Lessons from the Internet for Brick-and-Mortar
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\"RRIn today’s environment, brick-and-mortar retailers are facing unprecedented challenges. C-level leaders are navigating through increasing headwinds brought on by a confluence of technology-driven changes – including big data, the cloud, mobile devices, and social media – that threaten the viability of the traditional retail business model.

Over the past decade, retailers have made huge strides in streamlining their store operations and supply chains. As a result, additional cost-cutting opportunities are waning as fixed costs of rent, marketing, inventory, and infrastructure become more prominent on the P&L. With today’s retail cost structure, even a few percentage points in incremental sales can mean the difference between continued stagnation and breakaway success.

The changes in the industry landscape that are driving such dramatic changes also create unprecedented opportunities. Retailers who can successfully leverage emerging technologies to address their most significant “pain points” can unlock substantial profitable growth opportunities across the entire store fleet. In our discussions with retail CEOs, we often hear the following:

  • Information overload: Given the increasing amount of data and daily task requirements that are flowing to the stores, how can I keep my store teams focused on the few key metrics that really drive results?
  • Staff productivity: How can I get the organization to set appropriate performance targets for each associate and ensure that these targets are being met?
  • Inconsistent customer experiences: How can I consistently deliver the type of in-store customer experience that drives more and larger transactions and builds customer loyalty?
  • Underperforming stores: Why can’t I close the gap between my best performing stores and the chronic underperformers?
  • Showrooming: Are my stores becoming an expensive showroom for Amazon and other online retailers?

Lessons from E-Commerce

We believe brick-and-mortar stores will remain the primary retail channel relative to investments, sales, and brand-building, for the foreseeable future. While the overall share of online sales is increasing – fueled by the adoption of omni-channel strategies – 80-95% of retail sales still occur in stores. There are, however, several important lessons to be learned from Amazon and other online retailers:

  • Measure Your Traffic: The website “hit” IS the foundational metric for driving external marketing efforts.
  • Know Your Conversion: “Click through” statistics and conversion are continually measured and drive decisions on overall site design and assessments of usability.
  • Build the Basket: Premium product upsell and suggested accessories/ancillary services – if presented appropriately – can dramatically increase basket size.
  • Optimize – and Scale – The Experience: Metrics on traffic, conversion, and basket size enable online retailers to objectively and systematically optimize their websites and easily scale the desired experience.
  • Continually Test and Learn: In a dynamic competitive environment, even the best sites are subject to continuous review and A/B testing in order to remain effective and relevant.

Application to Brick-and-Mortar

These lessons have important ramifications for brick and mortar retailers who want to thrive in this new, omni-channel world:

  • Define What “Right” Looks Like: The customer’s brick and mortar experience is a function of product, staff, and the store environment. Most retailers do a good job in defining and managing the product and store environment sides of the equation, but surprisingly few have robust standards on staff/customer interactions…and even fewer have modeled the optimal management processes for GMs, DMs and functional support areas to ensure the desired customer interactions are consistently executed.
  • Measure – and Proactively Manage – Customers and Staff: Store traffic has been a traditional blind spot for most retailers; either it is not measured at all, or it is not considered to be accurate or useful. On the other hand, progressive retailers see traffic as a strategic asset, and they are using traffic as a key tool to measure both marketing effectiveness and store sales performance. Likewise, store labor hours have traditionally been viewed as a line-item expense to be minimized. But understanding the impact of customer/staff interactions – on both sales productivity and customer satisfaction – can be a game changer for retailers, enabling more effective and consistent customer experiences that drive more transactions and larger transactions.

The same technologies that are creating so many pain points for retailers also hold the key to successfully driving incremental sales and ROI from the existing store base. Improving the staff/customer interactions is low risk and high reward – for customers, for store associates, and for shareholders.

How The Yacobian Group Can Help

The Yacobian group has unparalleled expertise in what makes customers buy (or not buy), and in designing scalable customer experiences, earned over 25 years while working with the world’s best in class retailers to improve conversion and transaction size. We have invented a simple yet powerful store performance improvement platform called Blueday that integrates big data with human behavior, making it easier and faster to drive more — and larger — transactions.

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