Think retail is dead? Then it’s time to think again as new IHL Group research reveals U.S. retailers are opening 4,080 more stores this year than they are closing and they’re planning to launch 5,500 next year.
The research report, Debunking the Retail Apocalypse, polled over 1,800 retail chains with more than 50 U.S. stores in 10 retail vertical segments and found that for every chain with a net closing of stores, 2.7 companies are showing a net increase in store locations this year.
Essentially there is no ‘retail apocalypse’ taking place given that 42 percent of retailers have a net increase in stores, 15 percent don’t and 43 percent are reporting no change. The data also reveals the three fastest growing core retail segments: off-price and dollar stores, convenience stores and grocery retailers.
The report was underwritten by AT&T, Cayan, Fujitsu, Aptos, Level 10, Adspace and Veras Retail. Another big nugget from the data is that retailers focused on customer experience, as well as investing in better associate training and IT systems integration, will continue to succeed.
Retail Customer Experience reached out to Michael Colaneri, AT&T’s VP global business enterprise solutions, retail, to get his take on the research results and his unique insight on retail customer experience trends.
Retail Customer Experience: Let’s start with a little background on the study. Is this the first one on the topic, what prompted the study and who was polled?
Michael Colaneri: In the first half of 2017, the news media reported doom and gloom for all retail. Breaking news focused on massive store closings possibly misrepresenting an apocalypse of traditional retail. Looking at the revenue growth and overall industry store location growth in retail we uncovered the retailers most affected were in department store and apparel sub-segments, with the largest impact coming from a very small few Brands closing their businesses altogether. The latter were outliers skewing the overall industry perspective. This prompted us to study and uncover what successful retailers are doing with technology to increase consumer engagement and to remain relevant. The study is a comprehensive view of chain retailers that have over 50 locations. The study includes retailers from the following segments: grocery, convenient store, department store, superstore/warehouse retailers, drugstore/cosmetics, mass merchants, specialty retail, fast food and bar/fast casual dining with a look at several factors influencing both the state of the industry and what the leading indicators suggest as the truth about the state of retail as an industry.
RCE: A big point in the study is how customer experience, investing in better training of associates and integrating IT systems across channels are key to retail success. Is one more critical than the other or is it a best practice approach to focus on all three?
Colaneri: Best approach is to invest in all — knowledgeable associates armed with technology are critical in today’s retail/brick and mortar formats. Consumers are both proficient with and expectant of digital engagement. Those retailers armed with real time access to CRM databases and customer product, payment, and shipping preferences at the mobile point of sale will improve customer experience and engagement, positively impact conversion, gather greater insights on key/relevant demographics and merchandise while reducing employee turnover and more prudently prioritizing expenses.
RCE: Which one of those three do you believe retailers likely have the biggest challenge with?
Colaneri: The study suggests that the biggest challenge for retailers is balancing the expense of technology as they pivot to a more digital architecture. Building the right foundational systems enables retailers to build consumer engagement capabilities and gather data they can analyze for greater insights on footprint planograms, engagement capabilities, streamlined operational efficiency, and the integration of inventory management across all channels. One view of inventory regardless of location (the “endless isle”), connected associates, and a fully integrated supply chain can increase a retailer’s ability to impact revenues and share. Determining where and how much to invest in technology is the greater overall challenge and the answer for each retailer depends on where they are located in their individual transformation journey.
RCE: The study also mentions the critical role of digital signage. Why is that gaining greater importance and what is typically preventing retailers from embracing such technology?
Colaneri: One of the most common opportunities our retail clients ask us to help solve surrounds generating in-store traffic, reaching new customers, creating deeper consumer engagement, and capturing data. Digital signage is a growing solution to this opportunity since returns are being measured positively across several metrics. The absence of experience with the media or its benefits may have certain retailers viewing digital signage as a new cost center versus an engaging, revenue generating, and data analytics gathering value proposition. Signage can be developed in a variety of formats targeting 1:many (brand positioning and promotional incentives), 1:some (interactive and customizable where consumers share preferences in exchange for group targeted media) or even 1:1 platforms (specific, interactive, highly engaging personalized media). All three allow for data capture that can be synthesized for greater insights that enable more productive buying, merchandising, consumer engagement, and cost management. Digital menu boards, as an example of 1:many, have hit the market with tremendous momentum proving impacts to increased sales and engagement based on controllable static content delivery with flexible mobile interactivity. The future of digital signage will be fascinating to watch as voice and gesture recognition capabilities become more prevalent taking the medium to new levels of engagement as consumer expectation for digital continues to increase.
RCE: The advent or arrival of IoT brings great promis. What do you see as its biggest value point for the retailer striving to boost customer experience?
Colaneri: There are two business cases retailers most often ask about where IOT solutions can advance digital: Associate productivity relative to sales and operational efficiency. Retailers are looking to increase the value of and time associates spend transacting with consumers and they are looking to automate retail environments so that Associates are free to spend the majority of their time facing consumers. With smart shelving, connected coolers, and mobile associates (connected to the operation’s POS and inventory) retailers are finding relatively low-cost technology can enhance their top line objectives and boost consumer experience.
Posted with permission from www.RetailCustomerExperience.com
Photo Credit: iStockPhoto.com
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