Photo Credit: http://www.vacantnewyork.com/
Yes, this is probably going to come off as controversial, and yes, I am probably beating the “death of retail” horse to death (no pun intended). But as a native and a local to New York, I can’t help but share my take on the “death of retail” phenomenon that has been growing at an expedited rate, and which I find concerning. As a result, I’ve become more passionate about this topic. The more I’ve thought and read about it, the more I’ve also realized that the “data” angle hasn’t been addressed, which is why I wanted to write this post and hopefully create some conversation around the intersection between data and retail.
I believe that there were a few big misses by the retail giants (and smaller brands) that contributed to the “death of retail.” I’ll go on to rant about these below, in no specific order:
1. Not accounting for the marketing value and footprint of retail locations
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- Impressions of retail locations and brand exposure (counting rent as a partial marketing cost): It doesn’t feel like brands put a lot of consideration into the marketing “value” of their retail locations, which should act as marketing vehicles for them. Interestingly enough, many newer and smaller brands in NYC (potentially doing so experimentally) have started opening and launching their brands in multiple locations at once. Doing so can create more of a halo effect for their brand, with more exposure across the city to drive awareness and intent. For example, say a potential customer sees the brand at work and then again at home. They’d be more intrigued than just by a single location or touchpoint.
- Catching negative trends as they happen: Stores can be unprofitable for years, before reacting or closing. Similar to the point above, when brands are under-performing and evaluating which stores they may need to close, they tend to look at the performance of the store first, and not location, foot traffic, or exposure. They are not looking at what, potentially, can be done in individual cases for specific locations that might continue to drive value for the brand, even if they aren’t profitable.
2. No digitization of the retail experience
- People love reviews: We’ve all been trained to go online and read reviews, pros and cons, etc., for any sizable purchase that we make. We no longer take the salesperson’s word for how well a product or service will perform and deliver. With retail stores, we now have to either do our research before visiting a store, or pull out our phones while at the retail location itself. Very few (if any) retailers syndicate reviews for the same products from an online source to be displayed near the product itself, via some sort of tablet that features information and reviews about that product. The best example I can think of are the Best Buy Kiosks at airports that, by way of need (purchasing through a screen), allow you to see more information about the products before you buy.
- Navigation is simpler online. Why hasn’t retail adapted?: This tends to apply more to larger retailers (Best Buy, Target, etc.), but we still find ourselves walking through the stores struggling to find what we need, being forced to walk the entire store, etc. Retailers need to take a lesson from the world of eCommerce and make it easier for consumers to step in and know exactly where to go based on the store that they’re in. Yes, this might lose the effect of “buying more as I walk through the store,” but at least it’ll get people to come back vs. swear off the store because it’s too confusing and time-consuming to navigate.
- Consumers react to customization and recommendations: In a world filled with devices, we are used to being addressed on a more 1:1 basis – more so via email, but in some cases across digital properties, from advertisements that we see through to experiences catered for us when we give brands more information about our preferences. Retail has significant potential to make these experiences immersive and hands-on, and way more influential than any website, but it’s pretty rare that we see anything like this in our experiences. For example, the closest I’ve gotten is by being able to order my coffee and breakfast from Starbucks and be in-and-out in less than a minute. As a result, they now have me buying products from them daily (sometimes multiple times per day), solely because of this convenience!
3. Lack of measurement of digital investments on retail purchases
Photo Credit: https://blogs.oracle.com/marketingcloud/omni-channel-context-driving-real-time-personalization
- To this day, many of the remaining big-box retailers are still not connecting their marketing dollars to the return that those investments are driving, in any reasonably timely and actionable way. At the same time, without knowing whether it’s driving foot traffic, they’re arguing that digital is not as an effective of a channel as things like TV and Radio (which is true if reach and eyeballs are your only goals).
- Inability to connect online to offline return: There’s a lack of understanding of the true ROI of digital and offline marketing impact on retail and eCommerce, which results in brands seeing the two investments as unique and not understanding the fuller impact that digital has on offline and offline has on digital. The more expected behavior for marketers is that customers will see a TV ad, then go buy in a retail store or on their website. But to my last point, rare is the expectation that the customer sees a digital video or paid search ad and walks into a retail store (even though this happens quite a bit) – which means the brands aren’t tracking this sequence.
4. No 360-degree view of their customers
Photo Credit: https://www.linkedin.com/pulse/20140611200600-87033591-360-degree-customer-view/
- Lack of comprehensive, omnichannel view: People often do research online, but brands tend to lack the tech and mechanism to connect and understand their omnichannel presence, which can have a significant negative impact on their marketing dollars. In an omnichannel world, specific channels can appear to be MUCH less efficient than they are, if no one knows how to measure the broad view of what a customer does in a retail environment, such as after racking up $100s in marketing touchpoint clicks while researching products. The result is a single and siloed view where marketers only focus on and take credit for the digital conversions they drive, leading to some channels seeming less effective, or not effective at all. Even campaign types like brand vs. non-brand may appear to struggle to drive conversions, ultimately leading to budget cuts, budget shifts, and a room full of marketers wondering why their total company sales numbers are suddenly down.
5. Competition and Convenience
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- No fundamental shift in competitive pricing: Online retailers tend to spend more time ensuring that they’re more competitive than their competitors from a pricing and inventory perspective, while retailers seem to have stagnated here and only focus on the promotions that they may offer for that given day/week/month.
- Some retail has a different price for digital vs. retail: Many times, you’ll walk into a physical location for a retailer that also has a web presence, but the prices are lower online. And the retail location does not honor the lower prices, causing a lot of frustration for the consumer and potentially damaging the brand image.
- No significant shift in value exchange: Years ago, the biggest benefit for in-store retail was being able to get something the same day and in person. Today many things can be delivered from the internet in an hour, and this will continue to expand, taking away from that in-person pickup convenience.
To recap this rant:
Had well-positioned retailers: 1) found more creative and indirect ways to justify rising asset costs; 2) measured their non-offline investments impact on retail sales; 3) kept up “with the times” and adapted to the growth of mobile technologies; and 4) kept a closer eye on how they stacked up against competition, we might not have ended up seeing as many for-rent signs on stores as we do today. And maybe, just maybe, even Amazon would not be the behemoth and grim reaper of the retail world that it is today.
If you’re part of a retail company and happen to find yourself in any of these positions today, please do feel free to contact us. There are many more addressable ways to solve these problems today than there were a few years ago, so don’t miss your chance to drive recovery for your brand’s retail business.