SPECS Exclusive: A new day for physical stores
Photo: Amazon Dash
If you want to know how to design a modern store experience, look to Amazon.com for inspiration.
This was the somewhat counter-intuitive, but highly relevant underlying message of the presentation “Amazon Can’t Do That” at Chain Store Age’s SPECS 2016 conference in Dallas, March 13 -15 at the Hilton Anatole in Dallas. Presenter Lee Peterson, executive VP of brand, strategy and design of WD Partners, explained how e-commerce retailers such as Amazon have fundamentally changed consumer expectations for the store.
“Physical stores as we knew them are over,” declared Peterson. “The days of stack it high, let it fly are over. It’s not retail – it’s customer experience.”
As a result of the ubiquity of e-commerce, Peterson said the burden of fulfillment has shifted from consumer to retailer.
“In the old model, the customer would figure out they were out of things, get in the car, go to the store, find things, and put them in a big shopping cart,” said Peterson. “Nobody helped them and the checkout clerk didn’t look at them. The consumer did all the work.”
Now, however, customers no longer have to visit a physical store to get the products they need.
“We have stores in our pockets,” said Peterson. “Amazon gets it. Amazon Dash will tell you when you run out of something and ship it to your home. If you ask Amazon Echo where to find the best price on an item in a local store, it will show you where to get a better discount at a place called Amazon.”
Peterson credited Amazon for its “save, set and forget” subscription model of online shopping.
“Amazon is branding your home,” said Peterson.
To illustrate the changing shopping landscape, Peterson shared some WD Partners statistics. Physical shopper visits have fallen at least 5% per month for the past 30 months. The number of stores a consumer visits in their average twice-a-week shopping trip fell from 4.5 in 2007 to three in 2014. Yet thanks to e-commerce, overall retail sales have risen every month since January 2014.
Fortunately, all hope is not lost for brick-and-mortar stores. Peterson said that physical stores can essentially serve as fulfillment centers for e-commerce. Amazon itself plans to open 100 physical pickup locations for grocery orders, according to Peterson.
“We asked consumers what technology they want to see in stores,” said Peterson. “Eighty-six percent of 2,500 people across the U.S. ranked buy online pickup in store as a top technology.”
Leading reasons consumers gave for favoring buy online pickup in store included no delivery fee, convenience, speed of fulfillment, and the avoidance of having to enter the store if curbside pickup.
“Technology should enhance the customer experience, not replace it,” said Peterson. “Customers don’t have the patience to wait for a delivery and also don’t want to go in the store.”
While buy online pick up in store will build sales volume, Peterson cautioned it will not increase basket size. He also said retailers need to realize customers do not want to have to enter the store when they pick up online orders.
“You need to be creative,” said Peterson. “Offer features like pickup lockers.”
Peterson said WD Partners data also shows that the younger a consumer is, the more receptive they are to buy online pickup in store offerings. Sixty-five percent of millennial consumers and 57% of overall consumers are receptive to drive-through pickup, while 59% of millennials and 48% of overall consumers are interested in a single pickup point for multiple retailer orders.
Similar differences apply to millennial and overall consumer favorability toward front-of-store pickup (48% and 44%), parking lot pickup (39% and 29%), and even the unpopular back-of-store pickup (32% and 25%).
Peterson also said retailers need to offer an entertaining and engaging in-store experience that goes beyond simply offering products for sale. He quoted Staples CEO Ron Sargent on the parameters of success for a modern store.
“Stores have to earn the right to stay open,” said Peterson.