The following article is part of the 10 x 10 series by Method, a brand experiencing agency that serves a number of successful retail businesses. To read the article in its entirity, click here.
There is no doubt that the Internet is changing the retail experience, and with it how we shop. Beloved stores are feeling the pressure of the prices and convenience e-commerce retailers offer.
An ongoing study by IPG Media Lab reveals that shopper satisfaction at retail stores is declining up to 15% per year. Stores that used to define the diversity of shopping centers, from bookstores and clothing to consumer electronics and home goods, are closing. Small and large brands alike are searching for strategies to react to the change in customer expectation, where online retailers win on prices and convenience. For the first time in centuries, the role of the storefront is changing.
Times of transformation create opportunities. Retailers must adapt business models and integrate local, personalized services with online convenience. With these opportunities come new roles for the storefront that will redefine its social attractiveness.
The value of the local store for physical goods is continually evolving, driven by changes in distribution infrastructures. Recently, we have witnessed a shift in retail from physical to experiential, where the currency of value is the experience. However, we are only at the beginning of an economy driven by virtual goods. For example, while eBook market share is rapidly rising, Kindle eBooks only account for around 1% of total print sales. Virtual goods still need to fulfill the sales funnel from discovery and comparison to purchase and, later on, rediscovery.
Staying in Touch
Products and services increasingly exist within a cloud of information, continuously and dynamically linked to virtual brochure sites maintained by sellers, journalist reviews, consumer ratings, social commentary, and aggregated usage statistics. This cloud can be accessed any time in any place through multiple channels. While retailers traditionally see online and store marketing as competing businesses, customers ultimately care about convenience and perceived value -- not the channel through which they are served.
As the "goods" we transact change, so do our purchasing behaviors. What was once a simple transactional process becomes a complex web of value shifts across several customer touchpoints. Now, brands must manage multiple revenue streams, where the retail space may not be primarily devoted to income. Following this trend, wireless service providers such as Verizon have transformed their retail environments into places primarily for customer service, not monetary transaction.
Designing these new shopping experiences is not just about immediate sales but about creating opportunities to facilitate impulse purchases, up-sell, and cross-sell. The challenge is in constructing a seamless shopping experience that integrates the in-store, transactional, and post-sale goals. The experiences must converge to promote discovery in-store and the continuation of the sales process at home or on-the-go. This relies on context. Amazon suggesting a tripod with a new camera may not create more value. However, recommending a guide to photographing wildebeest for a camera purchased for a safari trip is more likely to increase perceived value.
We have to radically rethink how retail businesses earn revenue when sales margins are declining. The challenge is to design user experiences across offline and online environments that focus on different types of transactional values.
We can learn and apply insights from sectors that have made this move already ... (more)