Sharing The Pie With On-line Retailers

Read this if you struggle to compete against on-line retailers or even vendors.

The largest shopping center in the world exists mere inches away from your customer’s fingertips. Though online purchases account for a growing percentage of retail sales, “about 80% of consumers still want to browse and shop in-store” according to The Wall Street Journal(WSJ) in a piece datelined December 30, 2016. While the number of folks who have never purchased anything on line has dwindled over the past five years, Kantar Retail ShopperScape reports that “roughly 22 million households didn’t use [Amazon] in 2016”. Research has also found that online purchases have a return rate of nearly triple the in-store purchase return rate. All that said, the upside potential for brick-and-mortar shopping is pretty bright so long as you keep in mind what you are dealing with.

My Italian friends often say, “Keep your friends close and your enemies closer”. That advice couldn’t be more true when dealing with online retail. Let’s explore some of the many things that can be done to compete effectively with online sellers.

Perhaps two of the more compelling reasons to shop in-store vs. online is 1) the in-store experience and 2) the personal interaction. Let’s deal with the in-store experience first.

Gone are the days of simply putting goods on display, unlocking the front door and ringing up annual increases. If this is your current merchandising and marketing strategy you are undoubtedly going to have a difficult time thriving — and perhaps not even surviving — in today’s fast-paced retail world. Customers today demand an experience. This can be everything from tastings for a wine shop or trunk shows for an apparel or shoe retailer, to product demonstrations and clinics for an outdoor or sporting goods operation. Authors can speak at book stores; artisans might discuss their work at gift shops. The point is that whatever you are selling, it is imperative to create excitement for your product and a connection with your customers through the in-store shopping experience. Remember, the “sizzle7quot; is just as important as the steak-everyone has steak!

Next, let’s review the personal interaction with another human does. It doesn’t — and can’t — happen on line. People buy from people they like. Keep that in mind when you are interviewing sales associates. Do you like them? Are they friendly and outgoing? Are they effective communicators? Do NOT put someone on the selling floor simply to have a warm body there. It’s simply too expensive these days.

The more sensory the experience, the more spontaneous the buying. Don’t believe me? Walk through a Costco store on a Saturday and see how many product samplings you are offered. Even the most disciplined shopper among us has fallen prey to this marketing tactic. Some gift and home stores I am familiar with burn scented candles in the store. This hands-on approach of seeing, touching, tasting, smelling, even trying a product gives the brick-and-mortar retailer a huge advantage over the online competitor. Car dealers are masters at promoting not only through the senses, but also by using emotional appeals. The experience begins with your visual attraction to the sleek lines, then on to the new-car smell. The next level is how you feel sitting in the driver’s seat. Then finally the test drive with the salesperson’s appeal that “you deserve this car” or “this baby could be sitting in your garage tonight”. Once you have succumbed to the power of this sensory and emotional maneuvering, you’re an owner. All that’s left to do is the paperwork.

That example, translated from car buying, suggests that you become the local expert in your industry. I work with an outdoor store whose motto is “Ask Us-We’ve Been There”. Whether camping, hiking, boating, climbing, or back-packing, this store hires local experts who relate to what the customer is going to be using the product for. Think about it: Would you rather buy a pair of running shoes from someone who hasn’t run a mile in their life, or from someone who goes for a daily run before or after work?

When it comes to pricing, brick-and mortar retailers should know the online prices for the products and/or services you are selling. Unfortunately, these days, this includes shopping not only other online retail sites, but also many vendor sites, since they often sell directly to your customers. You must at least consider offering on-the-spot price matching whenever possible, and free shipping when it is economically feasible.

The idea that all shoppers will justify paying more to support a local retail establishment is indeed a noble intent. However, I don’t believe it is sustainable over the long term. About 80% of adults today have either a smartphone or some sort of access to the internet. Today’s shopper knows what the prices are going to be and probably has done some homework prior to even coming in your store. When you can, post current online prices when you can next to certain items. Why not encourage your customers to do online comparisons? They’re going to do it anyway. We all do! This is not a suggestion that you seek out and post the lowest price possible; instead, it is a way to show your customers that your prices are reasonable and include the cost of knowledgeable and expert service, which cannot be provided online.

Traditional retailers also have another advantage over e-commerce only merchants. It is the opportunity to make another sale when merchandise comes back — as it does nearly 30% of the time for online-only retailers. Use this to your advantage; you might even go so far as to stick a $5 coupon in the bag off the next trip to the store, just to counter any perceived inconvenience a customer experiences in making a return.

One more advantage: You can give the customers a —new— experience every time they visit you. Don’t forget to keep the merchandise fresh and exciting. Change the window and in-store displays weekly and rotate current inventory on end caps. Above all else, manage your open-to-buy (OTB) and especially the inventory on-order. You always want to have a constant flow of merchandise landing in the store – new looks and products to excite and delight your customers. Remember: Nobody comes into your store to see what came in last year!

Posted in General Management Practices.