Downsizing does not mean death to brick-and-mortar

Retailers cannot downsize and find profitability without fixing the fundamentals.

E.Y. Snowden, CEO of One Door, a provider of cloud-based merchandising execution software for retailers, believes store closings do not have to be a death sentence for retail. 

E.Y. Snowden

While e-commerce’s growth has put an unfortunate strain on physical locations, retailers cannot downsize and find profitability without fixing the fundamentals. In fact, Snowden says that real transformation requires investments in automation that enable stores to respond quickly to market trends, provide optimized products and promotions for each location, and simplify the associate experience. 

“Done right, this helps retailers succeed by creating immersive, memorable in-store experiences that online cannot match,” Snowden said. 

FierceRetail spoke with Snowden to get more insight into what brick-and-mortar retailers can do to succeed in the face of the changing market. 

FierceRetail: For all of the brick-and-mortar stores that are shuttering, what are they doing wrong?

E.Y. Snowden: Retailers can’t shrink their way to profitability in the face of changing market and consumer demands. Many brick-and-mortar stores are missing the opportunity to improve the merchandising execution fundamentals that create memorable in-store experiences their customers crave. More sophisticated assortments and a higher frequency of in-store promotions drive sales. Retailers need to refocus their digital investment, moving away from attempts to copy online business through e-commerce silos and toward a balanced technology investment strategy that recognizes brick-and-mortar stores as a critical part of the omnichannel experience. 

FR: What are the fundamentals that retailers need in 2017 in order to survive?

EYS: The biggest challenge retailers face is that the retail supply chain is extremely complex compared to other industries that sell services versus physical goods, yet retailers must transform their supply chain practices to meet the demand of customer preferences and remain fresh. One way to do this is to think about supply chains from the store inward as opposed to the procurement process outward. When you take that view, you realize quickly that retailers need to increase their investment in stores; including technology, processes, and headquarters-to-store communication. In many cases retailers have invested heavily in core supply chain technology, only to have any possible business improvement wiped out by failures in store.

FR: What role does technology play in the future of retail? What should retailers be investing in?

EYS: Real retail transformation requires investing in automation that enables stores to respond quickly to market trends, provide optimized products and promotions for each location, and simplify the associate experience. Specifically, retailers should invest in technologies that move store communications away from email, localize merchandising directives and simplify resets for associates, to get them back on the floor to interact with customers and sell. With the right technologies, retailers will succeed by creating immersive, memorable in-store experiences that online cannot match. 

FR: What role does data play in new retail?

EYS: New retail runs on data. From POS insights, to data on merchandising compliance and mobile, visual merchandisers in particular need to look at their numbers consistently to provide localized merchandising directives and personalize assortments for their stores. There is no room in new retail for data silos. From HQ to store floor, retailers must not only share, but combine their data to drive performance at the shelf. 

FR: Can you give an example of a retailer that is already giving memorable in-store experiences?

EYS: There is a reason why Apple is consistently mentioned among successful retailers. The key is in-store customer experience, from localized assortments of device accessories to the Genius Bar of technical support gurus. Nontraditional retailers like Starbucks are also creating value by designing ways to grow customers’ basket size. It’s by design that you crave a snack while you wait in line for your next latte. Finally, you have Digitally Native Vertical Brands (DNVBs), like Bonobos and Warby Parker, who are opening stores because they know they need them to perpetuate lasting brand experiences. This is a trend that we expect to grow in the next 3-to-5 years.  

FR: What will brick and mortar look like in 2020?

EYS: As we head into the next stage of retailing, we expect brick-and-mortar stores to be more lifestyle-focused, with an emphasis on providing the convenience of online with the hands-on, personalized approach of the in-store purchase. We also expect brick-and-mortar to remain an integral part of the retail customer journey. Today, almost 90% of consumer purchases still take place in store, and when you analyze the customer journey of e-commerce purchasers you realize that an incredibly high percentage visit the store at some point. Forward-looking retailers are finding ways to innovate and adapt by creating new formats, forming closer relationships with vendors, and leveraging digital capabilities like AR/VR to blend online and in-store experiences. 

FR: What else can you tell us about the changing face of retail?

EYS: Retailers and consumers alike should recognize that the death of a specific format does not inherently mean the death of retail altogether. Many of today’s closings are directly linked to the waning popularity of the late 1950s through the 1970s indoor mall format. Changing consumer demographics and preferences are killing this format, but at the same time open, outdoor mall spaces are growing in popularity. Similarly, while department store formats are struggling, the more localized, personalized stores are continuing to see sales rise.