It has been an interesting couple of weeks for retail. While earnings reports for traditional mall retailers, perhaps not surprisingly slumped. A slew of other retailers, notably those who have been investing in integrated store experiences and embracing innovation like Nordstrom, reported positive earnings and actual growth in same store growth.
Other retailers continue to tweak their current foot print allocations and invest in technology also reported positive numbers. Those included Williams-Sonoma, Abercrombie & Fitch, PVH, Dollar Tree, Burlington Stores, Guess and PVH. This forced Wall Street to admit that perhaps the current doom and gloom retail outlook is not nearly as bad as it may seem.
At the same time, it seems that Millennials- the often lauded “Horsemen of the Retail Apocalypse” are actually spending time in stores. In fact 50% of millennials prefer going to stores as a primary shopping medium according to a recent study. The big ‘but’ here is that they are not shopping the store the same way as previous cohorts which explains the discrepancy between an apparent preference for in store shopping, and the struggle retailers are seeing in same store sales growth.
Millennials are taking a much more fluid approach in how they engage and interact with the store. It remains a critical part of the shopping journey, but often the ultimate transaction occurs online for Millennials.
It’s a situation where the brick and mortar store has enormous influence over the discovery, research, and fulfillment portion of the shopping experience but does not enjoy the hard dollar attribution for these shopping behaviors. This causes a challenge and problem for retailers in evaluating which stores are the most productive, decisions about opening and closing stores, and even ecommerce strategies.
The reality is that the problem is not with the store, but how we are measuring the success and role of the store as Millennials and Gen Z become the majority of shoppers. Both cohorts when surveyed, list the store as an essential part of their retail experience, even though the dollars spent at the cash register in the store may not reflect it.
Simply closing a store that does not have store sales may actually be a mistake in these situations where a store’s influence actually anchors all of the retailer’s customers that live nearby. The presence of that store influences sales further than those four walls and drives value beyond just sales (few and cheaper returns, etc.). That’s why retail needs to rethink how to measure the effectiveness of their stores to include a more expansive set of metrics including what key elements influence shoppers.
By: Sandeep Bhanote| Co-Founder and CEO at Radius8 Inc
Courtesy: https://www.linkedin.com/pulse - Mr. Sandeep Bhanote