Power center retailers are fulfilling omnichannel expectations
By Joe Tichar, senior VP of corporate operations, DDR, Beachwood, Ohio
Forward-thinking retailers are increasingly leveraging their brick-and-mortar locations to establish omnichannel models that meet the growing consumer demand for a more convenient, more cost-effective and more personalized shopping experience.
Brick-and-mortar retail was once solely about attracting shoppers into stores to buy merchandise, and that is still largely the case, with 95% of total retail sales captured by merchants with a brick-and-mortar presence. With the increased adoption of Web-based commerce, however, retailers have architected their online offering around their brick-and-mortar locations to reduce delivery times by fulfilling orders in nearby stores instead of far-away warehouses and to cut shipping costs by offering customers the ability to pick up online orders in-store. These initiatives can help retailers grow top-line sales, operating margins, and profitability.
Indeed, market-share-winning retailers have found that utilizing their real estate as a key component of the supply chain allows for greater operational efficiency plus the flexibility to satisfy the full range of shopping options that customers demand in-store, online or any combination of the two.
Across DDR’s portfolio of open-air power centers, this evolution of retail towards omnichannel fulfillment becomes more evident every day. Below are a few examples:
At FlatAcres MarketCenter/Parker Pavilion, a 631,177-sq.-ft. prime power center in the Denver MSA, Walmart is piloting an innovative on-site grocery pick-up service. Shoppers who use the service, which is being tested at 11 Denver-area Walmart locations, can purchase groceries online and then pick up their merchandise at a local store for free. In surveys, Walmart shoppers have said that grocery pick-up – as opposed to home delivery – appeals to them because it gives them a chance to shop for items they forgot when placing the original online order.
At Gateway Center, a 639,756-sq.-ft. prime power center in the Boston MSA, Target is testing a ship-from-store, same-day-delivery program. With Target’s Rush Delivery service, consumers are able to order an item online before 1:30 p.m., and for a small fee elect to have it delivered from a nearby store between 6 p.m. and 9 p.m. that day. The service is being tested at Target locations in the Boston, Miami and Minneapolis areas.
At Whole Foods at Bay Place, Whole Foods Market and Instacart are piloting an innovative new delivery service that enables customers to receive their groceries in as little as an hour. The companies will also offer an in-store pickup option in the coming months for an added level of convenience. For the initial rollout, customers can visit Instacart.com or the company’s mobile app, add grocery items to a virtual cart, choose a delivery window and check out. Then, an Instacart personal shopper will confirm the incoming order on a smartphone, pick the items from Whole Foods’ shelves and deliver the order to the customer within the chosen time-frame.
Across all Gap and Banana Republic locations, shoppers can go online to reserve up to five items in-store until closing the next day with no obligation to purchase. The service enables Gap shoppers to feel confident that their desired items will be available in the store, and helps Gap associates recommend complementary merchandise, increasing the size of each transaction. Gap’s CEO has stated that conversion on reserved items is “off the charts.”
Finally, Best Buy has enjoyed tremendous success with its ship-from-store program, which the electronics retailer has rolled out to all of its 1,400 stores. Best Buy executives have credited ship-from-store with playing a significant role in the company’s 29% 2014 first-quarter increase in online sales by improving margins on clearance items, boosting online conversion rates and increasing the speed of delivery to customers.
While pure-play e-commerce companies have gained notoriety, traditional brick-and-mortar retailers have proven that providing a seamless shopping experience, both in-store and online, will ultimately position them for long-term growth in consumer market share.
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