By Michael Garel, CEO of eyeQ
Evidence mounts that brick-and-mortar retail is in decline. Recent news from three of the nation’s largest retail chains seemed to confirm this: JC Penney announced the closure of 33 stores and the elimination of 2,000 jobs, and Best Buy, after raising hopes with improved performance, saw a punishing 35% stock value decline in the last two days of the week after disappointing sales figures, and most recently Sam’s Club announced the elimination of 2,000 jobs. These damning results follow bad news from Barnes & Noble (sales decline), Macy’s (layoffs), and Loehmann’s (going out of business).
Is it time for traditional retailers to throw in the towel?
Advertisement
Not so fast, says tech giant IBM. In the annual 5-in-5 report — which predicts the five industries that will be most impacted by technological advances in the next five years — IBM claims that in five years, buying local will beat online.
“Local stores will merge digital with the instant gratification of physical retail to offer a more immersive and personalized shopping experience” said Sima Nadler, the IBM Researcher who authored the report. The report goes on to say, “Local stores will bring the web right to where shoppers can touch it, by enhancing the immediacy of physical retail with a magnified digital experience.”
In other words, IBM predicts that physical retail is going to take the technology ball back from e-Commerce and seize the lead.
Let’s go back to what many think of as the beginning of the internet, the 90’s. Back in the 90’s, brick-and-mortar retail stores were much more sophisticated than online channels. In the shopper’s mind, stores understood their needs and catered to them.
As the internet started to gain momentum, companies like Omniture created capabilities that helped web companies better understand who was visiting and what their particular interests were, giving online stores the first real chance to cater to – and therefore – compete for shoppers’ loyalty
The Internet then leaped ahead by empowering shoppers to help each other. Companies such as Epinions and Bazaarvoice allowed consumers to take control of product and service conversations, beginning the cycle of removing trust from the sales associates. In fact, today, 70% of shoppers read reviews prior to purchase, and 80% of those shoppers trust the reviews they read, while only 10% trust what the sales associate is telling them.
Though ratings, reviews, and conversations provided valuable information to shoppers that allowed them to make instant purchasing decisions, personalization was a missing piece. In the late 2000’s, companies such as Monetate revolutionized the way that e-Commerce platforms interacted with shoppers. Personalization quickly transitioned from novelty to requirement. Messaging, products, and offers that are relevant to each shopper’s needs and wants became both compelling and expected. At this point, the e-Commerce shopping experience significantly surpassed that of in-store for many, many shoppers.
Now the reach of that personalization has expanded dramatically. Have you ever noticed that products related to those that you have browsed online appear in ads when you browse unrelated sites, such as Facebook or your favorite news site? Products such as Campaign Suite by Turn allow marketers to reach online shoppers through not only the e-Commerce platforms they purchase on, but also every other informational site they browse. This increased level of personalization into a consumers browsing experience has been shown to increase conversion for the e-Commerce channel.
Finally, social commerce has had a significant impact on shopping behavior. Shares, likes, and comments with links back to a vendor’s e-Commerce site are becoming the norm for marketers to reach out to shoppers.
So what are bricks-and-mortar retailers to do? What can help bring the shopping experience advantage back to physical retail?
It is actually now possible for local retailers to provide the personalized and engaging customer experiences that e-Commerce has trained shoppers to expect. One method that has been promoted is smart-phone mobile apps. However, only a small segment of today’s shoppers are willing to download and fewer actually use in-store apps. What about the remainder of shoppers?
Sears Hometown and Outlet Stores recently received a national customer engagement award for closing this gap by bringing e-Commerce-type capabilities to their outlet stores. They installed customized 23-inch touch-screen panel PCs in strategic places throughout the store to bring real-time inventory and robust product details straight from their own e-Commerce channel. The consistency between online and in-store creates a true omnichannel look and feel and empowers shoppers in a way they weren’t before.
“With this integrated campaign, customers don’t need to go home for further research or to review customer feedback, it’s all in the store with added live interaction with our sales associates,” said JJ Ethridge, VP of Supply Chain, Technology, and Integrated Retail at Sears Hometown and Outlet Stores.
Sears Outlet integrates these highly interactive touch-screen displays with technologies that help the machines understand the shopper and his or her interests, enabling a more helpful shopping experience – taking back the advantage from e-Commerce. The result is a more satisfying shopping experience for both the customer and the retailer.
In order for physical retail to beat online, more brick-and-mortar retailers will need to provide these engaging and personalized digital experiences in-store without relying on mobile applications.
They will need to deploy the in-store corollary to the e-Commerce tools that deliver incredible shopping experiences. Computing and analytic technology available today allows forward thinking brick-and-mortar retailers to marry e-Commerce-like personalization and engagement e with the irreplaceable tactile and instant gratification experience of the physical store. Brick-and-mortar retailers are just beginning to implement such technology. As this technology propagates throughout the retail system, brick-and-mortar will win against online.
Michael Garel is Founder and CEO of eyeQ, Inc., an award winning provider of advanced retail solutions bringing e-Commerce-type capabilities to brick-and-mortar retail. eyeQinsights, their core platform, integrates live customer insights with responsive marketing, big data analytics, and even the retailer’s own e-Commerce site to create a personalized and more satisfying omnichannel shopping experience. An experienced tech executive and entrepreneur, Michael developed the concept for the company while obtaining his MBA at the University of Texas and researching the rapid change of in-store shopping behavior and the impact of e-Commerce on the in-store experience.
