May 22, 2016
May 22, 2016
First the bad news for retailers...
You know how I’ve included this quote from McKinsey in several of my previous blog posts, “Brick-and-mortar stores should still account for approximately 85 percent of US retail sales in 2025”?
Turns out it’s probably wrong.
I heard an analyst recently say that the statistics many cite about online sales being 9-15% are flawed. The total retail sales figure the US Census uses when determining percentage of online sales includes gas, which you can’t buy online, and cars which few buy online. They also include only what Amazon charges their third-party marketplace as online sales – not the sales those merchants actually make on their marketplace.
Once you adjust those factors? You get about 40% of sales are happening online.
I know that is distressing to read, but it is what is.
When did it happen? Many retailers noticed a drop in foot traffic a few years ago at a time we were being told the economy was doing better and better.
Many figured it was just them.
It wasn’t. It was the 4G network.
That’s also why Amazon Prime membership exploded to now include around 60 million users. Shopping became much easier on the fly, no longer tethered to a strong Wi-Fi.
First, it’s not like Amazon is a new thing. They’ve been around for a long time. I would agree with analysts who posit that the saturation point is near. It’s not like people are just becoming aware of Prime; it won’t grow much this year. Those who are going to use it are probably already using it.
If you look at eretailers of books, they were supposed to destroy brick and mortar bookstores. They didn't in fact their trade association the ABA crowed that booksellers are now operating 2,300 locations, up from 1,651 in 2009.
What if those who were going to purchase online are stabalizing?
The Index of Consumer Sentiment shows that consumer optimism is on the rise. At the same time, so are gasoline sales. This trend portends to increased spending and driving.
Just how soon these hopeful consumers will show up in your store is anyone’s guess.
Are you actively preparing yourself for when it comes?
Are you still buying based on fewer customers?
Have you deferred upgrades to your POS, CRM, and broadband capabilities?
Have you let your website become stagnant with the same content as your competitors?
Have you ignored social media?
When the business comes, will your staff be trained to sell your merchandise rather than just clerk it?
Invest time in understanding who your own customer is. If you don’t have a large operation, take any information you can from your customer relationship management system (CRM) and sort it. On a basic level, you must know what your number one zip code is, or better yet, your number one customer phone prefix. On an advanced level, learn how often do customers return to purchase from you. See the broader picture by determining what your average ticket is by quarter? If you don’t know how to do it, go to Upwork.com and search for someone to help you analyze your data.
Invest time in understanding exactly who your website visitor is. If you have Google Analytics installed (and you should), mine those insights to understand how people are finding your website. For example, click on Acquisition and Channels, then click Organic Search, and you’ll be able to see some of the top search keywords people have used to find you. Click on Interests and you’ll discover the top interests of people who find you and what they share in common. That should help you find similar people to market to both online and offline.
Invest money in technology. Whether it is your legacy POS system, a full-featured website, or a studio to make videos about your products, use technology tools to grow your business. A modern, cloud-based POS system can connect the dots between customers, their web behaviors, and their social profiles which gives you the ability to do a deep dive into their behavior patterns. A full-featured website allows video pages, reviews, and stories to standout from competitors. The web is accelerating from pictures on websites to video. Create an area in your store somewhere where you can make or edit videos. That prepares you for the challenges of marketing online to an increasingly video-obsessed world. And know that products marketed with a video instead of a picture have a 65% higher click-thru rate.
Invest time to understand what other Facebook pages like yours are doing. Make sure you’re using Facebook and have installed the Facebook Pages app on your smartphone. Unsure what to post or what’s effective? From within the app, click on the bottom right set of three dots. (See highlighted area at right.) In the middle under Insights will be a tab “Stories From Pages Like Yours.” Use this data to see what’s working for others.
Invest time in training your employees. I can’t stress enough how important it is to bolster your own four walls at a time when customers are demanding an exceptional experience experience . I was on the phone last month and one of the largest retailers in the US told me that their employees received 45 minutes training before going on the floor. I told them that’s barely enough time to teach how to clock-in and where the bathrooms are. Large or small, you’ll be known by the compromises you make in service rather than the hit-it-out-of-the-park moments. Who you choose to work on your floor and the soft skills you give them so they are able to engage a stranger and build rapport are what create an exceptional customer experience. That takes a lot of retail sales training. Otherwise they’ll sell like they were still in their pjs on their living room floor.
There’s a big shakeout happening with retailers large and small. Vacancies will continue to rise in malls, strip centers, and downtowns for reasons as varied as over valuation on Wall Street, lack of demand for a rotten customer experience, and owners who thought build it and they will come was a marketing strategy.
We are living in a time of data. Every click you make, nearly every breath you take is being tracked by someone and sold to someone else to create an online profile of you. Smart marketers are already using that data to get shoppers to go online.
Those shoppers who are going to brick and mortar stores are looking for something other than a huge discount – otherwise GAP and Macy’s would have reported higher sales last week...which they just didn’t.
Shoppers are looking for a human connection, not just a click; otherwise, they’d never have left their couch.
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