If you’ve been keeping up with headlines about the retail industry, your outlook could be pretty grim. Sales are declining, malls and department stores are shuttering, and retail employees are experiencing mass layoffs.
From all this negative news, it’d be easy for retail merchants to think that no one was shopping these days. But don’t give into any pessimism — the seismic shifts in the retail industry are actually benefitting many small businesses and specialized merchants.
That’s why we chatted with one industry expert: to dispel any feelings of doom and get a more realistic perspective on the changes transforming retail. So, read on for more details on how these changes may actually benefit your business.
Shoppers Voting With Their Dollars: A Shifting Industry
While we’ve been told repeatedly that the retail apocalypse appears to be on the horizon, that reality is far from true. In fact, most of the doom and gloom is grossly exaggerated, and just as there are retailers closing, many continue to open.
The difference lies in which retailers are willing to adapt to technology and new consumer experiences, and which ones don’t.
“I’m a firm believer that retail is not dying,” says Nicole Leinbach Reyhle, the founder of Retail Minded, a trusted source for independent retailers across North America. “Retail is changing the way it always has, but because of tech and innovation, that change is much more extreme than in the past.”
Reyhle launched Retail Minded in 2007, at a time when department stores and big-box retailers were still thriving. For instance, Sears Holding Corp., which owns Sears and Kmart, had over 900 Sears locations in the U.S. and Puerto Rico a decade ago. In 2013, the company began closing many of its stores, resulting in just open 700 locations at the start of 2016. This year, they’ll continue to shutter more than 40 stores and lay off hundreds of employees.
Doors shutting is a direct response to how consumers are choosing to shop.
“When a consumer spends their money, they’re saying, ‘This is how I like to shop.’ If you look at some of the retailers that are successful, it gives us insight into how consumers like to shop and engage,” explains Reyhle.
That being said, there are plenty of new merchants opening their doors and other who are expanding. For example, Dollar General has announced it will open 1,000 new locations, and discount apparel retailers TJMaxx has plans for almost 200 new stores in 2017.
Moving Toward Niche Retail and Immersive Experiences
Big-box retailers are obviously feeling the pinch as consumers shift their spending habits, but more small businesses are luring in these shoppers with more interactive experiences.
For instance, independent and specialty merchants are outpacing big-box stores because many of them are creating unique shopping experiences for their customers. According to a Pixlee article, these smaller retailers have an advantage because they’re able to build a strong, engaged community around their unique products and develop dedicated followings.
In fact, for many of these retailers, their indie status is what makes them so desirable to begin with.
“Consumers no longer want the brands that everyone else has. They want to be the trendsetters, trailblazers, and nonconformists,” according to the article.
According to a 2016 retail report from PricewaterhouseCoopers, younger shoppers expect personalized in-store experiences that go beyond traditional retail. More consumers, especially Millennials, want tailored offers, personalized promotions, and ways to directly engage with a brand. And smaller retailers are responding to this demand with in-store cafes to keep them around longer, technology-driven experiences to engage and delight customers, and consumer interaction on social media for an additional branded touchpoint. It also includes a rethinking of what constitutes a shopping space.
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“If you take a closer look at the environment for which these stores are placed, for example, a traditional mall isn’t as exciting as it was in the 1990s,” says Reyhle. “Outdoor shopping centers that mimic more of a traditional main street environment are more exciting for consumers. There’s a lot of variations to how retail exists and how consumers respond to retail.”
Multichannel Sales: Adoption of New Technology
Smaller retailers can also more easily adapt to innovation, such as cloud-based point-of-sales systems and digital concierges that provide personalized shopping suggestions to customers.
“This is their time,” encourages Reyhle. “It’s one of the positives of what’s happening in retail.”
With that in mind, Reyhle says that all retailers should be adopting multichannel selling. Today’s shoppers, especially Millennial consumers, use multiple platforms to make informed purchases. Businesses should be available to their customers on whatever channels they choose.
And those multiple platforms continue to include brick-and-mortar stores. According to CBRE’s head of Retail Research Melina Cordero, the majority of ecommerce sales are actually for brick-and-mortar brands.
“What’s actually happening is that a big majority, over 50%, of online sales are actually going to brick-and-mortar brands. When you shop online at a brick-and-mortar store that’s technically an online purchase going to a brick-and-mortar brand,” she told Bisnow. “There’s this misconception that online is countering brick-and-mortar, when actually what’s happening is online is going to brick-and-mortar.”
According to a Merchant Warehouse poll, 85% of Millennial shoppers reported researching products online before making a purchase, and a similar Accenture report confirms that nearly 40% of younger shoppers purchase items from a retailer’s online store if its physical location is closed. Not having an up-to-date website and mobile app can result in thousands lost in sales.
“The touchpoints of which consumers experience shopping right before that final purchase is going to continue to be an experience for them,” adds Reyhle. “There’s no shortage of opportunity there.”
Smaller Retailers: Keeping Customers Top of Mind
Despite being receptive to innovation and adopting multichannel selling, retailers who don’t make shoppers their priority won’t last in the long run.
“The number one piece of advice I would give anyone is to always keep the consumer at top of mind,” says Reyhle. “I think a lot of times, retailers get very lost in the operations and unnecessary touch points of operating and running their business. They’re so worried about the inventory, the logistics, the merchandise, and the marketing that they forget who that core audience is. When you keep your customer top of mind, you’re better able to direct your operational goals.”
Reyhle advises that retailers get to understand who their core customers are, what they like to buy, and where else they’re spending their disposable income. With the amount of data available to retailers these days, that information isn’t hard to find so long as you take the time.
“The reality is, consumers, those are the bosses of retailers,” she says. “It’s important for retailers to remember that.”