Dick’s Sporting Goods’ new House of Sport format engages customers with sports and entertainment.
Physical retail continues to drive the bulk of retail sales — and will for quite some time.
Despite all the attention given to e-commerce, 72% of U.S. retail sales will still occur in brick-and-mortar stores in 2024, according to new research from Forrester.
Even during pandemic-induced mandatory shutdowns and with additional safety concerns, consumers have shown they will continue to shop in the store when they feel it is a viable option.
The top reasons for shopping in store are to test products (47%) and being able to walk away with an item after purchasing (38%), Forrester found. Consumers also like to make returns in physical stores. Forty-one percent said online returns are difficult and over a third of consumers said this has discouraged them from purchasing online. Over half of respondents said they prefer in-store returns.
Post-COVID consumers are both digitally savvy and channel-agnostic, Forrester noted. They are open to exploring more shopping options (52% of U.S. online adults enjoy trying new brands) and more likely to take advantage of digital’s “self-service” environments (63% spend time comparing products before making a purchase.) This combination has raised the bar for retailers, Forrester said, as they rethink, redesign, and repurpose their store environments beyond simply offering tactile product experiences.
Retailers are also looking for stores to provide them with a competitive advantage against newer, more agile pure-play retailers by using locations as a source for capturing and evaluating customer interactions. As a result, they need to redesign in-store experiences with more up-to-date use cases, less friction, greater data integration, and lower operational overhead.
Retailer store designs have not significantly changed in decades and are due for a critical refresh to accommodate the omnichannel and experiential demands of the consumer, according to Forrester. The firm recommends using a “6E” strategy to build “purpose-designed” stores that deliver meaningful improvements to customer experiences, achieve operational excellence and drive specific business outcomes.
Forrester’s strategy is outlined below.
• Engage customers. It’s challenging for any retail store to differentiate itself from a plethora of similar product offerings available via digital channels, so a primary goal will be to engage customers. Dick’s House of Sport is one emerging model (the “experience center”) that focuses on activity and entertainment. This includes enhanced in-store app functionality, augmented reality (AR) and virtual reality (VR) experiences, and in-store product personalization.
• Emulate e-commerce. Savvy retailers will harness the best of e-commerce and integrate it into their store. The critical difference between a store visit and an online visit is knowing who that customer is and crafting the experience just for them. Online, it is easy to track device history to the person and across devices, but in-store, this aspiration is challenging.
• Expand impact. Retailers must think outside the box when designing stores to support initiatives, programs, and branding efforts across the enterprise. They must also serve as vessels of opportunity. Guitar Center offers product repair services through its store locations — a service that would require far more logistical complexities and overhead for a pure-play retailer.
• Empower associates. In 2021, 37% of global purchase influencers surveyed in the retail industry plan to invest internally in omnichannel projects and 31% plan to invest internally in AI. Why? As they juggle omnichannel fulfillment priorities, including pick and pack, curbside delivery, and returns and exchanges, retailers need to streamline operations to ensure a positive customer experience — along with healthy margins. Digital professionals are turning to solutions that help them service each customer in ways that person might want to shop, as well as become smarter about how they operate.
• Enable insights. In 2020, 46% of data and analytics decision-makers at global retail and wholesale companies have already implemented data management and analytics initiatives to improve their complete view of the customer across channels. Plus, another 27% are currently implementing these initiatives. As in-store tracking becomes more accessible and integrates with online tracking, retailers will be able to engage customers by tapping a lucrative omnichannel view of the customer using zero- and first-party data sources.
The challenge: gathering customer consent for such practices and managing the data carefully. With AI-powered tracking and decisioning tools, retailers will break down the silos within their organization and work in unison to serve the customer and reward store associates for their omnichannel efforts, all while honoring consumer privacy preferences.