There’s a common phrase that you may have heard over the last few years: Retail is dying. At Randal, we couldn’t disagree more. We know retail isn’t dying – it’s just changing. Technology has pushed all industries to evolve, and retail is no different. And just like transportation, manufacturing, communications and just about every other industry, the evolution is a new phase full of opportunity for smart retailers.
Harvard Business Review points out that the challenge to evolve is not killing retail, rather it’s the inability of some companies to adapt to a new model that is hurting the industry. Just as the rise of cities led to department stores and cars created suburbs and shopping malls, we’re facing a new change. Today, retail stores don’t need to be built to optimize a transaction. Since transactions can happen anywhere – in a store, in customers’ homes, or on their commute to work – the retail space has a new purpose. Consider Apple stores which offer a high-touch experience where shoppers interact with products and employees, but don’t need to end each visit with a cashier. In many cases, customers visit the Apple store to try out the product, but purchase it elsewhere. In fact, only 10% of iPhone purchases are made through the Apple store.
Simply put, the new purpose of retail stores is to offer an experience that isn’t available online. Build relationships, solve problems, interact with products, experience what it is like to be part of a brand. That’s the role of the evolving retail space.
Online Stores Setting Up Shop on Main Street (and vice-versa)
Many online retailers are staking their claim in brick and mortar spaces. The most obvious example is Amazon which recently opened bookstores and purchased Whole Foods for $13.7 billion. And Amazon isn’t the only one blurring the lines between online and traditional retailers. Last year Walmart purchased Jet, an e-commerce company, with the goal of strengthening their app and online shopping experience. Walmart also purchased Moosejaw and Shoebuy.com, both popular online retailers. And Target purchased Grand Junction, a same-day delivery company, in hopes of competing with Amazon’s famed delivery service.
Online retailers moving into brick and mortar stores, and vice versa, is just more proof that retail is indeed not dying. Smart retailers know online and offline shopping both have a purpose. While consumers enjoy the convenience and speed of online shopping, they aren’t giving up in-person experiences altogether. By having a presence in both spaces, it’s a win-win.
Shopping with No Merchandise
On the opposite end of the spectrum, Nordstrom recently tested a store in California that carried no merchandise. What’s the reason for such a bold move? Nordstrom Local, as they’ve called it, is a compact space (3,000 square feet) that aims to keep consumers from getting overwhelmed by the traditional shopping experience – racks and racks of clothing, toddlers throwing tantrums in the aisles, long check-out lines, etc. Instead, shoppers are able to try on sample items and if interested in purchasing the product, they can go to a Nordstrom store or have the item ordered online and shipped. Rather than browsing through inventory, a Nordstrom employee is there to guide the shopping experience and recommend items specifically for each shopper. What once seemed like a shopping experience only for the wealthy may soon be commonplace for any consumer!
Nordstrom (in addition to retailers like Bonobos and J. Hilburn) hopes to empower customers with this shopping model. It offers a service that can’t be found in traditional stores or online. If successful, it will be another step in re-defining the role of retail spaces.
As online retailers begin to occupy physical spaces, they’re not forgetting their online presence. These days, it’s not enough to be able to purchase items with just three clicks. Technology has brought the opportunity to order from Amazon using just your voice. Thanks to the Amazon Echo, you can simply say “Alexa, please order a package of light bulbs and two boxes of Kleenex.” That’s it. Alexa places the items in your cart and they arrive two days later.
For retailers, this means even more competition for commodity items. If consumers can order basic household items with a quick voice command, what would drive them to the store? What will the retail industry’s response be to this technology? It’s still too early to tell. But, as we said from the start, retail isn’t dying, it’s evolving. 2018 promises to bring new changes in the retail industry – and we are excited to see where together we go next.
Stay tuned for Part II of this blog in which we’ll explore the impact these trends have on retail spaces.← Back to all posts