By David Morin, Prism
For the better part of the last several decades, ‘sales per square foot’ has been the holy grail of retail analytics. Especially relevant prior to the rise of e-Commerce, this metric once provided the most efficient way to analyze a store’s ability to capitalize on available selling space. You probably noticed that things have been shifting in the world of retail – an increase in buying options, brands, and consumer knowledge have all led to more customer control over purchasing decisions. As the way we buy changes, so does the way that retailers can — and should — analyze their business.
Customer experience (per square foot) is quickly becoming the new retail metric for success. The advent of the Internet has drastically changed the retail landscape: ‘Showrooming’ is becoming more popular than ever, with consumers proactively researching products prior to entering a brick-and-mortar. Once consumers are in the store, they are checking the web in real-time to find the best price. Sales per square foot only measures in-store experiences that result in immediate sales – which now represents only a single piece of total brand experience. Whereas evaluating shopper touchpoints across multiple channels becomes a more inclusive evaluation.
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Simply put, customer experience is the sum of all interactions a customer has with a company.
The industry and Internet have been abuzz with talk about the decline of the brick-and-mortar retailer. While it’s true that retailers have been forced to reevaluate their physical store strategies, the notion that e-commerce is the only king is not quite true. In fact, in 2014, 80% of sales took place in stores. However, as consumers get savvier, there is increased pressure for retailers to create a compelling and seamless brand experience that is consistent both online and in-store.
In a recent eBook, The Retailers Guide to Competing with Amazon, customer experience consultancy Medallia concluded that the shopping experience was the most fruitful place for retailers to try to differentiate themselves from big e-Commerce. Many retailers are taking this cue and are getting creative at creating immersive in-store experiences: LuLulemon offers yoga classes to complement its wide assortment of yoga apparel, Neiman Marcus is experimenting with ‘Smart Mirrors’ to enhance the fitting room experience and Urban Outfitters is enhancing the experience by bringing Vetri Pizza into select stores. This only represents a few of the ways that retailers are using technology and unique offerings to give customers more reasons to continue returning to the physical store.
Despite claims that brick-and-mortar is passé, many retailers that were previously “online-only” such as Bonobos and Warby Parker, have moved offline by building physical storefronts. These strategically located stores can go a long way to improve and increase the overall customer engagement, and are often seen as a way to increase awareness create tactile a tactile experience with the brand. In the same way that traditional brick-and-mortar retailers have used the internet to offer more inventory and customization, online retailers are using physical stores to improve shipping timelines and extend overall brand reach.
Perhaps the biggest move as of late was the recent launch of a single, physical bookstore from mega-warehouse site Amazon in its home playground of Seattle — with speculative plans to open as many as 400 more brick-and-mortar stores in the coming years. Many have pegged Amazon with plans for total world domination across industries, so the Internet giant’s move to have a physical presence speaks volumes about the fate of brick-and-mortar stores.
So how can your store improve the customer experience?
- Provide unique in-store offerings. E-Commerce will almost always win when it comes to convenience, so it’s crucial to differentiate the in-store experience beyond just price and assortment. Whether it’s special events such as personal appearances from designers or tech innovations such as digital fitting rooms or mobile POS, these creative tactics appeal to customers’ heads and hearts to differentiate your store and keep them coming back.
- Use analytics. One of the reasons e-Commerce has proven so attractive for brands is the wealth of customer data available online. Many of the same data points are now available for the physical store – ranging from customer entry counts and shopper dwell analytics, to more sophisticated path analysis to quickly improve visual merchandising and store layout.
- Educate your staff. Today’s customers are smarter than ever and have a wealth of knowledge available at their fingertips. Make sure your team is up to date with product knowledge to be able to answer any questions as well as communicate what makes your products special.
- Add a personal touch. With the wealth of messages being thrown at customers every minute, it’s easy to think about avoiding adding to the clutter. But quality, personal messages can still be the best way to resonate with customer emotions. A smartly targeted promotion and exceptional customer service can go a long way to make a customer feel appreciated.
Even amidst all the innovation and change in the retail space, one thing is for certain even in today’s digital age: Brick-and-mortar is not dead. However, the way in which we evaluate performance has shifted beyond immediate revenue, towards the experiences and metrics that fully encompasses a shopper’s interactions with the brand across all channels.
David Morin is the Director of Retail Analytics at Prism. He has over a decade of retail experience that spans sales, merchandising, marketing, operations and brand management, and now works with many of the world’s leading retailers to make more informed decisions through data analytics. Morin has a Bachelor of Arts from the University of Southern California.
