Brick-and-mortar retail has a long and prosperous future ahead. Despite popular misconceptions about online stores and drone deliveries, people still need real stores in their lives — and will for decades to come.
Research from Escalent found that despite the impressive growth of e-commerce, in-store sales still dwarf online sales ($152.7 billion vs. $62.5 billion). Furthermore, online stores only beat physical retailers in a handful of categories. Retail demographics skew older, but people with household incomes under $80,000 shop more in stores than their wealthier counterparts.
Our State of Consumer Behavior Report confirms the same: 53 percent of people of all ages prefer to shop at physical stores. The ability to see and feel objects in real life, combined with in-person price comparison, leads many shoppers to prefer the brick-and-mortar experience.
Just because retail’s future looks bright doesn't mean retailers can relax, however. The world of retail will continue to change at a rapid pace, inspired by evolving customer expectations and the pressure of e-commerce options. Retail icons like Sears and Payless failed because they couldn't keep up with the times. To thrive in a more competitive consumer landscape, the retail brands of tomorrow must stay ahead of the pack, and it all starts with the in-store experience.
Retail’s Evolution Revealed Through Experiences
Forward-thinking retailers will flourish over the next decade. Others, which rely on old tactics, will stagnate and lose ground.
In-store experiences will separate the winners and losers because that’s what matters most to shoppers today. In our survey, 68.9 percent of consumers reported that a good in-store experience is either important or very important to them. Given the changes in how people buy from and interact with brands today, retailers must prioritize better experiences if they want to keep people coming through the door. Anyone can find a good price for a similar product online, and while retailers cannot charge a 50 percent premium for human interaction, they can distinguish themselves from the crowd without joining a doomed race to the lowest price.
Happy customers spend more money. Consider that 22.8 percent of our survey’s respondents said they would shop more if store owners provided unique experiences.
Retailers need to learn everything they can about what their customers want and how to deliver relevant experiences. Technology can help companies acquire, analyze and leverage data to meet this goal. By combining business intelligence with valuable in-store activations, the successful retailers of the future will keep customers coming back no matter how advanced e-commerce becomes.
The difference between impression and immersion cannot be overstated. Great in-store experiences communicate the brand’s vision, culture and value to customers in a way that websites can’t match. Only physical interaction can inspire the complex mental connections that drive consumers to adopt a brand as part of themselves, and only retailers that prioritize great experiences will reap those rewards.
Complete Commerce Ecosystem
To understand how to create better experiences, retailers must first understand how consumers process information. People who prefer to shop at physical locations cite the ability to see and touch products as their primary differentiator (40.3 percent), followed closely by an enjoyable shopping experience (38.4 percent). People generally rely on visual cues to make decisions, which means in-store visuals (filled with relevant information and behavioral triggers) take top priority. The better the visual triggers, the better the outcomes for both customers and companies.
Today’s consumers have evolved to expect immersive, interactive and unique experiences from brands. They don’t want to see boring ads and flashing lights, they want content that resonates with their needs and tells them information they want to know. Over the next decade, retailers should keep these priorities in mind when designing in-store experiences:
1. Focus on the complete commerce journey.
Consumers rarely do their shopping entirely offline. Even when they visit stores, they use their smartphones to compare deals and learn more about the products in front of them. More than 68 percent of survey respondents had searched for a better price online after finding a product at a physical store. Smart retailers will work to create seamless, omnichannel experiences — from awareness to purchase to delivery — to meet customer expectations
2. Give them something they can’t get anywhere else.
Young people love experiences, so give them experiences they can’t get anywhere else. In-store brand activations, smart technologies, and fun partnerships can all drive in-store traffic.
3. Stay updated on complementary products and services.
Savvy retailers understand how to turn a single transaction into a series of larger purchases. What do your in-store customers want, and how can your brand capture and leverage that information to provide a better experience?
4. Design digital in-store promotions.
People skip banner ads online without a second thought, but they pay more attention to promotions right in front of their faces in-store. Use digital technologies to get physical visitors engaged and interested in products and deals they may otherwise have missed.
5. Expand the physical into the digital to inspire visits.
Social proof and custom content make powerful allies. Get customers involved with in-store experiences and post the evidence on social media. Encourage people to share with their friends and followers. Create some FOMO with the audience to boost foot traffic and, in turn, sales.
When we look closer at how age and gender change the numbers of physical store vs. online shopping, people ages 17 to 34 preferred online at 55.1 percent, while those over 35 preferred physical stores to online shopping at 57.5 percent.
The retail revolution may have turned the spotlight online, but physical retailers have plenty of opportunities on the horizon. Don’t get complacent or worry too much about online competition. Focus on customers and their in-store experiences, then give them everything they need to keep them coming back for more.
Bobby Marhamat is the CEO of Raydiant Screen Signage, a digital signage provider that helps businesses turn their TVs into interactive signs that drive sales, improve the in-store experience, and reinforce brand messaging.
Bobby Marhamat is the CEO of Raydiant Screen Signage, a digital signage provider that helps businesses turn their TVs into interactive signs that drive sales, improve the in-store experience, and reinforce brand messaging. Prior to joining Raydiant, Bobby served as the COO of Revel Systems where he worked on the front lines with over 25,000 brick and mortar retailers. Bobby has held leadership positions including CEO, CRO, and VP of Sales at companies such as Highfive, Limos.com, EVO2, Verizon Wireless, LookSmart, ServerPlex Networks, and Sprint/Nextel. When Bobby's not spending his time thinking about the future of brick and mortar retail, you can find him traveling, reading, or tending to his vegetable garden.