Right now retail is being challenged on many fronts not only from emerging technologies but also uncertain economic times and changing consumer trends and perceptions towards what constitutes a well spent day at the store.
With Nordstrom the high end Seattle retailer opening shop in the stagnant Granville downtown core in Fall 2015 to huge fanfare, you might tend to question them taking a high risk gamble or having seen the light others have been blind to these past few damaging years when many a giant have fallen. Nordsrtom could not have asked for better timing given the larger investment needed crossing the border and the US dollar stronger at $1.32 Canadian, Target did not get that advantage when they first came in against a stronger Canadian dollar, possible had they weathered the storm for another year and closed down only their worst performing stores only they could have made it work, they did seem in a hurry to leave.
The announcements by Target, Mexx, Sony Corp Canada in early 2015 besides a spate of other store closures sent shock waves through the economy and the retail sector.Varied opinions exist but Targets closure was not only surprising but shocking as their enormous investment 133 stores costing $1.5 billion hardly lasted two years. Target definitely underestimated Canadian buying behaviour and did not come up to shoppers expectations of what should have been a better organized and run retail operation with shelves well stocked with appealing and competitively priced products. Opening 124 stores and revving up to 133 by the end of 2014 may have spelled undue exuberance and a total lack of research on Canadian consumer behaviour, doing business in a far smaller market than the uS, with a weakening Canadian dollar was going to be a huge challenge. The closures of Sony stores are better understood as consumers got exposed over the past decade to good brands like Samsung and LG at better prices, the stores were mainly used by consumers to browse Sony brands which were now losing their luster and appeal they had in the 80’s and 90’s. Electronics clients were also better served by the big box retailers like Future shop and best buy to make comparisons between competing brands.
A growing concern to retailers especially electronic stores is the practice now known as,”showrooming” wherein a customer visits the brick and mortar store to look at products and decide what they like, while researching on their mobile devices where they may buy the same product cheaper online and then return home to make the purchase online, thus using the store services while denying them the sale. Stores do have face up to the reality of growing e-commerce sales and have to adapt and also join forces if they are to remain a living entity.
There are several ways in which stores are responding with varying degrees of success:
1. Stores are not only matching online prices but are also pressuring their suppliers and manufacturers to impose minimum advertised price etailers charge insuring a minimum floor price for off and online sales.
2. Stores can develop the expertise in the area of business as Wayfair a furniture store became a Wikipedia of everything furniture for it’s customers. Thus providing a high level of service that could not be matched online.
3. Stores are also being credited for online sales that may have been caused by “showrooming” customers that have gone back home and made the purchase online as long as they are within a certain radius of the store, so in essence they are being rewarded for providing service to customers who eventually buy from the store website.
4, In-store Beacons are being utilized by retailers who have location sensitive devices spread across the store sending out notifications about special deals and coupons to customers who have downloaded the mobile app. Also allowing the store to capture key consumer information and buying habits, this capability is being used by Walgreens and Hudson’s Bay within their stores.
5. Above all the brick and mortar store have the distinct advantage of providing an enhanced unique shopping experience which the e-tailer will find hard pressed to match. Like for instance the recent launch of Nordstrom in downtown Vancouver to huge crowds lining up in the thousands to get in the store to enjoy that thrill of shopping in a fantasy environment being pampered by a staff of over 100 beauty advisers and personal groomers, not to forget a full bar and restaurant to relax and possibly spend a few hours in-store.
So in conclusion, all is not lost for the traditional brick and mortar store, it is all about adapting to the challenges with retailers pairing the convenience of both online and off line shopping. Providing a unique shopping experience tailored to the shoppers needs making them want to return over and over again.