First the bad news for retailers...
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 U.S. retail sales in 2025.”
Turns out that quote is 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 U.S. Census uses when determining the 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?
40% of sales are happening online
I know that is distressing to read, but what does it mean? 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.
That’s also why Amazon Prime membership exploded to now include around 150 million users. Shopping became much easier on the fly, no longer tethered to a strong Wi-Fi.
What does it mean for brick and mortar retailers?
Does it mean it is hopeless for brick-and-mortar retail? I don’t think so.
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.
If you look at e-retailers 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 4100 locations, up from 1,651 in 2009.
"What if those who were going to purchase online are stabilizing? "
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.
As we come out of the worst of the pandemic, 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?
What should you be doing to prepare for better times?
Invest time in understanding who your 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. Your average ticket value will help you look at the broader picture and gauge your brick-and-mortar sales over time.
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 improve your brick and mortar sales and 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. It goes beyond just having Shopify.
A full-featured website allows video pages, reviews, and stories to stand out from competitors. The web is accelerating from pictures on websites to videos.
Create an area in your store somewhere where you can make, edit, and livestream 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 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 the right.)
In the middle, under "Insights" where you'll find a trove of information. You can also compare yourself against at least five competitors and see how their engagement and posts are doing.
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.
I was on the phone recently and one of the largest retailers in the U.S. told me that their employees received 45 minutes of 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.
An exceptional customer experience is created by two things:
- Who you choose to work on your floor
- The soft skills you teach them for engaging customers and building rapport
That takes a lot of retail sales training. Otherwise, they’ll sell like they were still in their pj's on their living room floor.
Shoppers want a human connection
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 overvaluation on Wall Street, lack of demand for a rotten customer experience, aftershocks from the pandemic 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.
Shoppers are looking for a human connection, not just a click; otherwise, they’d never have left their couch.
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