Aligning The Physical Storefront To The Needs Of The future
Even before 2020 came along and knocked the world off its perch, the internet had put the physical retail space on notice. eCommerce and online banking neatly met the human need for convenience, bringing the whole world within easy reach of an effortless click or two.
This was not a good sign if your entire business model depended on convincing people to come to your location. And many were already talking of “the retail apocalypse”.
All this is to say that, when the pandemic hit, it didn’t usher in something completely unheard of. Rather, it hastened existing trends. Trends toward which shopping centres, retail chains, banks, and even insurers were already trying to align their customer service, in-store offers, and employee behaviour.
Amazon is the obvious example, as a long-established international internet success story. And, locally, Takealot’s almost complete dominance of online retail is such that it has forced regulatory anti-trust concerns for fear that it’s monopolising the market against emerging online retailers and physical stores trying to make the transition online.
But even though the pre-pandemic migration of businesses online was accelerated by the coronavirus, lockdowns have accelerated the Experience Economy, and the market’s need for more than just products. The brick-and-mortar store is not dead, but in many ways it is going through a rebirth.
The Strong Store Survives. The Adaptable Store Thrives.
In 2017, after 159 years in business, Stuttafords, the “Harrods of South Africa”, closed the doors of its last store for the last time. It didn’t take a pandemic to end the run of what had been a household name in the country for over a century. All it took was an inability to change in the face of shifting economic reality and the rise of online retail.
It was around the same time when local retail giant, Edcon began facing off against the reality of financial collapse, citing the competition of online retail and an inability to respond to the increase of cheaper imported products. This led to the closing of the Boardman’s Homeware brand and the shuttering of several smaller fashion brands. It also led to Edcon’s sale of CNA, which is a part of the story of the beleaguered stationer’s ongoing financial crisis.
Today, after almost a century in operation, Edcon is in business rescue and contemplating the sale of parts of Jet and Edgars, its flagship retail brands.
Compare that to pharmacies who, seeing the writing on the wall and responding to their own limitations as well as opportunities offered by the market, integrated online ordering with separate collections queues for orders made online.
Medications are still handled by an expert and the customer can be reassured by the advice and expertise of the person on the other side of the counter, but online integration enhances and streamlines the experience. The bonus, is that the customer is now in-store and in a good mood, thus leveraging a pleasant experience with the least profitable part of a pharmacy (the pharmacist) to make the profitable portion (the front store) more attractive.
So, the lesson is not that brick-and-mortar stores have no hope in tomorrow’s retail and customer service landscape – there will always be a place for a carefully crafted, flesh-and-blood customer experience (CX). The lesson is that no matter how powerful your brand, it is only as resilient as the experience it provides. Retailers cannot afford to fail to understand the customer and what he or she wants in their online experiences, their in-store experiences, and at the intersection of the two.
Understanding a changing landscape
According to the most recent market research by McKinsey, 76% of consumers changed brands last year. That may be an eye-opening number (or a mouth-watering one, if you were positioned to take advantage of such an unprecedented disruption) but it paints a clear picture of the contemporary state of brand loyalty.
On or offline, brands have never been on thinner ice.
Even in the pre-pandemic world, we were witnessing a trend toward customer personalisation and the aforementioned Experience Economy. Socially aware brands were becoming more common, and digital, connected consumers were demanding that brands become more than just the products and services offered by other, similar brands.
The message from the customer has been clear: “I’m awake, I’m aware, and you are not my only option.”
Discovery’s new R3 billion headquarters in Sandton – unveiled toward the end of 2018 – is a testament to the importance that smart brands give to creating seamless, interconnected experiences. It received 5 green stars from Green Building Council South Africa (GBCSA) and, in the words of CEO Adrian Gore, “was designed to be beautiful, functional, and inspiring. We wanted a space that embodies our core purpose, values and culture, and that would support our future growth – both in terms of physical expansion and in enabling collaboration, wellness and innovation”.
Equal parts integrated corporate headquarters and shopping centre, 1 Discovery Place creates a branded lifestyle for the public to enjoy, while simultaneously providing its workers with an interconnected and agile working environment, for better serving their many clients.
Just as customers have become more sophisticated, so too have their demands on brands that expect their loyalty. Luckily, the tools for hearing and understanding these demands have matched pace. Thorough market research, focus groups, feedback loops between internal and external stakeholders, and other methods of data and insight acquisition empower businesses with the knowledge necessary to adapt to the fast-changing context of an ever-more demanding customer base.
The brick-and-mortar store remains an integral part of the truly omnichannel approach to customer satisfaction and retention, providing a touchpoint for customer feedback as well as an opportunity to make the brand more memorable through the experiences it provides.
And, as is true for any other aspect of a business, if storefronts fail to evolve and engage modern tools, technologies, and techniques to draw in, satisfy, and retain their customer base, then better-prepared competitors, offering fuller, more comprehensive experiences will step in to do what they can’t.
Thinking outside of the box in serving customer wants & needs
Common perception would have one believe that Starbucks sells coffee. But the reality is that Starbucks was built on selling an experience: the coffee-shop experience popularised by 1990’s sitcom, Friends. The coffee was simply an accessory; it cost four times as much as comparable brands, but a customer could nurse one cup and enjoy the experience and the atmosphere without anyone hurrying them along, for hours at a time.
Starbucks is more a place to sit and drink coffee than it is a place to buy coffee.
It’s a tactic that succeeded in bucking the always-on-the-go trend of convenience above everything, by tapping into the trend of providing an experience. And that is, in part, how they won the so-called Coffee Wars of the 1990s.
Because as it turns out, while consumers have long shown a willingness to sacrifice some privacy for the sake of convenience, they have also made it known to those who are listening, that they are willing to sacrifice some convenience for an experience that’s worth it.
Once again, it is at the intersection of the online and in-store experience that true customer satisfaction can be found.
Exclusive Books is a great example of a how an innovative retailer can build resilience through well-informed forethought and preparation. This mainstay of South African book retail launched their first eCommerce site as far back as 1999, when eCommerce was still too new for many to be confident in using it. And in 2012, they became one of the first South African brands to gamify their website, using the Stickers campaign to drive awareness of their online presence.
But Exclusive Books never neglected the brick-and-mortar experience for the sake of digitization. No matter how big the branch, Exclusive Books has always cultivated an in-store atmosphere of quaint intellectualism and quiet contemplation – not all that different from Starbucks’. This focus is epitomised in EB Cafés, which allow customers – even if they’re only picking up an online order – to indulge in an atmosphere specifically crafted to appeal to their book-reading customers; an atmosphere that cannot be replicated at home.
According to CEO Grattan G. Kirk, Exclusive Books is doing better today than it was in 2019.
How seamless is the experience? How personalised? How did it make the customer feel? Will it encourage them to return to the store? How does it integrate into the wider, omnichannel customer experience? And, in the case of banks and other interactions where a client’s physical presence might be compulsory, how do you take the “grudge” out of what may well be a grudge purchase?
These and others are the questions that must be asked of how a business’s physical, customer-facing locations meet the needs of the market it serves.
What Does The Future Hold For Brick-and-mortar?
Every business’ challenges will be unique to itself. Both in the wake of the coronavirus, and in the face of a fast-paced and ever-shifting future.
But, the physical storefront has been a part of human society for almost as long as humans have had societies. They have been one of the few historically consistent bedrocks of business. And we don’t imagine that they will completely disappear any time soon.
However, what has also always been true of business, is that knowledge is powerful and only those who adapt to it survive.
Whether or not a physical storefront is a part of your business, the world is coming to expect omnichannel integration and personalisation as a given. And that will have an impact on how your communicate with and serve your market – on- or offline.
If you want to discuss how Interact RDT can help you research, reimagine, and refine the way your organisation’s operations, assets, processes and personnel integrate with your broader omnichannel presence to positively interact with your stakeholders, contact us here.