Actionable Insights From APT's Retail Practice

Modern Retail: Reinventing the Brick-and-Mortar Experience in the Face of E-Commerce

August 1st, 2017 | Posted by APT in Marketing & Media | Retail | Technology

A green screen studio, a movie-theatre-style marquee, and a stylish mural depicting classic Hollywood imagery—Warby Parker’s newest Los Angeles location is undeniably cool, and stands as a beacon of life amidst what some have deemed the “Retail Apocalypse.” In an era where many are struggling and a number of high-profile retailers are consolidating their networks, brands that started out as online-only players, such as Warby Parker and Bonobos, are doing the opposite: opening new physical locations.

These “showrooms” operate differently from typical brick-and-mortar stores in that they carry less inventory and serve primarily as an avenue to engage with consumers, providing the opportunity to experience a product before an online purchase. In addition to showrooming, in-store features such as Nike’s basketball court, where consumers can take part in Nike’s “personalized sports experience,” highlight a growing shift in the role of physical retail locations. Stores are now places where consumers can connect with a brand, discover new and exciting products, and make decisions around purchasing—whether in-store or online.

While some companies have found success in large out-of-the-box initiatives, others have been able to capitalize on simpler strategies. For example, Costco has proven quite resilient to online competition, in part due to its distinct in-store experience characterized by a popular food court, and what many of Costco’s consumers describe as a “treasure hunt” for the new products continuously added to store assortments.

A compelling in-store experience, like Costco’s or Nike’s, is essential to competing in today’s retail environment, but it is only part of a unified multichannel strategy. With up to 90% of consumers using smartphones while in-store, shopping channels are converging. Consumers are searching for price comparisons, information, and reviews as they shop, providing retailers an even larger opportunity to engage with them and build upon the in-store experience.

For example, Nordstrom has worked to modernize its consumer experience through improvements in a variety of channels, resulting in Credit Suisse naming it the “best-of-the-breed.” In stores, Nordstrom has been focusing on “clienteling” by empowering sales associates with easy access to information and enhancing personalized loyalty and promotional programs through its app. Moreover, its [email protected] series has become a fun, innovative way to keep consumers coming back. Lastly, by implementing curbside pickup, buying by text, and shopping via app, Nordstrom has created a stronger, more seamless omnichannel experience.

As competition with e-commerce giants grows increasingly fierce, it is crucial that retailers determine which of their new, innovative strategies truly move the needle on profits, and which need to be cut. Through a Test and Learn approach, retailers can begin building a more robust, integrated multi-channel experience while minimizing risk as much as possible.

Retail is no longer divided between online-only and brick-and-mortar companies. The lines are blurred, and as the shift becomes increasingly pronounced, those that do not keep up risk being left behind.

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