puts retailers and brands under pressure to continually innovate; businesses are striving not only to know what the customers want before they reach the store, but also to have it readily available.
Retailers that create an atmosphere of convenience and ease are generally rewarded with repeat business.
That was perhaps most evident at the height of the COVID-19 pandemic, when customers turned to e-commerce because of the ease of filling their shopping needs, from clothing to groceries to cleaning supplies. For 15 months, online ordering surged.
In response, brick and mortar retailers expanded their channels, and many that once eschewed online orders quickly found significant revenue gains by allowing customers to place orders online and collect them curbside.
Now, as retailers emerge from the past year with new methods of meeting customer needs, they also have found themselves possessing significantly more shopper data.
Personalized promotions
Retailers can use AI to build effective marketing campaigns that can not only help shoppers find the products they are looking for, but also to discover others they didn’t even know they wanted.
Product intelligence plus customer data combined with AI can produce targeted marketing and promotions that can encourage loyalty, increase return visits, and increase conversion rates.
Online, AI can help decrease bounce rates and improve engagement on the website by using personalized recommendations and banners.
AI can help retailers provide the personalized experience customers receive online when they are shopping in stores.
For example, AI cameras and sensors can record when an item is placed back after a customer selects it.
If that action is a trend, the manager can decide if the item should be displayed elsewhere, in an effort to provide it more visibility.
Better forecasting
AI-driven tools analyzing Retail Pro POS data help retailers understand who their consumers are, which allows them to provide personalized offers and deals.
Business analytics provide valuable insight into customer demographics, peak operation hours, buying trends and inventory.
Retailers can examine purchasing history from POS transactions to determine what influences customers’ buying habits.
By integrating automation from AI-driven POS systems in multiple sales channels — online, in-store, apps, etc. — retailers can more clearly understand their customers’ experiences and continue to refine them to better suit their needs.
As a retailer in a competitive marketplace, a major focus should be monitoring the health of your business. For most retailers this means getting a handle on your Key Performance Indicators, or KPIs.
Defining KPIs
A KPI is a metric that is designed to give you a quick snapshot of some aspect of your business. A KPI might be a measure of sales, customer activity, or financial strength.
More than simply a bottom line number, a KPI is usually expressed as a comparison with some other factor. For example, looking at the average sale per customer gives you an understanding of the potential value of each customer.
Which KPIs should I track?
There are hundreds of KPIs that a retail business owner could be using at any one time. If an activity can be tracked and measured in your store, a KPI can be developed to provide you with business intelligence. One of the challenges is to decide on a handful of KPIs that provide you with the most valuable information based on the goals and objectives of your operation.
Every retailer will have a different set of KPIs. For example, a business that uses commissioned sales associates to sell to customers may place a heavy emphasis on KPIs that track the effectiveness of an individual sales associate while these KPIs may be irrelevant for another retail business.
You may want to track KPIs related to your customers. Simply knowing the number of customers who enter the store each day may not be enough for you. You may want to gain a deeper understanding about your customer’s shopping patterns and what converts them from a casual shopper into a dedicated, returning customer.
To do this, you need to carefully consider what data you should collect and analyze.
Choosing the right data
Data, by itself, is not a KPI until it’s arranged in a meaningful way. A list of sales transactions throughout the day is good data to have but it’s not the whole picture. The next step might be to calculate the total dollar amount of sales for the day. You can arrange the data in any number of ways: sales by department, sales by item, or sales by cashier. At this point, you still only have data to analyze.
The strength of KPIs is knowing how to use data to gain a competitive advantage. It all comes down to the goals and objectives you set for your business.
For each goal you establish, you must also create the metric that will determine if you are successful in reaching that goal. Your KPIs become the method by which you track your progress. If your key performance indicators do not reflect progress toward your goal, you must change the tactics you are using in your business.
Using raw data to optimize your retail operations
Let’s look at one simple example of how your goals and KPIs come together to give you a competitive advantage.
Marlene runs a small clothing store in a mid-size urban market. Lately things have been going good but the business has leveled off. She would like to increase her business over the next year. She creates a goal to increase her sales by 10%.
Marlene realizes that an obvious KPI is her total sales. She can also break down her sales on a daily, weekly, monthly, or quarterly basis to compare with the previous year. This gives her the maximum degree of flexibility especially since her sales tend to fluctuate according to well-defined fashion seasons.
Marlene decides that a good strategy would be to do more advertising on radio and television during the coming year. To find out if the advertising is bringing customers into the store, she decides to track footfall, the number of people coming into the store. Fortunately, she tracked her traffic last year but if she didn’t, she could use the new data by correlating store traffic with the dates and times that advertising is running to see if the ads have an immediate effect.
If she notices that store traffic increases for a few days after a television ad appears, she may make more strategic choices about when to run television ads. Or she may be sure to have a special sale during the weekend following a big flood of advertising.
By tracking average customer spend, Marlene can determine how much the average customer spends during each purchase transaction. In order to increase sales, she decides to place some displays with accessories, scarves, and jewelry close to the cash registers. The strategy works and she notices that her average customer spend amount increases due to impulse purchases while customers are waiting in line.
Although her total sales KPI indicates some overall growth, Marlene is not satisfied with the progress she is making. She begins to track her conversion rate, the number of transactions throughout the day divided by the number of people who enter the store. This seems to indicate that a lot of people are coming into the store but not many are making purchases.
To combat this, she could implement a number of new strategies. Perhaps she should take a look at rotating her inventory more frequently so the styles are kept fresh. She might decide that she needs to add new merchandise. Eventually, Marlene decides to hire additional staff to take more time with the customers and help them pick out merchandise.
To maximize the effectiveness of her new employees, she tracks shopper to staff ratio. This KPI lets Marlene determine if she has the appropriate number of employees on the sales floor to handle the volume of shoppers. Monitoring her wage costs, which is wages paid divided by the total sales, will also help her monitor her costs.
As her business grows, Marlene may decide to implement different strategies or develop completely new goals for her business. These goals and strategies may necessitate new KPIs to help her determine if they are effective. As her needs change, so will her data collection requirements and so will the way she analyses that data.
Tracking KPIs in your Retail Pro
Retailers using Retail Pro have several built-in tools to help them track important KPIs easily and automatically, including pre-designed reports that can be accessed in Retail Pro Reports.
Filters allow you to easily report on different aspects of your operation and break down your data into different segments to allow you to take a birds-eye view or get down into the weeds.
Retail Pro reports can also be completely customized. This allows you to save time and money by adapting an existing report to show exactly the information you need without a lot of work and effort.
From inside Retail Pro, you can use customer or inventory statistics to gain more perspective.
X-Out and graphical reports allows you to look at sales activity throughout the day and get instant analysis.
Have a different KPI that makes your retail life easier, or have questions about KPIs? Email us at training@retailpro.com with your comments and questions.
Retail Pro Prism is fully customizable, integrable POS and retail omnichannel operations management software that helps retailers improve efficiency in inventory, customer, and store operations management across channels.
Whether you operate as a franchise, corporate store, outlet, or multi-subsidiary retailer, you can overcome data fragmentation and configure Retail Pro to your exact workflow, branding, and business needs.
Full-Featured Enterprise POS
Expand what your POS can do with complete access to customer details, gift card balances and promotions while benefiting from native offline capability and enhanced security.
Integrated Software
Use open APIs to integrate data from third-party solutions including ecommerce, loyalty, ERP, CRM, accounting, and any other tool you use.
Omnichannel Order Fulfillment
Create sales at one location and fulfill the order at any other location, as part of your BOPIS, Click and Collect or other omnichannel efforts.
Browser-Based POS for Uncompromised Mobility
Empower associates to complete transactions and inventory tasks anywhere on the sales floor with your choice of Windows, Android, or iOS devices.
Configurable User Interface
Increase transaction speed and efficiency by customizing the user interface with your exact checkout workflow and preferences.
Centralized Inventory Management
Save time on inventory management with robust style definition grids and centralized control that allows you to have complete visibility across all locations and online.
Automated Replenishment & Transfers
Increase inventory turn and keep your shelves fully stocked with automated inventory transfers between stores and best replenishment features.
In-store promotions are designed to attract customers to brick-and-mortar stores, build brand or product awareness and provide benefits that online shopping simply just cannot give them. If customers are not visiting the store they might be missing out on special promotions, discounts or free giveaways.
Also when customers shop at a local business, they are strengthening the local economy as well.
In order to compete with eCommerce, loyalty programs for physical stores have to be more than just membership cards. Creating a loyalty program is a great way to effectively strengthen your brand image, connect with your customers, improve your retention and drive more in-store sales. Following the pandemic touchless solutions are playing an essential role in the in-store experience. It is crucial that retailers show customers that they are invested in their safety as stores reopen.
Enroll Customers Into Your Loyalty Program In-Store In a Fun Way
Show customers how your in-store location is just as enjoyable as shopping online by:
Vivifying the thrills of shopping in person via allowing your customers to browse your online shop in your physical location
Making sure your physical and digital stores work together
Letting your customers interact with your products
Also, reward your returning customers with a loyalty program by offering discounts after a certain amount of visits, access to special in-store events and other perks. If they like the program they are more likely to recommend your store to friends and their families. Special offers by push notifications, personalized offers will help you enhance brand experience.
Bridge the gap between offline and online customer interactions with digital loyalty cards, which is an effective solution to boost in-store engagement and reach more customers through location-based messages, thereby driving multiple business KPIs.
Experiential Retail
According to a study by Deloitte experience has become the differentiating factor for businesses. Over 50 percent of customers say that the overall enjoyment of the shopping experience was important when making their final decision. When customers visit a store and are offered experiences such as large video display walls, a cafe, kids’ corner, virtual reality they will want to return. All these create a memorable experience and soar customer expectations.
Retailers can engage with in-store customers by enriching the offline customer journey, by offering them fun, easy and convenient ways to interact with gamified features. For instance, an offline treasure hunt, where customers need to find marked treasures or products inside the store, then use their mobile to scan the item’s barcode for a reward. You can prompt customers to thoroughly inspect the whole store, ensuring that they discover products or sections they would have overlooked otherwise. Send customers a push notification inviting them to play a fun game and win rewards. A Prize Wheel is ideal for mobile apps if you prefer touchless engagement for in-store devices. Showcase the prize wheel on an in-store device to instantly catch customers’ attention. Customers can approach the wheel and take a spin, giving you a new way to engage them.
After spinning the wheel and landing on a reward, customers are asked to log in or enroll in the loyalty program to redeem it. This ensures that they identify themselves while shopping.
QR Codes
Implementing a touch-free solution like QR codes on brochures or on signages in different areas of the shop, on the counter or in the dressing rooms, is a great way to make customers aware of your loyalty program. You might consider putting a QR code on the tags of your most popular products, so customers can scan it with their phone and receive a reward in return such as a small gift at the counter or a sum of loyalty points. Make sure to let the customer know that upon scanning the QR code they get rewarded.
DSW, the American branded footwear and accessories retailer featured QR codes on their magazine ads to engage customers. When customers scan the QR code they are taken to the DSW’s mobile site, where they can find the store nearest to them to view the products in person, check their order status, view DSW’s rewards program, and redeem their loyalty points, or make a purchase then pick up their order curbside, completely contactless.
The NFC technology helped Timberland increase customer engagement. The store could track, analyze and interpret their shoppers’ behavior
NFC Technology
NFC technology is a great way to spice up in-store customer engagement. With its help, you can create novel in-store experiences. It allows retailers to connect quickly and easily with customers at every step of the customer journey. In a loyalty program, NFC enables people to use their smartphones to interact with store-exclusive loyalty program features.
In Timberland’s Manhattan flagship store around 50 percent of the store’s inventory had been equipped with NFC tags. Upon tapping information about the product came up on the screen. The NFC tag was integrated to collect data from the customer. The store started adding credit for customers who signed in on the tablets, adding an extra touch to the customized shopping experience.
Beacon Technology
Beacon technology boosts customer experience by increasing efficiency, providing money savings, convenience, inspiration, and personalization. With targeted ads and brand offers, notifications and greetings on special occasions, you can add value while increasing trust. With just a single beacon near the entrance of a store, you could send a promotional notification to the user whenever they enter it or track how many users come to the store in a specific timeframe.
Target, the American retail corporation, is using beacon technology to help in-store customers to use Target’s app to create shopping lists, and then see where items are located in-store. As they move, their location changes in real-time, showing them whether they’re getting farther or closer to the product.
The new Target application will actually show your own location on the map, as indicated by a blinking dot. As you move through the store, your location will update, too. (Source: TechCrunch
Introduce a Kiosk In-store
Self-service kiosks are a rising component of in-store technology. It gives customers the possibility to shop for both the physical and online product offerings. They help shoppers gather information and speed up the shopping process. In-store kiosks are also a great way to promote a loyalty program. You can either set up a kiosk where waiting customers typically gather or offer priority lanes as a members-only feature. It is also an excellent solution to make sure customers are entertained while standing in line.
In order to help the customer as much as possible in finding products and to prevent lost sales, the ANWB, a travelers’ association in the Netherlands, needed a new solution to offer customers products that are not yet in stock. The kiosk has almost the same performance as the webshop on a PC, but the navigation especially works in terms of visual language and icons. By adding NFC technology to the kiosk retailers can ensure contactless touch screens for the customers making in-store shopping even safer in the post-pandemic world.
With the in-store kiosk ANWB makes sure that their full online catalog is accessible. (Source: Kega)
Sales Associates
Obviously, human interaction has a great impact on a customer’s emotional connection to a retailer. It will be especially of outstanding significance following the pandemic when everyone is craving a return to normal face-to-face communication. Well-trained sales associates can help boost loyalty program membership rates, as one of the easiest ways to inform your customers about your loyalty program and how their today’s transaction will get them closer to earning exciting rewards.
The Douglas perfumery chain’s loyalty card, called the Beauty Card, makes it possible for the company to serve their customers in a much more personalized way both online and offline. Besides offering several benefits, such as birthday surprises, product samples and invitations to exclusive events. They also offer makeup refreshing, skincare services, and beauty tips in-store.
In Douglas stores, customers can collect Beauty Points on their Beauty Card with each purchase, regardless of where it takes place, at the brick-and-mortar store, online or via their smartphone. (Source: ixtenso)
Brick-and-Mortars Coming Back to Life
Following COVID-19 face-to-face interactions will be receiving an even greater emphasis, as customers are hungry for communication. As shopping has evolved dramatically over the past several decades, the competition between retailers is fiercer than ever. Customer buying behavior is constantly shifting, not only when it comes to in-store shopping but online shops have also joined the race for customers, providing them with more choice and convenience.
Nevertheless, it is important not to overlook your stores as a crucial touchpoint in generating long-term customer loyalty. While customers are growing more comfortable with online shopping every day, the in-store experience isn’t going away anytime soon.
Direct to consumer (DTC) products have been wildly popular in the past few years, and as they slowly infiltrate big box retailers’ shelves, brands such as Casper, Harry’s and Bonobos are gaining more attention and getting an even bigger sales boost.
But traditional retailers are learning from them as well.
For the biggest retailers, partnering with DTC has been mutually beneficial. Walmart bought men’s fashion retailer Bonobos in 2017 for $310 million. Target is partnering with Harry’s to sell the well-made, discount-priced razors in stores, as well as Casper mattresses — which can also be found in top-tier stores such as Nordstrom’s.
Mutual gains
Part of the draw of those and many other DTC brands is their popularity: They will drive customers into stores and online. Forging partnerships with newer, more sought-after brands helps retailers attract and create relationships with a new segment of shoppers who may not have otherwise shopped with them.
In addition, what big retailers such as Walmart, Target and Nordstrom’s can gain from well-established DTC brands is digital expertise. These products have successfully launched and sold products online with no physical stores. They are marketing powerhouses, and big box stores are learning from their strategies, particularly for their own private-label merchandise. For example, Target’s partnership with Harry’s spurred it to step up its men’s grooming selection by expanding its own Goodfellow & Co’s offering to more than 30 products. (Target is clearly focusing on the segment and rounding out its offerings by also incorporating Ulta Beauty shops this year into 100 locations this year.)
Fluid shopping
What these relationships mean for consumers is that brands and retailers are becoming more attuned to the future of shopping. Customers are fluid in how they want to shop: One day they may opt for a personal, immersive experience at Sephora and the next they’ll order lipstick online. Convenience is a driving force, but it doesn’t always mean ecommerce. Sometimes, convenience is the ease of being able to go to a physical location and try on, inspect, and ask questions.
Successful retail has always meant providing what customers want, when they want it. Today’s technology merely widens the possibilities, and requires retailers to be intuitive and flexible.
The Center for Disease Control and Prevention estimates that in the United States, more than one in four adults are living with “some type of disability.” That is a huge opportunity for today’s retailers to meet the needs of a significant market segment.
Retail responds for accessibility needs
For some time, retailers have adapted their online presence as well as their physical stores to meet the needs of people with physical challenges.
Online websites, for example, must ensure the proper use of HTML, so assistive technology can accurately interpret the page content. In addition, the tab key should be able to navigate through all an ecommerce site’s web pages and access all interactive features.
But while retailers are making their websites more accessible, the items they sell do not always meet everyone’s needs. Gradually, clothing retailers have started to recognize the segment of people with disabilities by offering adaptive clothing, i.e., apparel that helps people with disabilities to get dressed or to simply live life. The segment includes people with specific physical impairments, the elderly and people who have recently had surgery.
Tommy Hilfiger drew on its athletic wear experience, which focuses on movement, performance and functionality, to create its Tommy Adaptive collection.
Hallmarks of these pieces include easy closures, ease of movement, seated wear, easy open necklines, magnetic buttons, hook and loop closures, internal pull-up hoops, low front and high back, part openings, and side seam openings. The designer was inspired to create a line of adaptive clothing when he saw the dressing challenges faced by his autistic daughter and son.
Hilfiger is not alone. Ugg’s iconic shearling lined boots are now available with side zippers for easy access and pull tabs on the back to help secure the shoe. Aerie has partnered with Abilitee Adaptive Wear to offer adaptive accessories, such as fabric belts to hold insulin pumps and water-resistant ostomy bag covers.
But the big brand names are also facing competition from startups who saw an opportunity to serve people’s needs and jumped on it.
For example, Careandwear realized cancer patients have unique clothing needs during treatment. In response, it developed and sells a Chest Port Hoodie, which provides wearer easy access to a chemo port. And Alter Ur Ego makes comfortable and adaptive jeans that feature accessible pockets, elastic waistbands, and straps for easy dressing.
Today, brands are reaching out to the disabled community, confronting social-emotional, environmental, and physical barriers and exceeding those customers’ expectations.
Slowly but surely, retailers are providing products for the one-quarter of the population that identifies as having a disability.
It’s a retail conundrum: Foot traffic in malls is decreasing, and brick and mortar stores are losing ground to ecommerce – yet shoppers still want to visit stores to touch and try out products before buying.
To capture more sales and remain relevant to shoppers, big box stores are thinking out of the box and partnering with popular name-brand product manufacturers.
Bringing Apple to you at Target
Image from Target
Target recently announced it will double the size of Apple’s footprint in 17 locations, expanding offerings in stores and online. In addition, Target team members will receive specialized training from Apple.
The retail behemoth has also partnered with Ulta Beauty to open 1,000-square-foot beauty shops, which will be staffed with Target employees who have been trained by the beauty retailer.
Notably, Ulta also provides customers with many services such as in-store hair salons, which drive considerable foot traffic: Salon customers reportedly make twice as many trips to an Ulta Beauty store as those who do not use those services.
And Target isn’t the only big box store looking to pretty itself up: Kohl’s will open 200 “Sephora at Kohl’s” locations this fall, with at least 850 locations planned by 2023. The cosmetics retailer will launch on Kohl’s website in 2022, offering more than 100 beauty brands, some of which are exclusive to Sephora.
Products across price points
The beauty segment is notable because America’s department store makeup counters have historically been the place to purchase upper-end cosmetics.
The American beauty counter is iconic.
However, they’ve gradually been losing popularity as shoppers prefer to visit specialized retailers – such as Ulta and Sephora – which can provide a more extensive variety of products at different price points.
However, by collaborating with those same cosmetics retailers as well as be increasing their in-store footprint, department stores could win back many of those customers.
Department stores are using the popularity of brands such as Apple, Sephora and Ulta to lure customers back into their stores.
Once inside, the customers can be tempted to continue shopping for other products.
In a way, department stores function like mini-malls: From motor oil to bikinis to wrapping paper, these stores have it all.
The tough part today is getting the shoppers to come into the store.
The addition of top brand names will help provide the visibility needed to get shoppers in the automatic door.
Amid recent retail turbulence, there has emerged an opportunity to provide customers a better, more intuitive shopping experience in the wake of a global pandemic that had serious repercussions in the retail sector.
With many shoppers staying out of brick and mortars due to COVID concerns, online shopping became significantly more popular, especially for buying everyday items like groceries and toiletry items.
As a result, retailers now have a year’s worth of data on new (and existing) ecommerce shoppers that can be integrated with store sales data from the Retail Pro POS for personalization, providing a more holistic customer view.
By preparing personalized and integrated customer solutions, retailers can be better positioned for success as the ability and customer willingness to visit stores increases.
Learning from your customer data
Hyper-personalization refers to enabling personalized, contextualized interactions across all channels, including sales and marketing.
A study from Ascend2 found that 62% of marketing professionals consider hyper-personalization to be critical, but only 9% have successfully implemented the strategy. Traditionally, personalized marketing would include, for example, inserting a customer’s name into an email or serving up specific content on a landing page. Personalized experiences in stores would stem from a salesperson’s ability to engage in clienteling based on the client’s history with a brand, especially in luxury retail.
Today, hyper-personalization uses intelligent tools like visual analytics software like Retail Pro Decisions to aggregate store and ecommerce data, the marketer’s email engagement data, website interactions, and other sources of third-party data to predict customer behavior.
AI algorithms can also compare a company’s shoppers with others online who display the same interests.
AI can aggregate similarities and predict future actions based on those that have already been taken by similar users.
That allows companies to deliver extremely relevant offers or product recommendations.
Rather than making recommendations to shoppers based on their own purchase history, AI compares their preferences and buying patterns to millions of others to discover more advanced, nuanced purchasing habits.
The strategy also builds brand loyalty: The more personal the customer experience feels, the stronger the relationship can be. Integrated data analysis combined with AI-powered loyalty and personalized marketing tools like AppCard for Retail Pro offers retailers something more than the competition.
Acting on data gathered during COVID’s ecommerce upsurge
With the sudden influx of customer data during COVID, retailers are learning more about what is truly important to customers, and what is not.
For instance, curbside pickup is a highlight coming out of the new normal shopping experience, a feature that in particular is helpful to parents of young children, those with disabilities or anyone on a tight schedule.
Prior to the economic lockdown during the first half of 2020, curbside delivery was pretty much limited to grocery pick up.
Retailers must leverage their data analysis capabilities while considering how recent customer trends will impact their supply chains.
They can then accurately respond to both vendors and customers in specific, relevant ways. By understanding the context of what customers want, retailers can adjust to meet those expectations. Retailers can move beyond providing customers with a robust product selection online and in-store. Today, the top retailers also offer a customized, cross-channel, personal shopping experience, resulting in loyal, satisfied customers.
One of the big reveals during the past 13 months is that people need (and want) to shop, and that e-commerce filled that desire both for necessities and luxuries.
Small, neighborhood businesses with no online presence had the toughest time surviving, while online stores with brand recognition — ironically, often due to a brick-and-mortar presence — fared the best.
Most strikingly, big, traditional shopping mall “anchor” stores felt the sting of greatly reduced foot traffic, while also enjoying a significant uptick in e-commerce revenue.
For example, Nordstrom forecasts sales to increase more than 25% this year, with digital accounting for roughly half of all revenue. Malls have been losing foot traffic for years. Moody’s industry research arm Real Estate Solutions (REIS) forecasts that malls vacancy rates will reach 14.6% by the end of the year as retailers regroup post-pandemic and reconsider their store locations.
And yet, customers consistently report enjoying an in-person shopping experience. Nothing truly can replace an experience of being able to touch and feel merchandise.
A case in point is the venerable Macy’s department store, a 162-year-old retail institution, which announced a year ago it would be closing 125 stores in “lower-end” malls during the next three years.
Macy’s strategy was to focus on locations with stronger sales as well as online operations. Then came lockdown and the pandemic era, and as shoppers tried to avoid malls, stores found ways to adapt.
Macy’s mall exodus is not unique; Dillard’s, J.C.Penney, Kohl’s, and Belk are also reportedly looking at freestanding and strip center locations.
Nordstrom, too, has been successful with its small format stores and intends to continue expanding those outlets along with its digital presence as part of its “Closer to You” long-term growth strategy.
Small stores, customer-forward strategies
Photo by Taras Chaban
According to reports, the stores will have full-service and possibly self-checkouts as well as same-day deliveries.
In addition, they will offer “buy-on line, pick-up in store” or “click and collect” service, which often comes with curbside pickup.
Such smaller stores are embracing the concept of offering a curated product selection, a characteristic more often associated with luxury stores. It provides these large retailers an opportunity to be flexible, react more quickly to buying trends and become more relevant to today’s clientele.
By showing a willingness to experiment with innovative merchandising ideas, these prominent retailers may not only rediscover their place in the industry, but also once again become leaders.
Increasingly, retailers are learning that sustainability matters to their customers, and the COVID season did not stop sustainability efforts.
Recycling, energy conservation and reduction of waste are all everyday topics of conversation.
That desire to help conserve Earth’s resources has helped unite customers who may otherwise be very different from one another.
To meet the increasing requests from customers for carbon-neutral packaging and products, retailers are offering more environmentally friendly options. Gartner has recommended three ways retailers could improve sustainability within their supply chains: source responsibly; use recyclable or minimal packaging; incorporate “recycled goods” into product offerings.
Retailers can choose vendor and distribution partners who practice sustainability.
When reviewing vendors, retailers can weigh sustainability as quality.
Sustainability includes processes that mitigate the harmful impacts of pollution and waste on the ecosystem, including reducing freshwater contamination and greenhouse gases.
Retailers benefit too, because sustainable practices such as decreasing energy usage, cutting back on waste generated and eliminating equipment for pollution control lower operating costs.
Many suppliers are coming up with innovative packaging to reduce waste.
For example, dental floss can now be purchased in reusable glass vials, rather than hard plastic packages.
Not only has the product cut back dramatically on waste, but because of its very nature, it creates its own pool of customers who return to buy the floss replacement on a regular basis.
On the recycling side, L’Oreal cosmetics will market its first cosmetics in recyclable paper bottles to consumers this year.
Thrifting — or shopping secondhand—is in vogue, and not solely because items are bargains or bespoke.
Because these goods are living a second life, they aren’t taking up room at the local landfill.
In addition, significant amounts of resources are saved by not creating a new product. For example, making a pair of jeans uses approximately 1,800 gallons of water.
The production process also generated greenhouse gases equal to driving more than 80 miles.
A number of retailers are focused on the “re-commerce” market, such as ThredUp and Poshmark, but some clothing brands including REI and Patagonia are selling their own gently used clothing, similar to the way in which luxury automobiles have sold “certified pre-owned vehicles” for many years.
Retailers wanting to strengthen or embark on a sustainability program should ensure their suppliers are committed to the same long-term vision.
Increasingly, customers are looking to buy from retailers and brands that share their values, and that includes companies that recycle, reduce waste and promote sustainable business practices.
