Connecting the Dots

It’s only October, but the holiday forecasts are starting to pour in. At this point out, it looks like it will be a “modest” season, with Deloitte (whose forecast, unlike some others, includes the month of January) predicting a 3.5% to 4% increase in sales over last year.



It will also, predictably enough, be a digital season. Deloitte forecasts that digital interactions will influence 64% of store sales this holiday season. The key word here is influence, which covers a wide range of activities, from shoppers seeking product reviews and checking prices to mobile payments.



What’s so interesting as retailers prepare for their busiest season is the sea change that has occurred over the past 18 months with regard to physical stores. Funny enough, the rise in online shopping has put a renewed focus on brick-and-mortar stores. With some exceptions, most e-commerce sites look pretty much the same, with price being the only differentiator in many instances.



More than ever, the physical store (and its associates) can be a key competitive advantage. Even shoppers who use stores more or less as fulfillment centers often end up making a purchase in-store.



After being treated to what can be called benign neglect in many cases, retailers are making the in-store experience a top priority. At least the smart ones are.



At press time, Target Corp. announced an ambitious initiative called “LA25,” whereby it will test 50 enhancements and changes to presentation and service in 25 stores in the Los Angeles market. Some of the tests involve programs and services the chain is piloting in other markets, while others involve brand new ideas. The changes involve physical updates — better store signs and more modern fixtures — and digital elements, such as RFID tagging.



Additionally, Target is bringing in experts in certain areas, including the beauty and baby departments, to help shoppers and provide personalized service and unbiased information about products.



In an interesting twist, some of the savviest stores out there today are being opened by retailers that were formerly pure play. No one has made the leap better than eyeglass marketer Warby Parker, whose stores are a delight. And a friend of mine visits Rent the Runway’s store in Manhattan on a regular basis. Rentals have almost become part of her regular wardrobe, since she can now go to a store to see (and try on) the dresses.



But Warby Parker and Rent the Runway are just the tip of the iceberg. From footwear brands to makeup marketers, more and more online marketers are opening physical stores, and the trend is just gaining momentum. (For a current update, see page 10.) What these upstart retailers seem to do so well is connect the online with the offline in a way that results in an all-around great customer experience.



So let’s bring it back to the holidays.



“Retailers that are likely to come out ahead this holiday season are the ones connecting the dots between their digital channels and their stores — rather than focusing solely on the online ‘buy’ button,” said Rod Sides, Deloitte’s retail and distribution sector leader.



It’s not just the holidays. Those are the retailers that are likely to do well the rest of the year as well.