01 Sep True Value of the Store
The British Retail Consortium/KPMG recently announced that total sales among its members, who include supermarkets and high-street chains, performed well over the last few months with May seeing an increase of 10.0% and July over 6% which is higher than two years ago.
The adverse weather in May and the glorious weather in June failed to dampen consumer demand and shoppers continued to return to the high street.
Consumers appeared to have a degree of pent-up shopping angst which they released by getting out of home and into retail stores to spend their hard-earned cash reserves. But why didn’t they spend that money online during lockdown? Could it be that people actually enjoy the physical shopping experience more than the online experience?
It’s estimated that e-commerce sales make up 15.5% of retail sales worldwide. This means that the vast majority of sales are still completed in physical stores. So bricks and mortar retail isn’t quite dead yet. It’s just changing. It’s evolving. And so, the role of the store is transforming as consumers habits shift accordingly.
So what is the true value of the store in the context of today’s retail brands?
There is a tremendous value that a store brings. It’s marketing. It’s customer acquisition. It’s a point of engagement. It’s brand building and connectivity.
Brands need to stop thinking about the store as simply a place to conduct transactions. They must embrace the transformation of the store from a place to buy to a place to experience and measure the real value of customer experiences in the same way that they measure the value of sales.
A store is valued for the role it plays in the omnichannel transactional relationship between a brand and consumer. The store’s worth is based on its ability to deliver an engaged footfall, to connect the brand with the consumer, and to unlock consumer spend.
Of course, the value of store turnover should be a consideration in measuring it’s value, but retailers also need to recognise the role of the store in influencing online behaviours and the quality of footfall or online impressions it can deliver.
Why not measure the quality of the footfall alongside the volume of footfall? Measure the conversion rate and the average spend per customer. Measure the number of customer service interactions that each store performs which will inform the role of the store in the customer journey for that particular geography. How many click and collect customers use each store and can the NPS score per store be measured so that store staff can be better trained to improve customer experience.
Surely the best way to compete with pure-play online retailers is to figure out how to build long-term relationships with customers by providing excellent customer service. Customers enjoy a sense of familiarity. Being addressed by their first name, enjoying a friendly interaction with sales staff, receiving personalised service and feeling that their needs are being met are all ways to keep customers coming back.
This all points towards the continuing evolution of bricks and clicks. We must integrate the channels and understand the rising importance of pre and post-purchase interaction. Store managers need to understand the evolving role of the store as a customer acquisition point and rethink the store as experience points to acquire customers online and offline.