The ‘Retail Crisis’ is Only a Crisis to Those That Didn't Evolve
The world of retail was rocked last month when Toys"R"Us filed for Chapter 11 bankruptcy protection. Many took it as a bad omen or the proverbial “last gasp” of a dying industry. Headlines of a “Retail Crisis” permeated the news cycle and analysts poured over the reasons why — with most of the blame directed at the shift to online shopping. With 80 percent of Americans shopping online at least once a month and e-commerce growing consistently by at least 10 percent year-over-year, the trends could seem bleak for some retailers. However, I would argue that not all will suffer the same fate.
2017 is the year that time ran out for retailers that didn’t evolve and continued “business as usual.” The Toys"R"Us Chapter 11 filing is another example to retailers of what happens if you wait instead of adapting to today’s consumers — ignoring the need for a combined approach of online conveniences with in-store experiences.
Specifically, Toys"R"Us missed the boat on truly understanding its customers and what they want out of their buying journey. The retailer didn’t adapt to the reality that mothers no longer want or need to drag their children with them to shop for toys. Why would they want to deal with a cart full of screaming kids when they could easily and conveniently buy the same toy sitting at home or work — kid free?
What Toys"R"Us got wrong, other retailers like LEGO and American Girl got right. The difference is in the local, in-store experience, which American Girl mastered early on. The popular doll retailer understood its experience-craving consumer and transformed its brick-and-mortar locations into destinations that made it fun and worthwhile to visit and shop on-site.
The same goes for cosmetics giant Ulta Beauty. The retailer successfully adapted to the evolving needs of its female customer base that enjoy all the conveniences of online shopping, but still demand tactile in-store experiences. Ulta implemented an integrated, multifaceted digital marketing approach that leverages a robust online experience that informs, supports and promotes its offline experience — all of which puts the customer’s needs first. The result? Ulta opened 38 stores in the first half of 2017 and is planning to open 100 stores by the end of this year, while also growing its e-commerce sales by 73 percent.
As with Ulta and so many other smart brands, the “retail in crisis” narrative isn’t even close to being true. In fact, the National Retail Federation recently pointed out that 2017 has brought an increase in store openings: for every one company closing their brick-and-mortar stores, 2.7 companies actually opened stores. This supports the fact that Generation Z (much like their predecessors, millennials) actually favors brick-and-mortar shopping over an e-commerce-only experience.
The interplay between online and offline experiences, along with having a local-focused strategy, is the key to the survival and revival of retail. Today’s smart brands are thinking differently about the path consumers take to get to their stores and what they’re experiencing when they get there. They’re also viewing their local brick-and-mortar locations as valuable assets that can create deeper customer connections and loyalty. Furthermore, they’re using effective local marketing tools and techniques to engage with customers, drive them to their stores and keep them coming back. With all the money invested in reaching customers online, smart retailers are ensuring that they're capturing them as they leave and driving them to the best source of conversion available. From local listing technology and geo-filters to targeted social media campaigns and consumer reviews, retailers are leveraging the latest digital marketing technology to create more meaningful connections with consumers on a local level.
Yes, the retail industry is in the midst of seismic shift. The innovation and disruption brought on by e-commerce giants like Amazon.com and eBay may have been the catalyst for change, but they certainly cannot be blamed for the downfall of some of the most recognizable brands in the world. Retailers that haven't yet run out of time need to see this as an opportunity to further commit to their evolution, kick their plans into high gear and appreciate the fact that the customer is still (and will always be) king.
Liz McConomy is the director of marketing for SweetIQ by ReachLocal, a local marketing hub.