Online and traditional retailers are merging customer experiences
Ever since online shopping arrived on the scene, there has been a sordid expectation that retail as we know it would soon come to an end. The comfort and convenience of buying from your couch—how could that be beaten? But for retail the reports of its death have been greatly exaggerated.
Instead of merely giving up and dying, retail has evolved. Online shopping and brick-and-mortar have begun to interact. Now, even e-commerce giants like Amazon have seen the value in opening up brick-and-mortar stores, with its first Amazon Books having opened in Seattle in 2015 and its second location slated to open in 2018-19 in New York City’s exciting and expansive Hudson Yards.
Traditional retailers are beginning to capitalize on the things online shopping can’t provide: an interesting and varied real-life shopping experience.
“The marketplace is seeing a transformation of clicks-to-bricks with Amazon and eBay opening physical stores,” says Lew Cramer, CEO of CBC Advisors. “Conventional storefronts are finding that e-commerce flourishes around physical locations and will disappear if the site closes. Consumers want immediate purchasing power, but also to touch, see and try products. A successful retail approach combines both clicks and bricks.”
“The way I see it, a lot of these tenants that have been focused more and more on the shopping experience seem to be the ones that are really succeeding,” says Cameron Simonsen, retail specialist with CBC Advisors. “eBay and Amazon and other online retailers—they’re starting to realize that you just can’t replace the experience for people. Consumers want to be able to touch and feel and see what they’re buying. For the retailers that have a strong online presence, it works hand-in-hand—like the Nordstroms of the world.”
Many companies have begun using experiential marketing as ways to get consumers in the door. “No longer are buyers seeking basic purchases. They want complete retail experiences,” says Cramer.
In New York City’s Time Square, this trend can be seen in extreme ways. The Hershey Company store is moving from its current location on Broadway and West 48th Street to a Times Square area nearly three times the size, and the brand intends to create a store along the lines of its “Chocolate World” attraction in Hershey, Pennsylvania.
The National Football League is partnering with Cirque du Soliel to create exhibitions that will transport consumers to what the league calls a “game day experience, from the intensity and sound of a pre-game locker room to the snow and frigid temperatures at Lambeau Field.”
And a company doesn’t need to be in the Times Square location of Hershey, NFL, Foot Locker or Margaritaville to cash in on the trend. Simonsen says that across the nation, companies like SCHEELS sporting goods or Costco are doing the same things.
“To an extreme, you have people like SCHEELS sporting goods, which have Ferris wheels, aquariums, talking statues and shooting simulators. They want people to come in and have a fun time,” says Simonsen. “And if they do, they’ll spend money.”
Local grocery stores, like Utah-based Harmons Grocery, has added cooking classes, dietician services, gelato bars, indoor-outdoor dining areas and an expanded prepared-food section to lure shoppers in to eat lunch, learn how to use new ingredients and alter their relationship with food—not just to pick up their milk and go straight home.
“I think people have to create experiences to compete. The competition is convenience. I can sit on my iPad on my butt, or I can get up and go experience something. But if the experience is boring, I’m going to stay on my couch,” says Simonsen.
For pure-play online dealers, like Overstock.com, creating something experiential takes a whole new mindset. Without bringing people into actual stores, Overstock is experimenting with partnering with Google for an augmented or virtual reality experience, letting customers “see” products in three dimensions from their homes. The company has also rolled out a tech product, Space Shift Roombuilder, which allows customers to design a room and see furniture they’re considering buying in the space.
“Shopping should be fun, but making decisions in home décor is hard to do without seeing it. A lot of women know what they like when they see it, but assembling all the parts can be difficult—so this technology helps with the visualization,” says Ginger Bower, vice president of marketing for Overstock.
While companies create more experience-based shopping for their consumers, they’re not neglecting the busy people on the go or the couch potatoes. While walking into the local grocery store may give a consumer a taste of what they’re missing, a busy mom of three and an appointment she’s late to may not care so much about how to correctly blanche asparagus right at that moment.
Smart retailers have also turned their eye toward convenience. Simonsen says companies like Wal-Mart have added parking stalls where items previously ordered online will be delivered to your car as you wait. There is a continued demand for grocery delivery, as well.
“People can decide whether they want to go touch and feel their produce, but if you’re just buying cereal and frozen burritos, you don’t need to go inside,” says Simonsen.
“Convenience plays a critical role in the retail experience. An exceptional storehouse and striking appearance is not enough,” says Cramer.
Expecting the unexpected
Subscription boxes and “daily deal” websites are another burgeoning trend. While many consumers might shop online looking for something in particular, others are just browsing—and companies are taking advantage of that. Subscription boxes, where a person signs up with a company, pays and then receives a curated box of themed items every month, quarter or year, are like gifts they send to themselves.
Daily deal websites, meanwhile, show casual browsers items (or brands) that may be hitherto unknown to the consumer—and offer those wares for a limited-time sale. For giants like Overstock, that trend has represented a shift from the company’s original business plan.
“No matter what socioeconomic group you’re in, everyone appreciates a great bargain,” says Bower. “The birth of [Overstock] was in liquidating merchandise, but since then, we’ve found out how to get first-rate goods at a great value to consumers. While we do have daily flash sales and weekly flash sales on our website, it’s still available 24/7.”
Pop-ups are here to stay
As established companies continue to innovate, the new kids on the block are finding new and interesting ways to integrate themselves into communities. Pop-up stores, where one, or several, businesses take up shop for a limited time in a retail space, are becoming more en vogue.
Having a sudden storefront for a total newcomer to an area—and showcasing it as a limited-time opportunity—creates interest for consumers. During New York Fashion Week, many designers open pop-up stores together, creating interest for their brands and for the event. Individually, it’s too challenging for each designer to open their own store, but as a group, the store may become viable enough to stay longer-term.
Furthermore, it’s a way for businesses, both large and small, to dip their toe into a community and see if they’ll be welcomed without having to pour resources into a risky endeavor. Even companies that don’t want to stay in a community can at least introduce themselves or their new offerings. For example, Overstock has opened a space in a Utah mall to introduce the public to its Roombuilder technology.
By utilizing the pop-up, companies get valuable information about what the community wants to see from them.
“Pop-ups frequently turn into permanent leases,” says Cramer.
For online companies, a pop-up is a great way to enhance their brand within a new community. “Online retailers utilize pop-ups to measure customer feedback for new product and future inventory. This not only increase sales, but also engages consumers who might not buy online,” says Cramer.
Catering to the costumer
All of the decisions made and innovations being used by retailers today are driven by data. With the wealth of data now available to retailers, getting offerings to consumers is becoming easier than ever—from the broad perspective of where to open a new store location to micro details like targeting advertising toward individual consumers.
“That knowledge gives you so much power. Today retailers run reports and studies on potential new locations, and they can estimate their store sales within 5 percent. They run their sales projection and it determines what they can pay in rent,” says Simonsen. “It used to be, ‘Here’s the population. Here’s the income, here’s the number of households within a certain radius.’ But now it’s gotten so much more high-tech. ‘Here’s our sales projection—we’ll likely hit that, and here’s the rent that makes sense. If we can’t hit that, we’re not going to open a store there.’”
Companies that do much of their business online, adds Simonsen, can look at online sales volumes to pinpoint which communities—even in the same general area—are hungriest for a brick-and-mortar location.
Meanwhile, online retailers pay attention to browsing, to what item was lingered on (but not purchased) and then target ads reminding you of the item even when you’ve left their site.
Overstock has put a lot of investment into a mobile app—which has won Web Marketing Association’s Best Shopping Mobile Application for four consecutive years—and into a loyalty program, Club O, that gives shoppers free shipping on items and an extra 5 percent off in rewards. Furthermore, accumulated data can help online companies personalize a repeat customer’s experience.
“The online community has a huge amount of data informing trends. When you come to Overstock, there’s millions of items to choose from, and a personalized experience can make it a lot less overwhelming. We’re using data to make that happen,” says Bower.
Brick-and-mortar shops have begun to do the same with “club” cards that track your purchases and offer rewards.
“Harmons has a Foodie Club card, and it tracks what you’re buying. So if you’re a vegan, they’re not going to send you a coupon for filet mignon. They know if you buy whole grain bread every time and they send you a coupon for it, you’ll come back into the store,” says Simonsen. “They want to know what a person wants rather than just sending you coupons for everything … I think it’s brilliant.”