E-commerce Retail Strategies: Retailers Adapt to New Playing Field
E-commerce has been a game changer for brick-and-mortar retail stores. The rapid growth in online and increasingly mobile shopping is pushing traditional retailers to innovate and implement new e-commerce retail strategies in order to not just survive, but thrive.
The good news is that, despite a surge in store closings, the retail sector is very much alive and well. Healthy consumer spending is boosting total retail sales at a rate of about 4.5 percent per year, according to the U.S. Census Bureau. What is changing is how and where people are choosing to shop. That shift has sent retailers scrambling to figure out new e-commerce strategies as they compete in a retail arena where e-commerce is consuming a bigger piece of the pie.
Retailers ranging from Walmart to the local hardware store recognize that the line between offline and online retailing is blurring and they have to have a foot, or at least a toe, in both worlds. Even e-commerce giant Amazon has taken a tentative step into the brick-and-mortar universe. The company recently opened its seventh book store in New York City and is planning to open six more U.S. locations this year, according to Business Insider.
Embracing New Technology
Traditional retailers are introducing new e-commerce retail strategies that help them to better compete in the omnichannel environment. They recognize the need to give customers a convenient shopping experience when and where they want it, whether that is in a physical store or online from a computer or mobile device. In fact, consumers spent $10.2 billion online last year while actually standing in physical stores using their own mobile devices or an in-store kiosk, according to Colliers International.
Traditional retailers are already well down the path of creating effective e-commerce retail strategies with their own e-commerce sites, shopping apps and social media marketing that drives traffic to websites and physical stores.
They are learning a thing or two from e-commerce competitors on tracking online browsing history and zeroing in on potential customers with targeted advertising based on zip codes and shopping history. Retailers also are bringing more technology into stores, both in back-of-the-house operations, such as inventory tracking and point-of-sale systems, as well as tech that can enhance the customer experience.
Retailers are experimenting with a variety of in-store tech. In fact, Inc. highlighted retail as one of the most promising sectors for tech startups in 2017. Many sales associates are now equipped with mobile devices that can do everything from conducting a transaction on the shop floor to searching available inventory. Customers can scan product bar codes to their smartphone to access discounts. In-store sensors help to gather data on everything from foot traffic to how customers are moving within a store or what displays capture the most attention.
Retailers also are using interactive tech to engage with customers. Customers can use touch screens to custom design everything from eyewear to wedding rings. For example, beauty retailer Sephora even has a "Fragrance IQ" kiosk to help customers shop for perfume. And traditional signage is being replaced with digital LED screens and video images.
Creating an Experience
Retailers may be rethinking the size, location and number of stores, but a store presence remains a critical part of operations. E-commerce growth has been outpacing growth among physical retail stores. However, stores continue to capture the vast majority of retail dollars. Physical stores generated 90.8 percent of all retail sales in 2016 with online sales accounting for just 9.2 percent. And the forecast makes it clear that stores will remain a dominant force with online sales projected to grow to a modest 13.3 percent in 2021, according to Colliers.
Brick-and-mortar retailers are making the most of their strengths — store locations that allow customers a full sensory experience to touch, smell, hear and taste. Shoppers can try on clothes, sample products and ask questions. But retailers also recognize that "old school" methods of stocking merchandise on shelves and parking a sales associate at a central checkout no longer work. Customers frequently complain about stores that are boring and hard to navigate. As a result, retailers are changing the store experience to give shoppers more of what they want, whether that is the convenience of speedy self-check-outs or an engaging in-store experience. Increasingly, stores are hosting everything from cooking demonstrations and yoga classes to in-store pop-ups showcasing local artists.
The challenge for today's retailers is how to balance e-commerce retail strategies — the cost of investing in a store experience, social media advertising and other technology — with the return on investment. There is no one-size-fits-all e-commerce retail strategy. Solutions vary widely by the size and resources available to the retailer, as well as the type of produc t a retailer is selling. Ultimately, the answer should lie with what resonates best with that target customer.