With the disruption in shopping habits caused by e-commerce, retailers are scrambling to find new ways of luring shoppers into stores — adding technology, creating in-store coffee and beer and wine bars, even eliminating inventory altogether.
Stores of the future, experts say, are all about creating in-store experiences that incorporate technology in smaller store footprints. The transformation has already begun to pop up at stores in the Bay Area and beyond.
“Retail is having to reinvent itself,” said Judge Graham, chief marketing and new business officer for marketing agency Ansira.
Graham pointed to Best Buy, which struck deals in recent years with electronics companies, including Apple, Samsung, Verizon and others, to set up showcase areas within its stores to show off their products. In about 90 stores, including some in the Bay Area, it has introduced in-store Dyson shops where people can test out high-end products such as cordless vacuums. It is also beefing up its tech support and customer service options.
Best Buy recognized it had to do something as far back as 2012, as it faced negative comparable sales and declining operating income rates. So the electronics retail giant rolled out some of its customer-service offerings and in-store innovations, and according to the company, it worked. It has grown its comparable sales and operating income rate for three consecutive years.
Other retailers are experimenting with personalized customer experiences in stores.
Nordstrom drew attention recently for its announcement that it will pilot a small-format store concept that does not actually have any inventory. Instead, there are dressing rooms and a “styling suite” where personal stylists will transfer merchandise in for customers. The store, which will also offer a beer and wine bar and manicures, will serve as a place to pick up purchases ordered online, get alterations made and other services.
“I think in retail there are so many more options for using space now,” said Kathy Gersch, a former Nordstrom executive and current executive vice president at consulting firm Kotter International. “Today you could have more of a showroom base that’s smaller, where people can try things on. … Technology has enabled a lot of new ways. I think you’ll see more and more of this.”
Nordstrom has an advantage in that it already uses personal stylists frequently in its traditional stores, Gersch said, so it’s unclear whether a similar concept would work for other department stores or retailers that would have to create the program from scratch. Still, the trend toward customer service and in-store experiences is building.
Apple executives are now calling their stores “Town Squares,” which they say will double as public spaces with forums, outdoor space and meeting areas for classes, workshops and other programming.
Other industries have taken a page from the book of retail innovation. Capital One has teamed up with Peet’s Coffee to open locations — including in San Francisco and Walnut Creek — that are part-bank, part-coffee shop, and Bank of America has embarked on remodeling its retail banking centers with layouts that complement customer service initiatives.
According to Raquel Gonzalez, who is the head of Bank of America’s Silicon Valley operations, the new financial centers include designated areas for people to connect with financial advisers, as well as digital ambassadors to help people set up appointments and navigate the bank’s technological offerings, such as mobile banking. The bank is renovating 104 of its 184 retail financial centers in San Francisco, Silicon Valley and the East Bay.
“Clients want options,” Gonzalez said. “Brick-and-mortar financial centers aren’t going away anytime soon, but what’s changing is the experience that customers have inside the financial centers.”
As online retailers have given consumers a convenient way to browse and buy a seemingly limitless number of items at competitive prices, stores are seeking ways to give people incentives to physically come inside and shop, but whether that will resonate with customers is unclear.
Lafayette resident Jordan Neville, 30, turns to Amazon for most of his shopping needs. He likes the convenience of being able to buy items at the click of a button — his payment information is saved to his account already — and ship them quickly and for free. Plus, he can avoid the hassles of parking, navigating and waiting in lines at local shopping centers, he said.
Still, he finds reasons to occasionally go to stores.
“If I need something that day, I’ll go to a store to pick it up,” he said. “Or, if I want to try something out.”
He said he appreciates that places like Best Buy allow him that experience. He also makes use of a program that has been hailed as a success by retail experts: Starbucks’ mobile app, which lets users place coffee orders on their mobile phones and pick them up in the stores, collecting reward points along the way that they can use to get free beverages or food.
A seamless transition between digital and brick-and-mortar experiences is something retailers will have to perfect in order to be successful, Graham, the Ansira marketing officer, said. “A few years ago, it was online or offline, e-commerce or retailer, but now it’s so blurred.”
Even companies that have been strictly online sellers are blurring that line and jumping into brick-and-mortar, boosted by already-strong digital systems and a wealth of customer data. Amazon has opened several Amazon Books stores, including one in San Jose, and plans to open a Walnut Creek store — complete with an in-store cafe — this fall. Other online retailers such as ThredUp and Warby Parker have opened showroom-like stores in the Bay Area and beyond.
“There is no doubt that in order for brick-and-mortar (stores) to survive in the near term, they need to provide the consumer the ability to connect their online purchasing with in-store services,” said Jim Fosina, CEO of online marketing company Fosina Marketing Group, in an email, pointing to a recent move by Kohl’s to allow customers to return Amazon purchases to some stores for free as an example.
But many big-box retailers have not done enough to engage customers in their stores, and they’re under “tremendous pressure” to turn things around, Fosina said.
“The times, they are a changing, and brick-and-mortar needs bold thinking,” he said. “At best, even the best thinking won’t change the trajectory of the rise of the internet in every aspect of the lives for (generations) X, Y and Z.”
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This article first appeared in www.mercurynews.com
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