Winning In-Store Begins Online
The explosive growth of e-commerce, largely powered by mobile and social technologies, is eviscerating traditional retail models, leaving many well-established retailers and brands struggling to remain relevant to today’s shoppers. A relatively common retail misconception is that “since all or the clear majority of my sales occur in-store, I don’t really need to worry about online.” The opposite couldn't be more true. Deloitte reported that nearly 70 percent of American shoppers went online before going to the store last holiday shopping season, meaning a store’s online presence and messaging is literally driving traffic to (or away from) the physical store. And this trend is expected to accelerate, with McKinsey quoting a 90 percent webrooming rate by 2020!
The logic of store-based retailers that eschew online is that the increased transparency it brings to pricing will force them into a “race to the bottom.” Instead, these retailers need to embrace online, including online tools, as a real opportunity to drive store traffic, sales and margins.
While price is an important component of a shopper’s online experience, it’s more about being within an acceptable price range on core products vs. being the lowest priced on all. For example, an electronics store needs to be competitive on heavily price-shopped items like televisions, but has much more pricing flexibility on the related accessories. In today’s environment, assortment is arguably more important than price. Carrying a unique assortment, including private label, is key to capturing the hearts, minds and wallets of shoppers. Brick-and-mortar retailers also have the local advantage — i.e., a local presence with a localized assortment and the promise of immediate gratification. This brings with it the opportunity for localized pricing and associated margin uplift. Ace Hardware is an example of a successful store-based retailer playing and winning with such a strategy.
Online Product Intelligence Powers Ace’s In-Store Strategy
Ace is the neighborhood home improvement retailer, with 4,400 independently owned stores. Furthermore, it’s exactly this neighborhood positioning supported by fair prices, localized assortment and helpful service at the store level that's key to Ace’s continued success. Ace promises good value and shoppers are responding. Ace has won top ranks in customer satisfaction for nine years running, and continues to post record financial results quarter after quarter.
Ace empowers its local dealers to compete effectively against such retail giants as Lowe’s and Home Depot — each of which has a sizable online and physical store footprint — with the company’s neighborhood value proposition. In addition, Ace's online product intelligence powers this store-based strategy with continuous monitoring of its competitors’ online pricing and assortment at the local level, including stock availability. With timely access to accurate and complete competitive product data on a regional basis, Ace is able to offer the “right product” at the “right price” for the local market.
As demonstrated by Ace, store-based retailers can win by looking online first to set their store-based pricing and product strategies. Some key takeaways from the Ace experience include the following:
- Ensure pricing is competitive online. As mentioned earlier, this is essential to ensure that shoppers visit your stores in the first place. If your pricing isn’t within an acceptable range, shoppers will stay away.
- Offer the right assortment for the local market. Store-based retailers have the opportunity to cater to local shoppers with their unique knowledge of local market needs and conditions, something an e-commerce giant cannot offer.
- Rely on the right tools. Retailers can’t compete and win with yesterday’s tools in an online world. If you're still relying on in-store product and price checks of your competitive set, you're missing the mark. It’s the online world that’s going to drive traffic to (or from) your store and those of your competitors.
In summary, the key takeaway for store-based retailers is to leverage online competitive tools for in-store success.
Jenn Markey is the vice president of marketing at 360pi, a retail price and product intelligence solution.