Remember when retail was just about selling product, in a small ecosystem that connected merchandise producers, merchants and shoppers?
Today, the key words are data collection, analytics, clicks. What would Marshall Field or James Cash Penney think?
Here’s what most analysts believe they’d be thinking about in 2019.
THE DATA GAME
Ford Motor Co. (Dearborn, Mich.) acknowledged recently that more than one-third of its profits come not from car or truck sales but from Ford Credit transactions. And the significance of that does not derive solely from the interest earned on the loans. It also comes from the amount of valuable consumer data it mines.
“We know where people work and what they make,” Ford President and CEO Jim Hackett said recently during a radio interview. “We know if they’re married. We know how long they’ve lived in their houses, and what the prices and values of those houses are. How do we know? It’s all on their credit applications.”
According to Brian Dyches, Escondido, Calif.-based Principal and Marketplace Director of Rex Group (Buenos Aires), “Today’s retailers are in the data-collection business, and any sale that produces consumer information is golden, in whichever channel the shopper shops – online, in the store or in some combination of the two.
“They must understand that the metrics they’re gaining from any consumer encounter are as germane to their success as the register ring.”
MORE THAN "EXPERIENCE"
The PetCoach initiative launched by Petco Animal Supplies Inc. (San Diego) may seem, at first, merely a stab at in-store “experience.” The pet supplies retailer markets it as “the highest-quality suite of personalized pet services, products and experiences” – advice, grooming, training, daycare and full veterinary care – “that can't be delivered by mail."
But, says Dyches, it’s also an opportunity to capture an enormous amount of information from those consumers who sign up. “Analytics tell merchants about assortments and what drives foot traffic,” he says. “Merchants need the same sort of acuity as is gathered by click-arounds on websites: why and where are people spending their time in the stores.”
When retailers started offering “Buy Online, Pickup in Store,” they saw it as an opportunity to lure reluctant shoppers back inside the store, for impulse grabs or just to browse.
But BOPIS offers retailers much more than simply impulse shopping. Retail 101 was all about getting consumers to shop off the list, says Carol Spieckerman, President, Spieckerman Retail (Bentonville, Ark.), but “retailers will have to disabuse themselves of the idea that shoppers walking into their store is the Holy Grail. Shoppers have too many options, and they’re driving the bus. If they’d prefer not to come inside, you’d better figure out how to meet their needs and retain their business – because someone else surely will.”
In fact, she notes, a recent trend is to offer shoppers better prices if they elect the BOPIS option and never set foot inside, which is what Walmart Inc. (Bentonville, Ark.) has begun doing.
MALL OR NOTHING
Macerich (Santa Monica, Calif.), the third-largest mall owner in the country, recently began adding the BrandBox concept to its properties as a way to help online brands open physical stores. At Tysons Corner Center (Tyson, Va.), five “digital native” brands opened 1500-square-foot incubator stores in November 2018.
It’s an accommodation to the online brands eager to expand their physical footprints. And it also keeps these malls vital and busy, which helps existing tenants.
“The old kiosk in the aisle used to be the mall’s innovation section, where brands set up shop to show their capabilities,” Dyches says, “especially in B and C centers, which have all that vacant space. The A centers, on the other hand, don’t have a vacancy problem, at all – they’re the ones increasing rents.”
IT'S STILL RETAIL
What Field, Penney and the other pioneers might recognize is that it still comes down to basic retailing. “It’s still all about making decisions, knowing your customers and balancing that with what makes the most sense for you,” says Spieckerman. “Ultimately, you have to cater to what the shoppers want. And then it’s your job to figure out how to make that profitable for you.”