Legacy retailers are shuttering their doors in record numbers, while Amazon plans to open its first brick-and-mortar. What. Is. Happening.
Digital has upended many industries, but none more visibly than commerce. Here’s our take on what companies will need to do to stay relevant and open.
The evolution of big-box stores
The suburbs served the Baby Boomers well. Millennials, not so much. Our “digital native” generation prefers population density and a sharing economy. This shift has affected the big-box stores and malls, and not in a good way.
Macy’s closed several of its stores last year. Sears closed over 150 locations. So what does this mean for their futures? Retailers need to take the hint — moving dollars from lighting huge stores to improving UX is the way to go. It’s time to invest in digital, but is it too little too late?
Conversely, a different kind of big box is emerging: Amazon is on the move with the huge consideration of warehouse storefronts, without people working in that storefront. In the U.S., it’s not clear how this would work out, but the U.K. has been doing the faceless distribution centers for quite some time now.
A marriage of convenience — and experience
Physical retailers operate in a world of extremes, and recent events make clear that failure sits in the middle. On one end, we have convenience: small footprints, limited personalized assistance, but you’re in and out in 20 minutes. Think Target and their plan for “flex-format” stores.
On the other end, experience. Nordstrom is renowned for its excellent customer service. Higher prices? Yes. But knowing you can return anything at any time without hassle, and be treated as a guest and not a wallet, makes it worth it.
So where do Macy’s and Sears sit? Right in the middle. They don’t offer anything near concierge service, and just because you can buy tires and sundresses in one place doesn’t make it convenient. That lack of focus left them in the middle and ultimately in the dust.
Physical goods, digital accuracy
Stores are getting better about leveraging and utilizing low-cost radio chips to track the accurate stock and exact location of the products in store, but also in real-time.
Large retailers like Macy’s and Kohls are jumping on board with tagging every item that is sold with these chips attached, just like price tags. Rebecca Minkoff’s store of the future simply blew everyone’s mind. It’s store’s inventory was clearer than ever thanks to RFID tags. Employees could bring an entire bucket of tags into a connected dressing room and scan the whole store, recording its inventory instantaneously.
Retailers who experiment with technology solutions, invest in their online experience, are open to interesting partnerships, and use data will survive. Unless you’re willing to dabble in technology solutions, you might as well close up shop now. With a big red bow.