The retail industry is changing at a breakneck pace. Online channels and digital services are shaking up shopping and purchasing trends, prompting a newfound emphasis on in-store experiences. With the closure of countless large and small stores in recent years, retailers must rethink business models to remain relevant.
MI retailers that fail to innovate will likely lose out to competitors that are more nimble and aggressive. Perhaps more importantly, businesses must place a focused emphasis on understanding their customers — past, current and future. Even mega-retail chains such as Blockbuster and Toys ‘R’ Us weren’t safe from changing demographics and economics.
However, this isn’t a reason to give up on testing new opportunities to strengthen your business and think beyond the way things have “always been done.”
Brick-and-mortar retailers have a huge opportunity to fundamentally rethink the in-store shopping experience, especially with the up-and-coming Gen Z population. It turns out that Gen Z values real-world retail for experience and discovery — with some recent reports showing that 60 percent of the Gen Z population crave a different experience every day. While 75 percent prefer to do as much shopping as possible online, 80 percent look forward to shopping in-store when they have time, which happens to be a common misperception. The rise of pop-up concepts is a prime example of this offline and online convergence. Once online-only retailers like Rent the Runway and Bonobos have also invested with IRL (in real life) connections via physical storefronts. Next-gen fitting rooms and smart racks are being tested in the fashion realm by brands like Alibaba and Guess to marry high-tech with the tactile experience of being in-store. If businesses can adapt to this and add a little personalization to their business models, it’s not difficult to uncover a variety of opportunities to attract and retain new and old customers.
Boring Retail is Dead
Do brands live a predictable, natural life cycle from birth to growth to maturity to deterioration to death? No. Brands can thrive consistently, if properly managed.
When Toys ‘R’ Us announced it was closing its doors for good, it marked the end of an era. While competition from mega-retailers Walmart, Amazon and Target contributed to the company’s ultimate stumble, Toys ‘R’ Us failed to keep up with changing trends in consumer behavior and childhood play. The stores were simply too large and jammed with inventory. Nostalgia, it turns out, isn’t enough to get customers in the door.
Blockbuster is another example of a company that used an outdated business model. Blockbuster had the right idea: clean carpeting, friendly employees, and rows upon rows of VHS tapes and DVDs. But, when the winds of change swept through the video industry, Blockbuster believed that its same business plan would continue to work. When the giant that is now Netflix arrived on the scene, Blockbuster scoffed at the idea of movie streaming. But its once-loyal customer base was fascinated at the idea of staying home and browsing a huge collection of movies for only $8 a month. Netflix prompted the shift that Blockbuster refused to accept.
Part of the problem that Toys ‘R’ Us and Blockbuster faced is one that other retailers are confronting now — but by the time these mega-retailers realized they needed to change, they were burdened with debt. In a demanding environment that requires consistent sales, innovation is a must. To stand out, companies must offer a differentiator.
Customer as King
In this rapidly changing marketplace, nothing is more critical than embracing the power of in-store experiential marketing strategies as a direct means to boost sales. There are several examples of retailers that have consciously worked to adapt to consumer demand, ranging from large outfitters such as Guitar Center in the United States and Long & McQuade in Canada, to independent regional U.S. retailers like Alto Music and Ted Brown Music.
Guitar Center uses the opportunity to build on e-commerce offerings with respected in-store musical education programming. In addition, customer experience is a top priority for the brand. This year, Guitar Center stores across America are installing 255 interactive microphone displays in partnership with Shure, further encouraging consumers to come in to touch and feel a variety of microphones before they decide to purchase. Long & McQuade continues to build on its legacy of prioritizing a strong rental experience alongside traditional sales. This has created a unique culture in Canada, where musicians are able to start out by testing and playing high-quality instruments from day one and establish preferences for well-crafted instruments and gear. This laser focus on high-value inventory, along with a friendly staff that gets to know shoppers by first name, has helped the company create lifelong relationships with its customers.
Such examples are by no means found only among mega-music retailers. New York’s Alto Music boasts an in-store professional recording studio that enables shoppers to test gear and gain a clear understanding of how items will perform in a pro-audio environment. Continuing its theme of prioritizing in-store relationship building, the retailer hired talent from outside MI to lead store design and merchandising. The result is a massive showroom with unique visuals; in addition to carrying nearly every instrument and gear combination that a musician may want to try, customers can also experiment with non-musical displays like GoPro, which speaks to how well the company understands that its shoppers are content creators of all kinds. Alto Music has also kept pace with the rise of e-commerce. Its online team sits in the same offices to ensure continuity between online and offline programs, and the company recently built a large warehouse off the main store to better support its growing online sales business.
Family-owned Ted Brown Music has strengthened its niche by tapping into its customers’ passion for music anywhere and everywhere — including online. An events locator on the retailer’s website invites customers to search for workshops and interactive sessions at their preferred store, ranging from drum circles to New Horizons, a program geared toward adults with no music experience to help them stay sharp mentally and physically as they age. Ted Brown Music also emphasizes instrument rentals to school bands and orchestras throughout Washington state — a nod to music retailers’ role in shaping the future of the industry. Music lessons are offered for a wide variety of instruments, from piano to saxophone to guitar, with educators hoping to inspire young musicians. Further, the retailer clearly understands the long-term value of investing in store aesthetics and sales staff training. When you walk into Ted Brown Music, the store is clean, easy to navigate, and staffed with associates who are well-versed to share personalized expertise and perspective that cannot be delivered through an online purchase experience.
Standing Apart from the Crowd
What worked for stores in the late 1990s and early 2000s clearly isn’t what is working now. Today’s customers want information on how to get more out of their purchases and how to maximize their relationships with a brand. Fail to meet your customers’ expectations, and they will respond by going to competitors, a predictable result for companies that overlook customer engagement.
By taking a look at Toys ‘R’ Us, it shows how valuable customer engagement can be and how important it is to keep an eye on the consumer lifecycle.
So, what should a business that’s facing a similar fate to Toys ‘R’ Us do? Take note of companies that have adapted to consumer demand and reworked their business models.
Often, determining how and where to start is the highest hurdle. Begin with an evaluation of your processes, training programs, store layout and marketing materials to make sustainable and impactful changes. Prosperous retailers constantly re-examine their stores’ atmosphere and the elements that infl uence their customers’ decision-making process. They make their stores inviting and interactive so that no two visits are ever the same.
This, in combination with a friendly, knowledgeable staff, can take your customer experiences from dull to exciting and genuine. Every element of the store goes into the customer experience. Going the extra mile will help your business stand apart from large retailers like Amazon, as well as small competitors, particularly in this age of always-on consumers who switch between shopping in-store to swiping and tapping on mobile devices.
Retail is far from dead, but boring retail will not survive in this new era of commerce.