Millennials have become a hot demographic in 2016, not only for their purchasing power, but also for their individuality. Millennials are connected 24/7. They use online and mobile as ways to communicate, socialize, as well as gather and share their information. Yet surprisingly, this digital generation conducts 75% of their retail purchases in brick-and-mortar stores.
“Millennials are changing the world and will continue to do so. The way we are thinking about stores is around millennials. They are the ones building it too.”
Andrew Smith, Director Retail Operations at Telstra
Millennials now account for 25% of the shopping population, a figure that is only going to increase. It is a huge opportunity for brick and mortar to gain the loyalty of this generation, but it’s also a difficult challenge. Since millennials have easy access to a wealth of information, they can be selective and demanding.
To gain their loyalty throughout the year, retailers must focus on technology. This is a fast-thinking, always-connected generation, and they expect all channels to be unified. Also, Millennials place importance on their unique interests, so retailers need to create compelling, personalized experiences that really speak to them.
Retailers must constantly and quickly evolve to keep up and please the smart Millennial shopper. By adopting new technology in 2016, retailers can create consistency between channels and design exciting brand experiences that will engage Millennials and keep them coming back.
Part two of our five part series exploring trends that are shaping brick-and-mortar retail experience. You can read all of the trends in The Store Is Back eBook, courtesy of RBM Technologies.
Digital technology has made retail experience more transparent than ever. Customers have unlimited access to information, so their brand perception forms long before they step foot into a store.
How customers see a brand extends beyond products on shelves, and marketing messages on signage. Shoppers have begun to see brands as nuanced and multidimensional, viewing emotional factors such as thoughtfulness and empathy as benchmarks of value on par with product availability and pricing. They already have a myriad of retail purchasing options, what customers want is a brand who connects with them on a human, more meaningful level.
“Your brand has never been more important. People want to hang out with brands that mean something to them.”
Andrew Smith, Director Retail Operations at Telstra
Now is the time for retailers to evaluate their connection with their customers. In 2016, shoppers will continue to place the value of a brand on how it makes them feel. This evolved brand perception means retailers must focus on delivering tailored, memorable and relevant experiences in order to strengthen their customer connection within the year.
Before a retailer can build a meaningful relationship with the customer, they must first understand them. It is therefore critical that retailers focus on knowing shoppers’ behaviors and patterns, as well as their local needs. To reaffirm the brand perception and create meaningful customer connections, retailers need to put customers’ preferences and behaviors alongside other store specific data. Collecting shopper-specific data can be used to create unique profiles which will then help build a more authentic and lasting relationship with the customer.
In today’s retail world, customer empowerment is undeniable. Technology has placed a limitless amount of immediate information and purchasing options into customers’ hands. Customers are now exceptionally choosy about where they shop and what they buy.
And so, customers are more likely to purchase when they know their dollars are going to socially responsible companies and good causes. According to a 2015 Cone Communications Study, “90% of consumers will be more likely to trust a company that supports social or environmental issues, while 88% will be more loyal.”
Businesses are obviously paying attention, since corporate philanthropy and corporate social responsibility (CSR) are becoming progressively important topics when thinking about business strategies. Retailers are increasingly looking for ways to incorporate social responsibility into their practices as well as to link ethical products to their brand identities. When exploring social responsibility opportunities, retailers should consider these four main categories.
With the rise of urbanization, retailers are beginning to move into smaller footprints within neighborhoods, so it makes sense that they start in the places they directly affect.
Whether giving to schools, donating necessities to local shelters, or organizing employee volunteer days, contributing to and supporting the local community builds strong relationships, deep connections, and overall trust with the neighbors and customers who shop in their stores.
With many communities banning plastic bags and shoppers buying organic and sustainable products, retailers are taking action to decrease their carbon footprint.
Reducing excess materials and waste, decreasing resource use such as water and power, offering local products to cut down on shipping impacts benefit both the environment and the retailer. Becoming more sustainable and environmentally conscious not only improves brand perception, but it generates efficiency and saves retailers unnecessary costs.
customers are more likely to purchase when they know their dollars are going to socially responsible companies and good causes
With so much access to information, smart, always-connected customers are becoming more aware of where and how a good is made, and they are considering the ethical impact of their purchasing decisions. The Cone Communications Study reports “Eighty-four percent of consumers globally say they seek out responsible products whenever possible, though eight-in-10 (81%) cite availability of these products as the largest barrier to not purchasing more.”
Therefore, offering responsible goods is an opportunity for retailers to stand out from competitors. By providing more products that use fair-trade practices, are humanely produced, and are made from sustainable or recycled materials, retailers can satisfy customer demand, drive more traffic and return purchases, and increase brand strength.
Customers want to expect good about their purchases, and want to support a brand that connects with them on a human level.
Charitable giving and non-profit partnerships are powerful ways to reach the emotionally driven customer. Partnering with customers’ favorite charities enhances the brand’s credibility and reputation. It increases media attention as well as customer-to-customer social sharing. In addition, philanthropy is an opportunity to increase employee engagement. Through volunteer opportunities, fundraising events, and donation-matching, employees heel more connected to the company.
Shoppers are now putting a value on a brand’s level of thoughtfulness and concern for making a difference. Ultimately, people want to do business with a brand they respect. A retailer that gives back not only benefits the communities and customers it serves, but also its bottom line.
What social responsible effort is your brand making? How are your customers reacting?
Starbucks is more than just a place to grab a latte before heading to the office, each individual Starbucks location has become a hub for people to gather, meet, congregate and relax.
Sephora makes high-end beauty products accessible. The products are available for customers to test, and its store employees are more than willing to demonstrate those products. Stores even host beauty classes and special events. Sephora has become a destination where people can get together, be creative, learn new looks, find new trends, and share unique experiences. Sephora has changed the beauty retail space into a fresh, interactive and educational environment.
Stores are no longer places that simply sell things, they are now social centers within the communities they inhabit.
In 2013, Club Monaco transformed its lower 5th avenue New York City store into an arts and education center. By expanding its offerings beyond chic and stylish fashion to books, flowers, and locally sourced coffee, it created a welcoming sensory experience that connects with the community and makes shoppers want to stay awhile.
These are just a few examples of how brick and mortar is changing. Stores are no longer places that simply sell things, they are now social centers within the communities they inhabit. With cities expanding, online retail options increasing, and more neighborhoods developing, people are driving less and looking to nearby stores for multiple purposes.
The rise of urbanization is forcing retailers to rethink the cookie cutter approach to merchandising. Large retail stores are getting stiff competition from small local shops, so they need to shift their focus. Big retailers must think small. Stores are now places to meet friends, gain local experiences, and find specialized inventory that caters to and reflects the community. People living within the community want retailers to contribute with authenticity and take on a sense of the local culture that surrounds them.
There are a few initial and necessary steps retailers must take in order to successfully achieve localization, deliver an accurate and superior customer experience, and ultimately make its stores community hubs. We will explore these steps in part 2 of this series.
The RBM bus has pulled away from the Javits for the last time, and NRF’s Big Show 2016 is in the books. A few parking tickets later, the team is headed back to Boston and ready to unwind after a few long days. But before signing off, I’m using a little caffeine, plenty of power, and a good WiFi connection to quickly jot down 5 things that jumped out to me at this year’s NRF show in New York:
A palpable sense of urgency around transformation and digitalization. I’ve been to plenty of tradeshows in my career, and I’ve seen many shows wane (Comdex or CTIA anyone?) as industry ecosystems reach a mature, stable, state. When there are no longer new things to learn, shows just die. The packed aisles and meeting rooms at NRF were testament to an industry in the midst of massive transformation, and an audience hungry to learn more from others on how to best maximize the opportunity that digitalization presents.
The packed aisles and meeting rooms at NRF were testament to an industry in the midst of massive transformation
A lack of integration between stores, store associates, and the rest of the omni-channel. Most of the omni-channel demos I saw minimized (or even attempted to eliminate) the role of the store associate in the interaction. A knowledgeable store associate is a “killer feature” of a good store experience, and we’d all better figure out how to integrate them into a good, omni-channel experience versus cutting them out. Additionally, there was little connective tissue on display between Multi-Channel Marketing solutions and Merchandising Execution in stores.
Insights everywhere, but not a lot of action. Store analytics were the “belle of the ball” with many vendors touting access to valuable insights regarding store performance, product performance, etc. But to get an ROI on analytics you need to perform the analysis, then act on the results. I saw relatively few examples of solutions that help retailers close the loop, and adjust their execution based what their analytics tell them.
Low cost VR/AR technology. There were an increasing number of use cases leveraging virtual reality (VR) and augmented reality (AR). The cost of immersive VR/AR capability is declining incredibly rapidly, and as this occurs it will change retail. But the first users won’t be customers, it will be store designers and visual merchandisers. Their ability to use this technology to visualize concepts and quickly make adjustments will drive significant agility into the design and merchandising process.
The rise of “real-time store sensing”. Last year there was a considerable amount of hype around Beacons, and the potential of proximity marketing. This year, that hype was gone as the implementation hurdles associated with Beacons has become clearer. Instead, a new broader category of real-time store sensors emerged including Beacons, low-cost cameras, and intelligent shelving and connectors. These sensors generate massive amounts of data in real-time regarding store performance that can improve understanding of store, fixture, and product performance, and also enable a personalized customer experience.
Despite the popularity of online shopping, the in-store customer experience is more important than ever. While today’s shoppers can have many digital touch points throughout their path to purchase, they still place a high value on the immersive experience of a physical store. 94% of purchases are made in brick-and-mortar stores where shoppers can see, touch and demo a product in real life.
Shoppers expect a seamless, well-planned, on-brand experience.
Since shoppers have instant access to the information they need, they have become much pickier about where they actually purchase. A store makes an impression in the first few moments a customer enters through the doors. Well-stocked merchandise, accurate signage, and on-brand campaigns all drive better customer relationships, repeat customer visits and better store performance. So it is critical that every store executes with excellence, and yet, not every store can. What’s holding them back?
In many cases, stores are required to follow instructions from massive, cumbersome printed binders that become quickly out of date, making the execution process confusing.
Retailers haven’t considered each store’s individual attributes such as size and layout specifications, customer demographics and neighborhood culture. Stores can’t give customers an authentic and valuable experience, and customers can’t connect with the brand.
When merchandising plans don’t fit, store employees are forced to make judgment calls. Store teams end up spending more time on store setups than they do on the floor engaging customers.
There is little to no communication between the stores and headquarters. Stores don’t get the chance to give feedback or report on compliance, making retail execution inaccurate, wasteful, messy and immeasurable.
It is critical that retailers focus on the store experience.
Achieving a unique and consistent experience strengthens the customer’s brand perception and the retailer’s position amongst the competition. The physical store has a big impact on the customer’s connection to a brand and service. The brick-and-mortar store still holds the power to a retailer’s brand, because It can engage customers in a way online can’t. It is more than a place to buy products, it provides an experience that enriches customers’ lives.
To achieve a superior store experience, retailers must track, measure, and optimize store performance, as well as stay ahead of shopping trends. Also, stores and headquarters need to be on the same page. Daily brand ‘micro-decisions’ should flow from strategy teams all the way to individual stores.
Achieving this all boils down to a digital approach. Retailers can improve store execution, deliver a better retail experience, and drive higher customer satisfaction while also lowering merchandising execution costs, all through a single application.
A few short years ago, many in the retail world and beyond were beginning to write the eulogy for Best Buy. The consumer electronics giant was being taken apart brick by brick by online retailers and showrooming.
Fast forward to present day, Best Buy is in the midst of a reimagining, breathing new life into its brick-and-mortar stores and adapting to the current retail climate to remain viable.
Among the myriad of steps taken to reduce costs and increase profit – store sales rose almost 4% over last year – there is one thing Best Buy would not skimp on, the customer experience.
“Despite the more than $1 billion of costs taken out of the business, [CEO Hubert] Joly stated in Best Buy’s most recent conference call that the amount of customer-facing labor has increased. The company’s rounds of layoffs have mostly targeted middle managers and staff at the company’s headquarters, an approach that ensures that the customer experience doesn’t take a hit for the sake of cutting costs.”
Some electronics chains cut costs across the board to stay afloat only to sink even faster (Circuit City), Best Buy was very strategic about where it cut costs and where it knew it needed to keep the foot on the gas. Instead they embraced that which made them unique against their online adversaries, the ability to walk into a store and see, touch, and engage with their inventory.
Best Buy is not finished and will certainly need to trim some fat in other areas of the organization, but their commitment to the customer experience is a decision that has paid off and can serve as a case study for other retailers facing the same situation.
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Back-To-School is an interesting retail season as it is less defined than most others. The holiday shopping season, for example, has a well defined start date on Black Friday and ends around New Years Day.
Back-To-School seasons start at different times of the year depending on the city and state in which families live or even which school their children attend. What’s more, vacation and summer schedules play a major role in when parents can get to the store to shop.
While the start and end times of Back-To-School shopping may differ, one thing is for certain, kids will always have to go to school and parents will always have to buy a laundry list of items before they do.
So how do retailers navigate this unique selling season and convert as many customers as possible?
The National Retail Federation’s Retail Insight Center released data that provides some visibility into retailers’ marketing tactics for Back-To-School sales.
In a survey of respondents ages 18+, NRF found that a well-executed mix of both analog and digital marketing initiatives, at-home and on-the-go, was the key to retailers capitalizing on Back-To-School shopping and attracting them to their particular store.
5 Top Media Influencers on Back-To-School Shopping
Video on mobile devices
Media That Influences Shopping Particular Stores For BTS
Information Among households with a school age child
Charts from the NRF Foundation’s Retail Insight Center. To access this data and more research please visit the Retail Insight Center.
What is clear is execution across every channel is critical to success. Perhaps more than other selling seasons, parents are looking for deals. This explains the high importance of coupons for respondents.
Back-To-School is the precursor to the two largest shopping seasons of the year, Halloween and the Holidays. As retailers prepare marketing and advertising campaigns for these two seasons, it is important to consider the consistency of your message across all channels.
Take the time to focus on what is unique about each channel and craft the conversation, offer or message in a way that fits each.
The steadily growing transition to purchases made via plastic is one of the many reasons why the use of mobile payments has also become more and more popular among independent retailers. Accommodating customers at the point of sale can be the most important step in ensuring their continuing business.
Mobile payment programs are relatively inexpensive, require very little, if any, additional equipment and software, and can be easily used by anyone to process transactions. Here we will look into three ways retailers can use mobile payments to benefit their customer conversion rates.
As a Cheaper Way to Accept Credit Cards
Payment with plastic cards has quickly evolved into the most used form of payment, even for the smallest purchases. In 2014, 51% of consumers preferred paying with some form of plastic (debit or credit card). It only makes sense for retailers to follow this trend and accommodate customers with various plastic payment options. Every customer has experienced a moment of deciding not to purchase a product, simply because they did not have the cash readily available for payment.
Businesses who have not accepted card payments in the past due to equipment and setup costs can now look into providing this service through mobile payment. Many mobile payment companies charge less per transaction in fees than some credit card processors, and the equipment can be had for $25 to $35 per mobile swiper. This option can help smaller retailers save on setup costs while not missing out on growing their customer base at the same time.
As a Line Buster
Reducing checkout time is a great way small retailers can use mobile payments to their direct advantage. Customers are on average more willing to return to a business if they are not waiting long periods of time at point of sale. Mobile payments can be used by anyone at your business with a mobile checkout device, which eliminates the need for a designated checkout booth since salespeople can go to customers instead of having them wait in line.
This option is great for retailers with busy peak-hours since it can enable all employees to act as a cash register and information source. Accepting mobile payments can give all employees an integral part in closing customers sales, which in turn allows retailers the opportunity to improve customer relationships. Customers enjoy the products or services they receive more when they feel customer assistance was provided to them at an above average rate.
Taking Payments Away From The Store
Another great benefit in using mobile payments is the portable opportunity to sell products or services at any location. Retailers often participate at local conferences or outdoor shows where customers are more likely to purchase products or services with plastic payment.
Using a mobile payment program, you can accept payments instantly and avoid the risk of accepting fraudulent checks or turning away potential customers. Naturally, this option should increase your customer base and increase sales. It is more common for a customer to finalize a purchase and spend more on a single purchase if credit card processing is provided as an option for payment. Mobile payment programs allow small retailers the prospect of growing their business from any location.
In many ways, mobile payments can make credit card processing for retailers cost effective and significantly accommodating to customers at the same time. By easily and quickly checking out customers through mobile payment apps, you can also increase profits by helping more customers finalize their sales. If you have not considered mobile payment programs before, this is a great way for your business to keep up with the growing customer demand of plastic payment options at an often lower processing rate.