In almost all product categories, consumers are making fewer trips to brick-and-mortar stores. When consumers see brands and products on shelves, they can touch, feel and learn about them, and awareness and buying increase. As that real-life exposure decreases, brands feel the pain of lost sales.
In fact, when a store closes, only a small portion of a brand’s sales directly transfer to the brand’s online, mobile or other channels. Therefore, what can brands and retailers do to offset these “lost sales”? Here are four strategies the most successful brands and retailers are using:
1. Adopt a “demand creation” approach.
The reality is that a brand’s own channels need to be even more productive because there are fewer opportunities to meet the consumer in a physical retail environment. Brands should go on the offensive to create material demand via actions outside the store. That demand can then be pulled through any channel the consumer prefers. Brands do best when they invent new strategies to advance brand awareness among target consumers. Be a ubiquitous presence in the daily lives of consumers.
2. Drive more sales to your direct-to-consumer (D-to-C) channels.
There's much more potential today to capture meaningful sales on a brand’s own website than ever before, as consumers are both increasingly engaging directly with brands and more willing to buy right from brands’ websites. And when done right, D-to-C can be a truly thriving channel for a brand. For example, Under Armour captured 35 percent of its 2018 global sales through its online and owned stores. Forty-five percent of Crocs’ 2018 sales were D-to-C through its retail stores and e-commerce site. And D-to-C accounts for about a third of sales for VF Corp. (parent company of Vans, The North Face and others), with the goal of growing to over 50 percent of total company revenues by 2021.
3. Dramatically improve your digital merchandising.
In a physical store, the best ways to get your product in front of customers are well understood. Shelf placement, endcap displays, shops-in-shops, packaging, signage and other visual merchandising techniques are all well-known. However, that’s not quite the case yet in the digital world. It’s an area brands struggle with.
Brands should focus on devising the right online content and strategies to catch the consumer’s eye. This often has little to no overlap with traditional in-store merchandising best practices. It involves, at a minimum, making sure products are affiliated with the right categories and searches, as well as appropriately featured and promoted on retail websites.
4. Win with Amazon.
Odds are high that if Amazon.com isn’t already a meaningful sales channel for a brand, it will be at some point in the future. About half of all product searches already begin on Amazon, according to industry research, and consumers are becoming more accepting of purchasing premium brands on the site. Furthermore, brands’ ability to achieve higher-quality positioning on Amazon will continue to improve.
Anker, which makes and sells phone and power accessories, has built a nearly $600 million business in seven years selling almost exclusively on Amazon. It started with a simple set of core products, carefully expanded its line, burnished its credibility via quality and strong reviews, and in this way embraced the exposure Amazon gives partners that deliver top-notch products on time.
For many brands, future sales are at risk because of less physical product placement and interaction with consumers, and a digital marketplace that's still not fully understood. Going on the offensive with smart digital strategies should deliver more control of your destiny, mitigate risk and drive growth.
Jon Weber, Rob Haslehurst and Noor Abdel-Samed are all managing directors at L.E.K. Consulting, a global strategy consulting firm.