It would be easy to assume the retail industry coming out of 2020 was in dire straits. But in truth, the news wasn’t all bad. It’s true that many businesses — especially those considered non-essential — saw dramatic reductions in foot traffic. On the other hand, some businesses, such as home improvement stores, actually saw sales increase throughout the pandemic and began course-correcting their retail footprints to account for more online traffic.
No matter how brands fared during COVID, one thing is now certain: retailers can no longer rely on physical locations alone as a way to drive store traffic and sales. The pandemic challenged any retailer that “over-expanded” its physical footprint in previous years to right the ship and ensure its remaining stores were properly tailored to the target market.
Shrinking physical footprints created opportunities to re-evaluate strategies around product mix, experiences, and more — so now, post-pandemic, how can retailers strike a balance between in-person and online in this “new normal” and truly maximize the value of a store visit?
Rekindling Connections and Driving Loyalty with Experiences
As one might expect, there’s no set formula for retail businesses looking for continued success or a brand revitalization post-COVID. However, there are some telling statistics and areas of opportunity — especially around consumer behavior — businesses can take advantage of to re-establish the balance of in-person and online sales.
For example, McKinsey found that 73% of U.S. consumers have changed stores, brands or the way they shop. Reversing or mitigating the impact of these changes may prove difficult, but with ecommerce fatigue setting in, retailers have a window of opportunity to invest in programs that rekindle connections with consumers and drive loyalty. Despite all the change of the past 16 months, brick-and-mortar retail presents unique competitive advantages for those that deploy it well. Just look at the ‘digital first’ brands such as Alibaba, Amazon, Apple, and Google that are investing more in physical retail.
But re-establishing a physical footprint doesn’t alone ensure success. Instead, it’s the combination of physical location and consumer experience. Hence we are seeing innovative retailers establish experience programs such as:
- Experiential retail: One of the most successful strategies for increasing in-store retail traffic is developing in-store specific, hands-on experiences. A great example is DICK’S Sporting Goods’ House of Sport concept, which includes running tracks, climbing walls, batting cages and more.
- Classes and community: Another strategy providing significant dividends for retailers is classes and educational content. Michaels Stores is famous for its online and in-store classes. During the pandemic these classes strengthened loyalty with existing customers and expanded the retailer’s reach to new audiences.
- Omnichannel experiences: One big challenge facing retailers is enticing customers who are comfortable returning to stores to pay a visit, while accounting for shoppers who may not be ready to shop in person. To account for this, some retailers have shifted to a hybrid model of livestreamed in-store events. Take Petco’s recent livestream fashion show — a shoppable, social media-driven experience that allowed consumers to view, share and shop products all at once.
- In-store services and appointment shopping: Whether it’s the Best Buy Geek Squad or Golf Galaxy golf club fitting, expert services act like a magnet to attract consumers to physical retail. These premium touches give shoppers an added incentive to visit. In addition to direct revenue, these appointments create valuable insights that can be used to increase the average spend per visit and ultimately the lifetime value of shoppers.
With this broad range of options, there is no one formula for success and retailers should certainly experiment — but the challenge then becomes illustrating the impact these programs have on bottom-line revenue and store performance.
While there are a plethora of metrics available to retailers, here are the ones we find most useful:
Direct revenue: A great benefit of most experiential initiatives and services programs is that they provide store visitors with identifying characteristics. By connecting booking systems to POS, CRM and loyalty data, it’s possible to close the loop on these programs to understand the direct revenue impact and impact on consumer lifetime value.
Shopper Yield: While it’s possible to estimate direct impact during the planning phase of a new retail initiative, a simpler method is to forecast lifts in foot traffic and assign a value to each incremental store visitor. To do this, retailers can adopt the shopper yield metric conceived by RetailNext. If you can reliably increase store traffic via experiences, you can optimize and increase profitability with shopper yield.
Net Promoter Score (NPS): While revenue and yield are the best indicators of the value of a store visit, many retailers look to NPS to measure the ROI of their physical footprint. Speaking with eMarketer in June 2021, Joe Kudla, CEO of activewear brand Vuori, commented on the value of NPS, saying: “What we find is that customers who originate in our stores tend to have a really high NPS [net promoter score]. They buy more, so their average order value is higher and they have a higher lifetime value.”
For now, the great news is that there is no shortage of ways to marry the connection of in-store shopping with the new reality of online purchasing. By leveraging one — or all — of the strategies outlined above, along with the tactics for measuring their effectiveness, retailers can experiment, find the perfect fit and understand the metrics to support these endeavors.
Ryan Whitney brings more than 20 years of experience building and leading global sales teams and developing successful go-to-market strategies for both private and public companies. As Chief Sales Officer, Whitney is responsible for AnyRoad’s global sales and partner alliance strategy. Prior to AnyRoad, he helped scale Gainsight to a $1B valuation as SVP Americas, along with being an early sales leader at ServiceSource which IPO’d in 2011 (both category creators).