Three generations ago, the choices for purchasing, say… a wrench, were limited, at least by today’s standards. You went to the hardware store, looked at the selection on the wall and picked the one that matched your needs and wallet. Today, a visit to the hardware store is just one option out of many as an ever increasing number of choices become a part of consumer’s lives. We can opt for a home-delivered catalogue, use our smart phone, ipad or personal computer, visit an in-store digital kiosk, etc. As a consequence, store sales continue to decrease. In 2012 the online channel will account for approximately 38% of US retail sales, or 1.2 Trillion dollars.
It is clear that the retail landscape is experiencing an incredible paradigm shift. This shift has been accelerated by four factors:
1. The economic slow down, which over the past four years has influenced a greater number of consumers to search for a better value.
2. Changes in media consumption and the emergence of social networking as an consulting, editing and purchasing tool.
3. The rise of Gen Y (Millennials), the next big wave of consumers with very different shopping habits (technologically savvy, connected and practical with a unique sense for brand association and a distinct disregard for traditional advertising and mass media).
4. The effect the convergence of all of the above factors has had in the way we shop.
Consumers today expect the world around them to respond to their needs and wants with the same convenience, proactiveness and intelligence that digital channels offer. Unfortunately, “the store” has not fundamentally changed since the industrial revolution and must adapt to the changing tide quickly (as some retailers are trying). Customers demand and expect a seamless experience when interacting with a brand.
Increasingly so, consumers now perceive a “shopping trip” to be a dissonant experience, a chore that does not resonate with their expectations. The online channel has provided a convenient alternative, yet is void of experience and, by its nature, emotionally disconnected. The online experience will certainly continue to evolve, luring more and more customers in that direction. If so, is the retail store as we once knew it now “dead”?
The answer in the long term is an emphatic yes. The brick and mortar experience has to evolve and adapt quickly, or else. We prefer to enrich ourselves with delightful life enhancing experiences and will continue to do so since we’re wired for it. So, how will the store evolve and what can we expect the next phase of retail evolution to be?
The “store” today has yet to capitalize on the three differentiating elements that distinguish it from the digital shopping experience.
1. The store can deliver an immersive experience, one that engages all the senses.
2. The store allows customers to try, test and experience the goods.
3. And lastly, the store has the opportunity to evolve the current service models to the next level, connecting with customers in a deeper, more personal way.
It is simple and perhaps obvious: “going shopping” at the store level has to be fundamentally different than “going shopping” online.
The next 5-10 years will continue to revolutionize how we shop, and hopefully, we will be able to reset retailers to sell their goods and services based on evolving customer needs versus the traditional model where goods are organized by purchasing categories and internal business practices. Perhaps a topic for another conversation.