The demise of the brick-and-mortar store has been greatly exaggerated, with retailers expected to open as many as 1,300 net new stores in 2017. But retailers seeking to stay in consumers’ good graces must understand three trends that should shape their store strategies in 2017 and beyond, according to Retail Systems Research (RSR):
Store associate training must be a priority;
Even retail winners rely too much on price as a differentiator; and
A “good” in-store experienceshould include changing store layouts, in-store community and more VIP-specific promotions.
This article features exclusive insights from Steve Rowen, Managing Partner at RSR, who digs deeper into the research results and how retailers can pivot to secure a strong future.
1. Retailers Still Don’t Pay Enough Attention To The Role Of In-Store Employees
Employee training efforts, particularly for existing store associates, aren’t where they should be. More than half (52%) of retailers say they would spend less than ten hours per year engaging existing store associates in any kind of training. These employees are the people on the front lines, expected to engage with customers and give them a reason to stay in the store.
Other store personnel fare better when it comes to training: those receiving at least 11 hours of training per year include new store associates (63%), assistant managers (67%) and managers (72%).
Lagging retailers — those defined by RSR as merchants with comparable store/channel sales growth below 4.5% — have frankly done the worst job of getting these employees up to speed, and training plays a major role in that. In fact, none of the laggards provide even 30 hours of training to both new and existing store associates per year; 62% provide less than 10 hours per year on associate training.
“The truth is, it’s the first job a lot of us have, and it’s not compelling enough for us to stick around in,” said Rowen in an interview with Retail TouchPoints. “That tells you everything you need to know about how retailers treat their employees. In a lot of ways, that’s benefitted retailers over the last 100 years. They don’t have people with 30 years of experience that are driving a much higher salary. As a result, you get what you pay for. They often don’t have the same level of education a consumer does…not by a country mile.”
The top opportunities for retailers looking to improve the in-store experience are heavily employee-centric, making these training processes even more important. The top four opportunities, as defined by retailers, include:
Educating and empowering associates using technologies (54%);
More personalized attention from employees (46%);
Focusing on a more convenient customer experience (45%); and
Finding ways to make their employees more productive (45%).
“Unless you’re a retailer that takes the time to make your employees valuable, both in compensation and the way you treat them, nurture them and build their careers, the trend of ‘No thanks, I’ll just check my phone’ is going to continue more and more,” Rowen noted. “It’s not a simple answer, but associates need to be seen as an ambassador of your brand, and someone that has the ability to make or break a customer relationship.”
2. Despite Success, Retail Winners Can Still Address Business Challenges Better
Retail winners (50%) — merchants with comparable store/channel sales growth above 4.5% — analyze the need for consistent in-store execution more often than their peers (35%). Despite their improved self-awareness, they are still susceptible to disappointing store experiences.
For example, 50% of retail winners cite consumer price sensitivity as a top business challenge. That’s better than the 61% of their peers who do so, but even the retail winners believe that price is the chief rationale behind all consumer shopping habits, which often prevents them from focusing on improving their value proposition elsewhere.
“It’s just conditioned behavior,” Rowen noted. “That’s the way they’ve perceived the world for a long time. When you ask customers now, ‘What matters most?’ price is high, but it’s not the only thing that matters to them. The ability to trust ratings and reviews from other consumers is big, and it matters just as much as price. So does the ability for the sale to be conducted speedily. Shoppers think they’re in a hurry, and whether they really are or not, it doesn’t matter.”
And only 35% of retailer winners are concerned about rising minimum wage pressures. While that figure is double that of their peers (17%), these numbers remain low overall, which is problematic at a time when the issue is often in the public eye.
3. New Perspectives On Great Store Experiences
Retailers struggle to define what makes for a good in-store experience, and also what roles technology should play within it. Merchants have recognized that hiring better quality employees (68%) is far more important than self-service (26%) or in-store robots (11%). But the research indicated that there was a “disappointing” lack of emphasis on changing store layouts (34%), integrating stores into the community more via local events (35%), or even providing more VIP-specific promotions (38%).
“Unless you are killing it in stores — and there are a few retailers who are — and you’re 100% confident that you’re doing everything you possibly can to lure customers away from online and into your doors…I think you need to understand that the way you’ve always done things doesn’t work anymore,” said Rowen. “It seems to be a pervasive school of thought: ‘Maybe we’ll throw a tablet at it, or maybe we’ll roll in a kiosk.’ That doesn’t work. We’re talking about reaffirming why your stores have a right to exist. If you can’t answer that question, the customer’s not going to be able to answer it.”
Although retailer responses are comparable on issues such as hiring better talent and rolling out technology in-store, the report noted a difference between retail winners and the rest of the industry in two areas: catering to their best customers, and becoming part of the fabric of their communities.
For example, 32% of retail winners are likely to host more community events in store, compared to 27% of all other respondents. And 32% of retail winners are likely to include VIP-specific promotions in their stores, double the 16% of all other respondents.
The combination of these two initiatives could make for a true differentiator. Retailers should bring their VIP customers into the store for an event that will interest them and offer special promotions along with valuable content.
When it comes to technology, the objective should be to make the store more interesting, and not impede in-store activity. Top in-store technology opportunities include:
Making the store more fun and easier for customers (50%);
Maintaining and/or improving the customer experience (48%);
Bringing more of the digital experience into stores (42%); and
Reacting quickly to changes in the business environment (39%).
“Pick a store in a market where it’s screaming for change, and tinker with it,” Rowen said. “Do something different from what you’re doing and measure it. See how it plays out. If you find that it is working out and a huge investment isn’t required, roll it to another one.”
RSR Managing Partners Paula Rosenblum and Steve Rowen authored the research report, titled: The Retail Store In 2017: The Change Imperative.