Tech Talk: Experience the Joy of In-Store Shopping
I hear two main culprits from senior retail executives when it comes to their companies’ troubles: getting the merchandising right (i.e., matching supply and demand), and the burgeoning growth of e-commerce. Stores are often left with either too much or not enough inventory — suffering in either circumstance.
While it seems as if it’s raining Amazon Prime boxes, in fact, e-commerce amounts to less than 10 percent of all retail sales. Of that 10 percent, about half is captured by traditional brick-and-mortar retailers — a shift in where orders are being transacted — while the other half is going to Amazon.com. So that lost share of 5 percent (50 percent of 10 percent) is explainable. However, how does one explain the rapid revenue and concomitant stock declines of the major department stores beyond that 5 percent?
To put it bluntly, stores have lost their magic because the user experience hasn’t changed in nearly 100 years. Compared to the experience at a Marshall Field’s or Selfridges back in the early 1900s, today’s shopping experience is nearly identical: lure the customer in with advertisements and window displays; offer a maze-like environment that requires endless sorting through racks or piles of garments to find what you’re looking for; provide little or no assistance with the try-on process; make the customer wait in line to buy an item (treating them like a vendor); and then usher them out of the store. Sound familiar?
Millennials and Gen Z consumers want EXPERIENCES. They’re willing to spend $5 for a cup of known origin coffee, $10 for a piece of artisanal cheese, a premium for local produce and garments made in the U.S. Yet very few stores are delivering those experiences. Shopping in-store is as uneventful as shopping online, so why should consumers bother?
The in-store shopping experience needs to be about more than just a transaction. If a consumer wants just the transaction, e-commerce wins easily. Customers flock to Amazon and similar shopping platforms where the buying process is drop dead simple. If you know what you want, are willing to wait two days, and size/fit isn’t an issue, it’s hard to justify a trip to the store.
At the retailer level, one store in particular has claimed the experience crown and won over millions of consumers, turning a true commodity into a $5-plus experience: Starbucks. Where were we before Starbucks? In New York City, the blue-and-white Greek urn coffee cups dominated the takeout coffee scene and were sold at every corner deli and street cart for $1 or $2. Dunkin Donuts, Wawa, 7-Eleven and convenience stores offered similar low-cost options for a cup of Joe. Starbucks transformed the coffee purchasing process to an experience. Other retailers can learn from its playbook.
Coffee as an Experience
Starbucks’ stores serve as an experience for both the time-starved mobile workforce and those with free time. Complimentary Wi-Fi sent a huge signal to the ever-growing mobile workforce: head to a Starbucks to get work done. For others, the concept of a place to hang out and work or chat without being asked to move along reduced the sense of tension and urgency in the air.
Starbucks did something else right — it offered personalized coffee. The menu was designed to be personalized, but not customized. A key difference in the Starbucks experience is the ability to get coffee the way you want it, adhering to its time-sensitive consumer base. The base coffee type (latte, chai, macchiato) has bounded choices. This is personalization at its best. The coffee line moves along with a set amount of choices, but nearly infinite variations to those themes.
In-Store Experience: Save the Customer Time
Starbucks can also teach other retailers the importance of eliminating friction. Starbucks’ mobile ordering platform has been a huge success because it saves people time. Traditionally in retail stores, merchandise is placed towards the back of a store, with the goal being that customers spend more time finding the items on their list. This strategy creates more opportunities for “impulse buys.” Let’s consider inverting the merchandise model to give consumers what they want immediately when they set foot in-store. In all likelihood, that customer will stick around, browse and be in a better purchasing mood than if you get them lost and confused wandering around your store.
Retailers can also use text messaging to let shoppers text a number to find what they’re looking for, as well as receive a turn-by-turn guide to get to the exact shelf where the product is located. Stores can also use indoor location services technology to enable shoppers to pull up a map of the store and receive directions so they can quickly navigate to the item they’re looking for once it’s known to be in stock.
There are plenty of purchases that consumers want to make in-store; you just have to give them reason to set foot in one.
Pano Anthos is founder and managing director of XRC Labs, an innovation ecosystem for retail and consumer goods based in New York City.