Surviving the Apocalypse: 4 Critical Questions Retailers Should Ask Themselves Right Now
“Just do it” may be the slogan of one of the most successful brands of modern time, but as a business philosophy, it’s a recipe for trouble. Retailers need to think strategically and consistently evaluate their organizations, operations and investments in order to stay ahead of the game, particularly in today’s fast-paced world.
And while a legacy department store, a direct-to-consumer brand and a regional chain may all have different challenges they need to address, there are some questions that every retailer today should be asking themselves:
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1. Do I have the right number of stores, and are they in the right locations?
E-commerce may be the growth driver for many retailers today, but no one should discount the importance of physical stores. For digital-first brands, that could mean opening a flagship or testing the waters with a pop-up or showroom, but for a large share of the industry, the focus in the coming years will likely be on pruning brick-and-mortar footprints, as retail advisory Coresight Research reports that US retailers have announced 6,105 store closures and 2,658 store openings so this year.
In 2019, though, the calculus for which locations to keep open and which to close is far more complex than just how much money the stores themselves are bringing in.
“Ultimately a store today is not just a place where you buy products,” explained Mortimer Singer, CEO of the business development and strategic consultancy firm Traub. “It’s a billboard. It’s a brand equity and storytelling stage. And it also drives people to your website. So you have to be able to calculate all of these different things through one omnichannel lens, and that is what I think people have not been doing very well until now because they see retail and e-commerce and mobile and wholesale as different channels.”
Retailers therefore need to take into account factors like the halo effect stores might have in some areas so they don’t risk closing shop and discovering they’ve lost a key traffic driver to their website or app. But they also shouldn’t be afraid to shed dead weight when there are other options available.
“You don’t need to overcommit to an entire fleet of stores and leverage your business with tens of thousands of square feet of potentially unproductive space,” said Jeremy Bergstein, CEO of The Science Project, an integrated retail agency. “There are so many more opportunities for retail now in commercial real estate, and malls are looking for all these great ideas. We very much think of retail as the places in the consumer journey where they interact with the brand, and that can be online, it could be an event, it could be at a pop-up, it could be in a store.”
2. Is my mobile shopping experience seamless from start to finish?
A first-rate mobile site is table stakes for today’s consumers. The channel now accounts for more than half of e-commerce sales, according to the market research agency eMarketer, and that share could rise to nearly three-quarters (72.9%) by 2021.
For merchants of all sizes to compete with behemoths like Amazon, they need to perfect the customer journey, from checkout to the all-important page load rate; according to Google research, more than half of mobile visitors will abandon a site if it takes more than three seconds to load.
“If a small brand does not have an integration to Apple Pay, to PayPal, to Amazon Pay, to any of these other platforms to seamlessly allow for a consumer to check out in one or two steps, they’re going to lose the customer. They’ll go somewhere else,” said Singer. “It’s little details like that that will make or break a shopping experience.” For instance, if a customer is scrolling down a long list of items and clicks into a product detail page, she shouldn’t be taken back to the top of the page when she clicks “back” in her browser.
And while it may be worth it for certain brands to invest in mobile apps (particularly those with large, loyal customer bases), he recommends that smaller businesses focus on mobile web first.
3. Do I have the right infrastructure in place to be nimble and meet the customer where they are?
Expectations for convenience and service have never been higher — and for retailers to meet these demands, they have to understand who they are and who their customer is, and have the technology in place to support that.
“We believe if you build that infrastructure and that architecture from the ground up, then you can be really flexible on that presentation layer,” said Bergstein. If a retailer doesn’t have unified systems for inventory and customer relationship management (CRM), for example, a VIP shopper could walk into a pop-up and “all of a sudden they’re anonymous,” he said.
Having these basics in place can also help retailers recognize where to direct their resources and do so with relative flexibility.
“The best brands out there are looking at a combination of global and local content,” said Bergstein. “They’re looking at online [and] buy-online-pickup-in-store. They’re looking at things like appointment booking, pre-selecting and having things waiting for you, concierge. I think that there’s a massive opportunity in localized services for global brands that is not being uncovered at the moment.”
4. Am I prioritizing ethics and sustainability — and making sure the customer knows it?
If you don’t already have sustainability and ethics in mind, you’re already behind the times. Particularly for Gen Z consumers, who will account for 40 percent of all consumers globally by 2020, environmental and social issues are top of mind when it comes to choosing where to shop. According to a study by marketing agency Cone Communications, 94% of that market segment believes that companies should help address social and environmental issues, compared with 87% of millennials.
“I believe that five to 10 years from now, you’ll be considered a dinosaur unless you are able to show with transparency how things are made and where they’re coming from,” said Singer.
For direct-to-consumer brands, the path to transparency is more straightforward, since they can share facts and figures on their websites and social media channels. But that doesn’t mean multibrand retailers should consider themselves exempt.
“That’s the thing about being a retailer: you get to choose. And therefore they need to continually be thinking about this from a merchandising perspective,” said Singer.
Net-A-Porter, for instance, said at a recent press event that it is launching a permanent sustainable edit on its site in June, which will include almost 30 brands. The company has sold more than 15,000 pairs of sneakers by the sustainable shoe label Veja since launching in 2018, proving that the decision is as much a business imperative as it is a moral one.
Check out FN’s video about why sustainable shoe brand Allbirds is winning right now.
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