Physical Retail’s “New Normal”

[vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_column_text]English is full of inspirational sayings that exist for one purpose: to encourage you to do things that more likely than not you aren’t really all that inclined to do. “Slow and steady wins the race.” “Change will do you good.” “You’ll be strong to the finish if you eat your spinach.” By the time we are 18, most people know all three of those expressions in some form or other.

Dark green vegetables, patience and change need a helpful mnemonic boost — mostly because the vast majority people don’t inherently like any of them.

And that is especially true of change. It’s one of those things we like to do in theory because we know it is connected to progress, but in practice people and institutions really prefer doing what already works for them.

But sometimes change comes unbidden when what’s always worked in the past stops working because “normal” conditions have changed.

Such is the situation facing many retailers today, as the world of consumer interaction is re-aligning around them.

[pullquote]In physical retail, while we’ve had hints of innovation here and there, we haven’t had full scale transformation before now.[/pullquote]

“In physical retail, while we’ve had hints of innovation here and there, we haven’t had full scale transformation before now,” Shelley Kohan told MPD CEO Karen Webster in a recent podcast interview. Kohan is the VP of Retail Consulting at RetailNext — a big data tech firm that helps real-world merchants navigate the digitization of the marketplace.

But that transformation is at hand largely because it has to be. RetailNext just released its June Retail Pulse report. Traffic to physical stores is down ~9 percent, sales were down ~6 percent and transaction volume fell by almost 8 percent. On the flipside, however, average transaction value was up by almost 2 percent, and sales per shopper were up by 3.3 percent.[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_single_image image=”152621″ alignment=”center” style=”vc_box_shadow_3d” border_color=”grey” img_link_large=”” img_link_target=”_self” css_animation=”” img_size=”full”][vc_column_text]If those results sound familiar to you, they ought to; they fit the general pattern of RetailNext’s Retail Pulse reports for the entirety of 2015, traffic and sales are down, value and number of sales per shopper are up.

[pullquote]Looking at performance when traffic is down more than 9 percent – I do feel that the new trend is going to see that traffic decline,” Kohan told Webster. “The new norm here is that there is going to be declines.”[/pullquote]

“Looking at performance when traffic is down more than 9 percent – I do feel that the new trend is going to see that traffic decline,” Kohan told Webster. “The new norm here is that there is going to be declines.”

But, she told Webster, the new normal is about more than looking at traffic declines to physical retailers and declaring the end is near. The reality is more complicated – as the retail landscape is shifting in many ways.

“Today’s consumer has less time, less money and less patience,” Kohan told Webster. “When a customer enters your store it is pretty high level change they are going to purchase and that is positive for physical retail. But because of the ‘less time, less money and less patience issue,’ it has to be easy and efficient for them to find the product and purchase it. If they can’t find it quickly there is a lot of enabling technology for them to be able to get it another way and they are out the door.”

Product is king, Kohan noted, and always will be, but experience is key. A good product is the cost of doing business for a retailer, the necessary condition without which there is no chance of getting off the ground – but without the right support it just won’t get that high off the ground before it comes crashing back down to Earth.

[pullquote]We see 90 percent of sales coming from brick-and-mortar.[/pullquote]

“We see 90 percent of sales coming from brick-and-mortar. Retailers understand that to combat that traffic decline they have to work on building that experience and brand. The reality is consumers are seeking a complete digital and physical experience across the various touchpoints the customers interact with,” Kohan noted, explaining that the coming revolution isn’t about one particular tactic and self-supporting life cycle for each customer.

“How can you really converge and make this a 360-degree journey? How do you make the eCommerce business the path to deliver the customer the front door? How do you take them through the front door and then onto the social media experience to keep the conversation going? Then how do you use the social media experience to get consumers back around to the eCommerce experience – these are the right questions for retailers to be asking themselves these days,” Kohan noted.

Answering those questions will mean change for retail. Kohan noted that with traffic down and falling every month, retailers are beginning to have to be very choosy about physical locations and decisive about what to do about those that underperform.

They also need to adjust for the consumer that their recent data suggests is emerging. They shop less often in person – but when they do they purchase more, which Kohan notes is indicative of consumers that come into the store pretty well-informed, and who expect to be greeted by staff that is equally well-informed.

[pullquote]Retailers that are really thriving and doing well are overcoming that knowledge deficiency gap. They are building staff that are well-trained, who know the products and are ready to explain them to customers.[/pullquote]

“The other big opportunity for retailers is this knowledge deficiency gap which is happening in physical retail and is what I think is one of its darkest secrets. You have the consumer who has done all the research and comes into the store,” Kohan explained. “So when they get through the door and they find the sales associate that doesn’t have the same level of knowledge about the products and services, or even better knowledge about the products and services, there is a big chance for a disappointed consumers. Retailers that are really thriving and doing well are overcoming that knowledge deficiency gap. They are building staff that are well-trained, who know the products and are ready to explain them to customers.”

The new normal is a very new place, Kohan notes, and getting newer every day. But in some ways the name of the game — providing the best customer experience — has remained the same. It’s just that the tools to provide those experiences have gotten more numerous and complex.

Change is challenging – which is why no one likes it. But change is also an opportunity, and for retailers, Kohan says, the data indicates that this is an opportunity to build a customer that is always connected.[/vc_column_text][/vc_column][/vc_row][vc_row full_width=”” parallax=”” parallax_image=””][vc_column width=”1/1″][vc_single_image image=”152625″ alignment=”center” style=”vc_box_shadow_3d” border_color=”grey” img_link_large=”” img_link_target=”_self” css_animation=”” img_size=”full”][/vc_column][/vc_row]