Online retail may dominate mindshare but it’s the physical store that still dominates sales. In the UK, one of the most advanced e-commerce markets, internet sales accounted for 27.6% of total retail sales in February 2022 following a higher peak of 37.8% during January 2021 lockdowns.
So if physical retail still dominates then why do so many retailers struggle to exploit the full potential benefits of their store networks? In this article, we will try to answer this question and highlight what can be done to overcome the challenges.
Alternatively, if you would like to get a full overview of how to achieve a 360-degree excellent customer experience in retail, you can download our report straight away.
Here you will find:
- Offline is going strong
- How to make the most of your store portfolio
- Combining in-store and online knowledge
- Overcoming the silo approach
Offline is going strong
Physical stores are quite hard to operate, they are more cumbersome and expensive, burdened by rents and inflexibility. They are costly to stock, staff and maintain and the many roles a physical store requires – from shelf filling to manning checkouts – can hinder the customer experience if staffing is stretched.
It was once believed that these disadvantages meant that online retail would kill off the physical store entirely. This became an even stronger argument when lockdowns forced stores to close and customers shifted in greater numbers online. Many assumed the shift would be permanent.
But while some retailers have been forced to abandon store portfolios for an online-only presence for financial reasons, the return of shoppers to stores once restrictions eased shows that physical stores still have their place.
Part of this is the fact that stores offer immediacy. They can satisfy a shopping need or urge at the moment. But it’s also to do with the experiential offer of the store and the social element of shopping that consumers love.
The power of the physical store is evidenced further by the fact that even pure-play retailers now have their own stores. Amazon has been experimenting with physical store formats since 2016 and now includes formats such as Amazon 4-star, which recently opened its first store outside of the US in the UK, and Amazon Style, the company’s first physical store for fashion which will open later this year, probably in the US.
How to make the most of your store portfolio
Bring together the best of the online experience – great prices, selection, speed - and convenience of instore shopping experience which is built to inspire
So how can your retail business maximize the opportunities of your physical store network and ensure it complements what you are doing online?
One way is by looking at what the likes of Amazon are doing with their store experimentation. Their stores combine their learnings and online best practices with an understanding of what the physical store should represent. They aren’t laden with historic ways of doing things but instead are reinventing such store concepts for themselves. Their stores bring together the best of the online experience – great prices, selection, and convenience with an in-store shopping experience built to inspire.
And that is a key differentiator of the physical store - it allows you to merchandise your stores in a way that customers can look and feel your products and be inspired. It’s something that online simply doesn’t allow. Your store is also the opportunity to connect more directly with your customers, both physically and emotionally. It also allows a greater opportunity for brand immersion and for a retailer to showcase its products and its brand, creating an experience that will stand out from the competition.
Done well it combines the benefits of both channels to deliver a more compelling offer. At luxury boutique Browns, which is owned by Farfetch for example, a new flagship opened in London in 2021. It includes connected mirrors, high-touch services, and an interactive space for consumers to combine the best of in-store and online in a physical setting.
Other retailers are redesigning their digital stores to make them feel more physical. Ralph Lauren, for example, has a virtual version of its Paris store that allows shoppers to browse a representation of the physical store but find out more about products and add them to their basket as they would online.
Combining in-store and online knowledge
As with online, the in-store experience and service level should be flawless and friction-free but this is where retailers can face challenges. Processes need to be smooth and your employees need to be empowered to bring your brand alive and represent you positively since the store is a window on your brand. They need to be ambassadors for your brand. That means they have to love working for you and align with your values as a retailer.
There are many options to help ease in-store pressure, such as mobile POS and self-service, to free up employees to focus on customer service that will drive sales and customer loyalty. But it’s also about giving your employees access to the customer insight that can help them improve customer experience in-store and help them sell better.
Best practice comes when as a retailer you can exploit the benefits of both channels since each has its own particular benefits. That means linking in-store transactions with what the customers are doing online so that you can seamlessly connect customer journeys, wherever the customer is on that journey and whatever channel they may be using.
Instore you need to be trying to recognize the customer as soon as they enter your store. Ideally, it’s about getting the customer to positively engage with you and share their data before the point of purchase, so that you are able to access the customer knowledge that allows your people to sell better. Having a unique customer profile across channels and using AI to add greater insight to the data you hold, allows them to give better recommendations to your customers when they are standing in front of them. That makes the customer much more likely to buy.
Overcoming the silo approach
Ensuring that you are no longer operating a silo approach instore or online can be critical for your business
Most importantly, however, is recognizing that both store and online play equally valuable roles – and that they both play a part in a successful retail business. This means embracing your physical stores and ensuring you aren’t still operating a silo approach in-store or online.
Store employees have historically been reluctant to engage with online, worried that they will lose the store sales that have traditionally been the measure of their success.
But successful retailers realize the stores can push online sales in the same way that online can push store sales. For instance, a store assistant ordering an item online for a customer that’s out of stock in-store or upselling to a customer that is "click and collecting" or returning an online order in-store. It’s about retailers caring that the customer is shopping with them as a brand, not with them as individual channels.
Successful retailers have reorganized into one unified business unit that offers the omnichannel approach they need to be successful. They also incentivize employees accordingly. They realize that for all the benefits of online the physical store offers an experience that simply can’t be beaten. They operate a truly omnichannel model where the store is still an integral part of the offer, not one that sits on the sidelines.