How E-Commerce is Pushing Retail Growth

When e-commerce first came to light, many believed it was the beginning of the end for Brick-and-Mortar retail locations. As time has gone on, however, we’ve found that e-commerce is only eliminating the retailers resistance to reshape the design and functionality of their in-store experience to account for online consumer behaviors.

While large department store retailers, such as Sears & J.C. Penney’s, are closing locations across the nation, retailers like Sephora are expanding. This is because Sephora fulfills consumer desires for specialty stores with consistent product lines and seamlessly integration of offline and online. According to Wired, Fast-fashion retailers who are harnessing the power of internet-based technology in all aspects of their business — design, manufacturing, and logistics — are the ones growing and in many cases taking over larger spaces once inhabited by big-box retailers. They’re offering the convenience and targeted product lines consumers expect in today’s shopping experiences. Two retailers are prime examples of a successful shifting away from big-box retail mentality: Starbucks and Amazon. They have been effective in meeting the demand for out-of-the-box omnichannel experiences.

Starbucks has transformed their loyalty program into a real-time personalization engine. Since 2009, their app has evolved from enabling consumers to scan their card to earn rewards points when they pay, to giving consumers the opportunity to place personalized drink orders and skip the line. Using contextual and purchase history data, the app is able to deliver a personalized online to in-store experience.

Unlike Starbucks, Amazon started as an online retailer and has driven growth in ways other e-commerce companies have never explored. Starting as on online book retailer in 1995, Amazon has spent the last 20+ years expanding their marketplace offering and retail categories. With the introduction of Prime in 2005, the retail giant offered a yearly subscription service consisting of free 2-day shipping, and by 2014, Prime members gained access to Prime Video & Music, programs that compete with Netflix & Spotify. This year, Amazon made even bigger news that shook the retail world. It was recently announced that Amazon will be launching Prime Wardrobe – a service that brings the fitting room right to your front door. Unlike other subscription programs, such as TrunkClub & Stitchfix, you can use this service at any time with your prime membership, instead of agreeing to get a box monthly. While the program is still in beta, this move could be a real threat to brick-and-mortar stores. In addition to the introduction of Prime Wardrobe, it was recently announced that Amazon is looking to buy Whole foods in a $13 billion deal. Though Amazon has tried entering the grocery market online with little success, buying the natural grocer will give them the physical presence that is needed to succeed in the grocery market. With moves like these, the ways people shop for groceries could be heading towards the way consumers shop in other retail spaces.

Not all hope is lost for the retailers that have been slow to evolve their in-store experience. Three key elements retailers need to focus on in order to create success in this fast-changing environment include: Experience, Convenience and Technology Integration.

Consumers today, especially millennials, put a big focus on the “experience” they get from a store. This is why retailers need a focus and why specialty stores are seeing more success in comparison to department stores, as they are better able to carry out their unique brand identity and craft defining customer experiences worth leaving the house for.

An interesting example of integrating products with an experience came from Rachel Shechtman, founder of “STORY”. The store, located in Manhattan, is not a normal a store. The product lineup and display within the store changes in correspondence with each “story”. Stories are featured for an four to eight week time period – like a magazine article brought to life that you can walk through and purchase from. With each new story, comes excitement and new products to check out. STORY pride themselves on offering a “point of view of a magazine, changing like a gallery and selling things like a store.” In ways, it could be compared to how a pop-up shop runs. Each “story” features products from a variety of companies, but all are aligned around a singular theme. Currently, they’re running a “Fresh” Story, focused on fresh produce delivered by Jet.Com and how healthy cooking with fresh ingredients can be made simple. In correspondence with the story, they’re offering apparel featuring bright produce patterns, as well as healthy cookbooks and convenience-orientated cooking appliances. In doing so, the consumer can immerse themselves in the story of cooking with fresh produce made simple. STORY also gives an opportunity for companies to introduce their products in a fun, hands-on way to consumers that creates defining customer experience needed to drive in-store sales.

A big expectation shoppers have is convenience, yet traditional department stores like Sears and Macy’s are having a hard time pushing this, often due to lack of targeted focus. Department stores are full of many product categories and going through the giant store trying to locate the item you’re looking for can be a hassle and often lacks a positive experience. Retailers can enhance these experiences with integrated in-store and mobile app technology available to aid aisle navigation and product identification.

There are many stores that focus solely on one of the product categories that can be found in the big-box stores, offering a more streamlined shopping experience. For example, there are many fast-fashion stores that have equal quality clothing as large department stores and at lower prices, but without having to navigate a maze of other product categories. Perhaps another example is bedding. Sears & Macy’s have bedding, but they’re not known to have more attractive choices or best prices. Instead, many would check Target, the retailer known for being “cheap-chic,” if they needed it right away or Amazon, if they could wait two days for their new sheets. Though Target and Amazon have a vast amount of product offering, Target has a focus on low-price quality and the convenience of the simple store layout, while Amazon has a simple yet highly personalized e-commerce set-up that almost all consumers can use without frustration.

Technology Integration
It’s not enough for sales associates to hold tablets in brick-and-mortar locations to compete with the real-time personalized recommendations and automated checkout processes consumer can experience online. Retailers must find a way to balance in-person sales interactions with modern retail technology. There is no use for an app or piece of technology that doesn’t offer more than visiting the e-commerce would. Retail technology integration should always add new dimension, interactivity and simplification to the in-store experience.

Amazon Go, another one of Amazon’s beta programs, offers a different type of shopping experience, where no associate or cashier is needed. With the use of “deep-learning algorithms” and “just-walk-out technology”, the Amazon Go app allows consumers to scan into the Amazon Go location in Seattle, grab the groceries they need and walk out without even needing to scan the product with their phone! The introduction of this technology opens many new possibilities in the retail world. Will associates be needed in 10 years…or will the use of apps and voice-controlled intelligent personal assistants take over the the brick-and-mortar world?

E-commerce isn’t necessarily abolishing physical retail… it is simply forcing retailers to think differently about the experiences they deliver and what shape those experience take. One thing can always be counted on though as retail grows – need for convenience. Right now, that means tapping into the technology consumers hold in their hands and delivering tools and content that save consumers time.

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