What Top Brick and Mortar Retailers Are Doing To Combat Amazon
By Bob Phibbs
As 250+ Bon Ton stores go out of business, the Wall Street Journal caught up with their former CEO Tim Grumbacher who said, “If I had had the foresight to realize I had to blow up the model, I would have.”
He went on to say he would have subleased space to other companies, added more services like blow-dry bars, and narrowed the product assortment. He believes department stores need to become a series of specialty stores to survive.
Well maybe, but that’s not particularly a new idea - Bloomingdale’s, Macy’s, and Nordstrom have being doing that for decades.
So what are the big players doing to increase their retail sales strategies?
Penny’s added appliances to try to out-Sears the zombie retailer Sears. Yet JCP had one of the most disappointing Q2 earnings calls and a week later lost their CEO.
No two ways about it though, with the lowest unemployment rate in about 20 years, it seems almost everyone is reporting higher sales.
And while brick and mortar retailers are innovating, it's clear that in many areas Amazon continues to pocket market share. When it comes to searches, the e-commerce giant is on pace to own more than 75%, according to a statement from Jumpshot CEO Deren Baker.
The retail world is in such flux, keeping abreast of all the news is good. Realizing positives and negatives in types of changes...better.
Here is a rundown of some of the retail initiatives five big, successful retailers are using to ride the wave of positive consumer sentiment.
Will they all work to combat Amazon? Are they customer-focused and will they make a more human connection in retail? Some, yes, others less so.
But to compete in any retail environment, you need to know what innovations big retailers are putting into place so you can be inspired and see how they are altering your shoppers expectations.
Bought niche brands Bonobos, Moosejaw, ModCloth, and ShoeBuy to essentially buy new customers.
Acquired online buying site Jet for the talent Marc Lore, who now heads up their ecommerce business. Many of their innovations are coming on the digital side.
Created a new division, Store No. 8. It is an in-house startup incubator where five companies focus on a different trend in retail and how that trend will change consumers’ lives in the next five years.
Is testing the Bossa Nova scanner, a robot that scans shelves and finds areas where Walmart needs to stock more inventory.
Installed a conveyor belt mechanism known as the FAST un-loader. Trucks full of merchandise roll up to the system, where boxes are scanned and sorted automatically. Walmart says the process used to take eight employees per shift but now only uses four.
Created maps unique to each of its more than 4,000 locations to help shoppers better navigate the huge aisles and find what they need. The function is also tied to shoppers' lists in the app, guiding them to the milk, bread, popcorn and other items they're seeking.
Launched Winemakers Selection, 10 distinctive labels of wine sourced from California, France and Italy. They sell for about $11 per bottle yet are designed to taste like $30-40 bottles. You be the judge.
Launched a new scheduling app that lets employees swap shifts with another associate and offering an option for schedules with set days and hours each week... and locked in on a quarterly basis.
Launched Jetblack, a concierge shopping service idea Marc Lore developed with Rent the Runway founder Jenny Fleiss. In NYC for $600 a year, you can get a personal assistant that inventories your home for staples you might need, as well as the ongoing ability to text to shop and have items delivered that range from everyday staples, to the perfect birthday gift for a 9-year old, wrapped and delivered to your door. This service targets a completely new upscale segment for them. And it has nothing to do with everyday low prices.
Developed tighter controls on goods. Two years ago launched a five-year plan to minimize the cost of discounts and unpurchased merchandise.
Opened Off/Aisle, a freestanding discount chain to compete against Nordstrom Rack.
Partnered with Amazon to sell their Alexa-enabled smart home products and accept Amazon returns.
Leased extra space to grocer Aldi.
Adding chatbots on Facebook Messenger and Kohls.com to assist with customer support, product knowledge, and purchases.
Rolled out branded pop-up shops which allow brands and other companies to sell their products and services on the ground floor of the retailer’s stores for as short as a month.
Created in-store, discount-department Backstage Pass, which now sells their unsold merchandise to their own customers instead of selling it to third-party liquidators.
Acquired Story, a New York concept shop, primarily for the talented Rachel Schechtman.
Opened their loyalty program to all customers, not just their branded credit card users.
Rolled out mobile checkout to all stores.
Added virtual reality shopping experience in some stores.
Changed merchandising to radical cross-merchandising by putting Vans next to Valentino and Nike next to Balenciaga because men mix and match and no longer dress in head-to-toe designer.
Increased exclusive brands.
Are opening off-price Rack stores in Canada.
Opened full-line flagship men’s store in New York with flexible fixtures. Customers can also return merchandise at the entrance within 2 minutes; they can have an associate get something at store level 24 hours a day. One suit brand even has a screen that projects suit patterns on a faceless mannequin, so shoppers can see themselves wearing that brand.
Purchased BevyUp a company that allows shoppers to share information with each other and browse items together online.
Purchased MessageYes a company that offers brands the opportunity to text their customers.
Expanded rewards program cross channel – that’s 90% of their shoppers – that offers free shipping, as well as in-store shoe repair and other services. VIP loyalty members have exclusive access to their in-store department called First Dibs.
Added a W Nail Bar in some stores that provides nail art, gel manicures, and pedicures.
Opened four new lab stores to test fixtures and operations initiatives.
After realizing many of their shoppers were moms, they added a kids shoe department complete with creative play spaces.
Purchased Canadian retailer Town Shoes.
Added vertical product showcasing which allows them more floor space
Holds in-store popup store parties.
Provides in-store, shoe-donation points for their partner Soles4Souls that puts their social cause front and center; that’s particularly important for attracting Millennial shoppers.
Added a Fit Step Pro station where shoppers can get custom insoles for the perfect fit.
They are looking at providing shoe rentals next.
You have to be blind to not see that there have been major disruptions in retail, and every indication is they will continue.
Retail leases are drastically shorter than they once were — down to an average of five years, versus as long as 20 in the 1990s. CBRE predicts that the temporary will become the permanent state of things.
And with the price of shipping climbing, already-tight profit margins are punishing online retailers.
Many online-only retailers are losing money because people send so much stuff back.
Brick and mortar stores need to look at blending various online and in-store experiences to be where their shoppers are.
The distinction between brick and mortar or online is dying; it is no longer an either or but an AND.
As Jamie Nordstrom said recently, “I want to shop on my phone, but I want to try on in the store. It’ll be in the dressing room waiting for me, in and out in five minutes. And then how about having your purchase delivered to your home or hotel? You don’t have to leave with a shopping bag,” he says.
While Amazon excels at leading you to things you already know you want, many shoppers have discovered it is actually less convenient to shop online and sort through page after page of similar items.
The brick and mortar experience on the other hand is one of discovery, of treating yourself, of being social, and of trying on new versions of yourself.
While a lot of new boutiques boast “community rooms” and several of those owners are proclaiming that they don’t care if people buy their goods, it isn't about selling, it's about people coming together, let’s not forget, the definition of retail is the sale of goods to the public.
Nothing works if shoppers don’t translate your experience into their own motivation to part with their money.
Anything less than focusing on how you can sell more of your merchandise is folly.
It's not just the big players that are looking at their operations...
Karen Meek Owner of In The Pink Jewellery had something to say about changing the way she’s done business recently on LinkedIn. “I have only just started my journey into this new world of connecting directly with customers via social media, I'm not there yet, my formula isn't right, but at least I'm trying new ideas. Operational website, live videos via the web, post scheduling on all social media channels and trying to monitor the results to see what works for me in my little jewellery stores. But there are so many retailers of all sizes not even contemplating this, let alone trying.”
I couldn’t agree more…
Let some of these real-life, retail innovations spark your own creativity and help you evolve your own retail business.
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