A few years back, the determinants in retail success have basically been location, store design, and curb appeal, with most of them completely relegating to the background any insight to the changing customer behavior. The retail apocalypse has, however, necessitated the new face of retail.
According to the Statista, The fact that the ongoing rise of e-commerce in the United States is hurting brick-and-mortar stores is undisputed. Two corporations that filed for Chapter 11 bankruptcy protection in October 2018, are retail giant Sears and Mattress Firm.
Despite reducing assets and selling real estate over the years, Sears was unable to pay off $134M worth of debt. Sears Holdings, the parent company of Sears and Kmart, said it plans to keep profitable stores running. By the end of 2018, the company is looking to shutter at least 188 stores. The latest list of store closures includes 45 Kmart locations and 18 Sears boxes.
Mattress Firm, on the other hand, said it would shutter 200 underperforming locations right away, and look to potentially close 700 stores altogether over the next few months. In conjunction with its prepackaged restructuring plan, it received commitments for about $250M to help support ongoing operations during the process. The company also obtained another $525M in lines of credit to finance its exit from bankruptcy.
Whether we’re in the middle of the “retail apocalypse” since postulations are that e-commerce is the cause, is still up for debate though. While online retail sales rose to more than $450 billion in the United States last year, they still account for little more than 10 percent of total retail sales, depending on which categories you want to include in that total.
Though this may sound like a respite, however, retailers have a looming “hurricane” hovering over their heads and the signs have been around for years. While some retailers saw these signs and adapted their business models years ago others who neglected them are currently gnashing their teeth.
E-commerce retailers are seriously upping their ability to collect and leverage insights into consumer behaviors gained by technological innovations like big data. Retailers who caught up on the game are adopting technology and processes to achieve the same advantage and adapt to today’s retail landscape.
The truth is, brick-and-mortar retail is not dead. Market Track, reports that U.S. shoppers still prefer to make most of their purchases in-store especially for big-buck purchases like cars, appliances, and jewelry. But what actually happened?
Millennials who are now the largest cohort numerically, spend very differently from their materialistic baby boomer parents and thrifty grandparents. They prefer experiences over consumer goods, tend not to own but prefer to use, stream or rent. And retailers will do well to catch up to millennials’ spending habits.
What should retailers do?
The new face of retail involves consumers engaging with a brand seamlessly across their e-commerce, brick-and-mortar, social media and every other channel to create unified, consistent encounters. This can only be done by integrating big data.
Forbes reports that 62 percent of retailers say the use of big data and analytics is creating a competitive advantage for their organizations, according to a study by IBM. And more importantly, nearly 80 percent of big data users surveyed by Accenture agree that companies must embrace big data or else risk facing extinction.
What do they have going for them?
A comprehensive insight into the consumer’s history
Using big data to provide a comprehensive view of the customer journey allows retailers to optimize in-store experiences, improve customer service, and boost retention. You must always focus on the fact that retailing these days has moved to another level and brands are overly becoming more effective, extracting value from data by automating and optimizing processes or producing actionable insights.
Improved Margins And Supply Chain Management
Armed with and having the ability to analyze available sales and customer data, retailers can optimize pricing, predict marketing trends, and forecast demand to help gain a 60 percent potential increase in operating margins.
Personalized and targeted marketing campaigns
Leveraging more data, the retailer can harness and access all available information on customer behavior and then integrating the information with social, mobile, and e-commerce allows marketers to create more targeted promotions and personalized marketing campaigns.
Informed Business Decisions
The Big Data Executive Survey for 2017, reports that more than 80 percent of the participants say their Big Data investments have been successful. They report a variety of positive outcomes, including cost reduction, the establishment of a data-driven culture, and various benefits related to innovation, new products and services, and industry disruption. Only 1.6 percent of respondents deemed their Big Data initiatives failures, which is an impressively low number.
It’s not really a retail apocalypse in the extreme sense of it, what we have is a revolution. You should consider this a chance for retailers to get creative in their approaches to customers.
Clearly, the old method isn’t working, the retailers that refused to innovate and were flushed away by the tide should serve as a case study. You still have a chance to innovate. You need to find new ways to be relevant and think about how you can make customers’ lives easier in our modern, connected world.
This isn’t the end of the world, it is the start of something exciting. Leverage Big Data.