Brick-and-mortar retailers aren’t going gently into that good night as online competitors continue to make gains, a new report found.
To fight what CB Insights calls the “retail apocalypse,” or the recent decline of traditional retail in malls because of the rise of e-commerce, retailers are embracing new technology, partnering with startups and reformatting their stores to attract and serve customers, according to its “Surviving the Retail Apocalypse” report released last week.
In 2017, almost 7,000 brick-and-mortar brands, including Sports Authority and Toys R Us, closed in the United States. Still, some retailers are growing. For instance, Target plans to open 35 stores in 2018, while Dollar General plans to add 900 to its 14,000 existing locations. Many of the successful retailers fall across the home goods, grocery, discount and fast fashion categories, and all of them are using pricing, product and operations, and customer experience strategies to remain competitive.
One reason that discount retailers such as Target and Dollar General are thriving is the widening income gap in the country. But innovative uses of technology are also coming into play. For instance, grocery store Kroger is using digital pricing technology called the Kroger Edge in 200 of its stores. Using that, the stores can instantly change prices or offer promotions without having to retag and relabel everything in the store, the report said.
Startup companies are helping retailers optimize pricing through artificial intelligence, or AI, and the Internet of Things, or IoT. Shelfbucks, for instance, uses IoT sensors to track the success of in-store pricing.
In terms of streamlining products and operations, many retailers are increasingly developing private labels to help build brand loyalty, CB Insights analyst Natan Reddy said in a web presentation about the report. Think of Target and its Market Pantry food label and Cat & Jack children’s clothing line, for instance.
Other retailers are streamlining their supply chains to get products out quickly. Clothing store Zara, which caters to changing fashion trends, can take a product from design to rack in 25 days, Reddy said. What’s more, they make a limited supply so they can quickly pivot style. That also reduces the risk involved in making a lot of something that doesn’t sell well, he added.
Startups here aim to help retailers, too. France-based Vekia uses an AI-powered platform to provide inventory and logistics optimization. Additionally, retailers are upping their game with their delivery capabilities, especially following Amazon’s acquisition of Whole Foods. Walmart acquired a digital startup called Parcel to help with same-day and last-mile deliveries. Still, Walmart’s growth slowed recently, which Reddy said was likely a result of its inability to manage the flow of products during the holiday season, particularly against Amazon, a major competitor.
Lastly, retailers are trying to elevate in-store customer experiences. For instance, a New York City Nike store has a basketball court and treadmill. Cameras record customers’ use of those so that staff can provide expert advice on the best footwear and apparel to suit their needs and up their game. Apple stores led the way in creating not just shopping space but also a gathering place free of cash registers and long lines, Reddy said.
Technology has a role here, too. Cosmetics giant Sephora partnered with ModiFace to let people “try on” makeup using an app before they buy it.