It doesn’t take a brain surgeon to realize we are at an inflection point in the retail industry. The store closure stats from 2016 are disturbing and the projections for 2017, unfortunately, aren’t any rosier. What’s driving this unprecedented shift? Business Insider says, “Nearly every major department store, including Macy’s, Kohl’s, Walmart, and Sears, have collectively closed hundreds of stores over the last couple years to try and stem losses from unprofitable stores and the rise of ecommerce”. Over expansion and online shopping are two major factors. The third prevalent factor is generational.
Millennials are coming of age – obtaining higher paying jobs, getting married and buying homes. They have replaced Boomers as the largest most lucrative target audience for marketers. The bad news for brick and mortar retailers is this generation has grown up in the digital age where almost everything is obtainable with an e-pay account and a mobile device. It’s just a matter of time before plastic credit cards and leather wallets go the way of the Tyrannosaurus Rex! Prognosticators predict the retail landscape will change so dramatically over the next several years, we’ll hardly recognize it.
Some of what we are seeing is the aftermath of over expansion in the “GO-GO” eighties. Back then there was an emphasis, mostly driven by Wall Street, on increasing total revenue vs. growing same store sales. Many retailers got themselves stuck between a rock and a hard place – too many stores, decreasing per store volume. This is the proverbial “no man’s land” for any business. When brands find themselves in this situation the tendency is to come up with a short-term fix – can you say discounting? While these tactics may prop up sales temporarily, when overused, they typically undermine the health of the brand.
Of course, hindsight is 20/20. What’s an overgrown retailer to do to survive in today’s new digital world? Unfortunately, the first step is contraction. Brands hate to close outlets. They lose distribution but the bigger fear is the impact closures have on consumer perception. The cocktail party chatter becomes, “Can you believe they’re closing another (insert major retailer name here)? They must be struggling”.
The ultimate fix is adding value to the in-store shopping experience. They must make it worthwhile for a millennial to opt for a store visit over lying in bed, shopping on their mobile device. That’s a pretty tall order but not but not too tall to conquer (in this reporter’s opinion).
How do you add value to the shopping experience? I wish I had a more novel idea but it all comes back to customer service. The challenge is to deliver service that’s good enough to get a millennial out of bed; to basically have them change a pattern which is ingrained. Alert the media: Satisfactory service will not cut the mustard. It must be over the top! Think interactive, digital, personalized, customized, memorable, unique!
The challenge is to become known for spectacular service which doesn’t happen overnight. It requires a compelling vision and a strategic plan. Retail leaders must be patient, stay the course and not over react to a blip in stock price.
It’s not too late to reinvent your service brand which for all intents and purposes is your brand. Get started today. Your long term survival depends on it!