6 Ways Premium Retail Stores Can Survive the Online Onslaught
Is retail doomed?There are certainly those out there who think it is. Take Marc Andressen, founder of Netscape and tech investor. His view:"...Retail chains are a fundamentally implausible economic structure if there’s a viable alternative...Few can survive a decline of 20 to 30 percent in revenues. It just doesn’t make any sense for all this stuff to sit on shelves...I’d bet on the pure plays in ecommerce. Software eats retail.”There's plenty of evidence to back up his point of view. Our own research shows us that those premium shoppers who mainly shop online is now greater than those that mainly shop on the high street. And the increased usage of mobile devices and related growth of 'showrooming' - checking out products offline before buying them online - is accelerating this trend. It's not hard to see those 20-30% falls in retail volumes happening, leading to the ecommerce only world that Andressen predicts.However, there's more to shopping than transactions. The very fact that shoppers 'showroom', rather than purchase purely online, means there's value to a retail. And shopping is a social activity too - time to share with friends or to gather with likeminded shoppers who share the love for a particular brand.That's why many premium and luxury brands are still investing heavily in retail. But things need to change in response to the ways consumers are changing. Here are some the trends we're seeing from premium and luxury brands who are blazing a new trail in retail.1. It's Got to be About the Experience, Not Just the TransactionAlthough marketers spend heavily in developing the user experience on their websites and other digital properties, it's usually just appealing to one sense - the visual. A shop gives the brand an opportunity to engage the shopper on so many more levels, to get them excited about the brand and its products, to get them talking to their friends about them.Take Burberry's flagship store - it's a brand experience, not just a place to buy Burberry's eponymous trenchcoat. Shoppers are treated to sporadic 'weather' events as digital thunderstorms break out, created with the help of a sophisticated sound system. When shoppers try an item on, the changing room mirrors spontaneously show images of the specific piece on the catwalk or on film. It's a place where shoppers can immerse themselves in Burberry's view of the world - their innovation, their taste, their 'Britishness' - not just a place to buy clothes.Brands that use shops just for distribution will suffer - the web is a much more cost effective channel for this. Those that use it as an opportunity for consumers to sample their products, and their brands, will be those that thrive.2. Use Staff Where They Can Add Value, Automate the RestSurvey after survey shows that shoppers prefer face-to-face over any other form of customer service. If you want to leverage your retail presence to build loyalty and positive word of mouth, then you want to invest in the very best retail staff with the very best training. You want staff who are going to add value to the customer's experience, not staff who are just order takers.That's going to cost money which means that retail brands are going to need to automate the activities where their staff are performing purely functional roles (and therefore, aren't adding value.The payment process is the prime opportunity, and more and more stores are introducing self-serve payment options. For example, Aurora has introduced iPad checkouts to its stores so customers can select their items online after sampling them in-store, pay for them and arrange for either home or in-store delivery.3. Add Value, Don't Just Sell StuffWhen Ron Johnson designed the Apple Retail experience, he wanted to move technology retail from a selling concept to a value creation mindset. In short, he wanted his staff to focus on making people's lives better rather than just selling them things - recommending things that added value to their lives rather just than just filling their lives with clutter.So he made sales staff non-commissioned and focused them on the customer needs, even if that meant recommending a product that Apple didn't carry.For premium and luxury brands looking to use retail spaces to build strong and long lasting relationships with consumers, this would seem like a sensible mantra to follow. Too much selling takes the control away from the consumer and compromises the retail experience - driving them back to an experience where they're more in control - online.4. Give People Reasons to Come BackRetail space is expensive to create and maintain, so it makes sense that brands should leverage that retail space as much as they can by encouraging shoppers to come back.Apple has its 'Genius Bar' - encouraging customers to come back in for training and fixes when they're having problems with their Apple products. Some fashion brands are expanding beyond the 'two season" mentality - frequently updating ranges to give shoppers a reason to come back more often. Burberry's store has a built in stage and sound system to host concerts and other cultural events to bring customers into its Regent Street store.The more face-to-face interaction a consumer has with a brand, the more that relationship will deepen. The more often they walk into a store, the more often they'll buy.5. Places for Co-Creation and PersonalizationIf a premium retail store is just offering an experience where people select off the shelf and buy, then the full potential of the environment is not being realized. Sophisticated shoppers are expecting ever more personalization, a need that the web struggles to fulfil.Take a fashion environment. Retail staff should be able to help shoppers select clothes that suit their colouring and body shape, and help them to create outfits which make them feel good about themselves.Technology is helping this process to - with many stores, including M&S, employing virtual mirrors which allow shoppers to not only try on lots of different outfits virtually, but to accessorize those outfits with different make up looks and jewellery.6. Bringing Together the Best of Offline and OnlineYou've immersed the customer in the brand, and your highly trained staff have made personalized recommendations that are best for them. But how do you make sure you secure the transaction? By bringing the best of the online world to the offline world.Stores can't showcase a full product range, so give customers the opportunity to browse other styles and colours and order other sizes while they're in store. Don't make customers queue at a till - they don't have to queue online - do as Burberry do and give them an iPad to enter their payment details into while they relax on a sofa. Bring the convenience and choice of online to the offline environment - 'blending' the 2 channels together.So is retail really doomed? For premium products, where the equity of the brand is so key, and the price points encourage trial, we think not. However, those that will thrive will be those who leverage retail to truly showcase their products and their brands not those who see if purely as a method of distribution.