retail apocalypse
POSTED : July 25, 2019
BY : Martin Mehalchin

Retail is in the middle of a bankruptcy epidemic. Year-to-date retail closures in the U.S. have already exceeded the entirety of 2018 and industry stalwarts aren’t immune. More than 2,100 Payless Shoe stores will disappear off the face of the earth. Call it what you will — industry disruption, the retail apocalypse, a rash of closures, economic restructuring — but brick-and-mortar is hurting.

To understand what is happening and develop a response we must act like epidemiologists and examine the patterns of consumer behavior and competitive pressures that brought the industry to this point. It’s overly simplistic to blame e-commerce. If e-commerce was all it took to remain competitive, Payless would have been in an excellent position to capitalize, considering it’s had an online store since 1999.

Events like the Payless liquidation represent a culmination of trends: a legacy retailer with an expansive brick-and-mortar presence, saddled by debt, and unable to respond to shifting customer expectations, goes under. It’s a common refrain; Toys “R” Us and Sports Authority suffered similar fates. Many pundits call out physical stores as the “has-beens” of the industry. We disagree. A brick-and-mortar presence is not a fatal flaw. A failure to innovate on the unique benefits of their physical presence is, and it’s led to many retailer’s steep declines.

Some industries are prone to obsolescence, in part because of their over-reliance on a single technology. Video stores, for example, have ceased to exist because of movie streaming. When VHS and DVD passed, so did the retail stores that sold them. Yet, brick-and-mortar is not aligned with one technology. It’s a space where technology can evolve. With 90% of shopping still occurring in-store, we have every reason to be optimistic. For companies left standing in today’s hyper-competitive market, the trick will be remaining relevant to customers who expect a shopping experience that offers more than cheap shoes.

Our four pillars of relevancy for brick-and-mortar outline where physical retailers should focus their efforts. At the core is a move toward innovation that blends the physical and digital while reducing friction in the customer experience. It’s about meeting the customer where they’re at and leveraging technology to create differentiators.

  1. Analytics maturity. With half of all consumers willing to sever a relationship with a retailer if they recommend the wrong products, physical retailers need to scale their analytics maturity model quickly to ensure prescriptive accuracy. In-store analytics with data points like inventory, foot traffic, geolocation and weather add a dimension to data intelligence that can set brick-and-mortar apart. Personalized mobile push notifications with real-time offers are just one example of how analytics can impact physical retail.
  2. Edge technologies. Artificial intelligence, machine learning, virtual reality and augmented reality may seem like science fiction, but they’re actually reality. H&M has AI-driven chatbots that help customers to pick out outfits, while IKEA’s customers rely on AR tools like IKEA Place to visualize and measure a piece of furniture in their home. Amazon recognizes the potential of using edge technologies in brick-and-mortar, which is why they’re planning on opening hundreds of cashier-less Amazon Go stores.
  3. Unified shopping. Access across devices is the minimum requirement for today’s retailers. Customers increasingly expect to be able to have a similar shopping experience whether on their phone or in-store. To accomplish this, retailers running legacy technology stacks with siloed data will need to upgrade platforms. Headless commerce solutions will help many retailers fluidly blend content across devices, while customer data platforms can create a more unified view of customers.
  4. Loyalty and membership to enhance the experience. Brands are using innovative loyalty designs to build deeper relationships with consumers — including at brick and mortar locations. Nike and Sephora offer case studies of this approach. Nike reserves pinnacle experiences at its House of Innovation concept stores in New York and Shanghai for members of the Nike Plus membership program, and Sephora Beauty Insider members can enjoy access to free beauty classes and in-store services that are tailored to their profile.

Brands must continue to reinvent the physical shopping experience from the inside out. Success stories are there for the taking, but legacy retailers will need to invest in experimentation with technology to remain relevant. Their survival depends on it.

Article originally appeared at Retail Customer Experience.

For more insight on major innovations in retail, download our report Reinventing the Brick-and-Mortar Experience.

About the Author

A picture of Martin MehalchinMartin Mehalchin is a Partner at Concentrix Catalyst where he leads the relationship with some of the firm’s largest clients and helps drive the growth of our Customer Experience Services. He has dedicated his career to working with executives and managers to help them define their strategies and then translate those strategies into results. Martin is a Brain Trust panel member on and is a sought after seminar leader and speaker at conferences and on webinars. Among the clients Martin has worked with are Nike, Atlantic Records, Microsoft, Qualcomm, Expedia, Victoria’s Secret, Adidas and DuPont. Martin is a Board member and Chair of the Marketing Committee for the North Cascades Institute.

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