The future of retail box stores has to change yesterday but…
…some industry professionals are stuck in obsolete
As I pulled up to my driveway this evening, a host on NPR was finishing up the last of two interviews with professionals who specialize in designing retail stores of the future. I was so intrigued in what they were not saying that I lingered in my car with the radio on. Surely a look in the review mirror would have found my eyes rolling around and maybe even a mouth agape. Two specialists that work on new retail store development were describing stores of the future that were obsolete today. There was not one solutions focused on helping box retail stores compete with online shopping trends.
Planning for the obsolete retail stores of tomorrow, today
If these two professionals are indicative of the brains behind new store designs, brick and mortar retailers will be building stores that are broken before doors to new stores open. Both were stuck on mood, atmosphere and a bit of today’s technology yet implemented. I was to take one part of the conversation to task, it was the mention of customized dressing rooms. The first interview specifically mentioned dressing rooms where you could plug-in your iPhone and turn on some mood lighting. The second interview also mentioned store mood lighting that the host compared to what casinos have been doing for decades. That segment did touch upon relevant tools for the modern retailer such as the store recognizing a customer in the parking lot. GPS enabled phones make this a realistic part of today’s shopping experience. A retail store could entice you to have an app that would use a GPS enabled phone to begin a personal shopping experience. In other words a store could welcome you as you entered with “HAL”, “Welcome Dave, be sure to use your store reward today!”
Today’s shoppers have much better real-time price shopping tools
What I did not hear was anything that would really help retail box stores compete with online shopping. Having had 25 years of working in CE, i.e. consumer electronics, I enjoyed a time when there was no competition on another corner and MSRP plus 20% what we put on the price tags (Pacific Stereo 1984). Twenty-three years later at Ultimate Electronics (2007) it was routine to verify a commission-killing competitive price online and hope to accessorize the sale because the company demanded that I make up for margin lost due to price matching. Today with the proliferation of mobile devices with browsers, I expect that a similar shopping experience begins with a customer showing that competitive price on his or her phone and simply stating, “can you match this price?”, followed up with, “by the way, that includes tax and the shipping is free”, followed up with, “and please match the online extended warranty”. This phenomenon is not limited to just consumer electronics. Anything a box store sells faces price competition in real-time, including clothing!
Building new box stores on a pessimistic outlook of online retail trends
During the second interview on tonight’s NPR show the store designer stated that his company predicts box stores to drive 80% of the retail sales through 2015. That prediction is extremely optimistic. Furthermore that prediction suggests his company is planning to build in obsolescence, but make it prettier. I can’t imagine any scenario where online retailing doesn’t make big gains in sales, especially as mobile devices become the dominant way to access the Internet in the United States. For box retail to compete, they need to co-opt online retail strategies and react to the shift in consumer’s use of digital technology. Online retailers offer better prices in part because labor and inventory costs are shared. Lower labor costs, “just in time inventory” and manufacturer fulfillment are not typical to box retail stores. The box retailer of the future has to address the supply chain and labor costs while still providing the advantage of personal service. The dressing room of the future can be part of the solution. Especially if that dressing room integrates a “PDSA, the personal digital shopping assistant.
About that comfy dressing room the store designers on NPR envisioned…
Imagine this scenario. You are an upscale big box clothing store. Your advantages include personal service and good margin despite discounters selling the same name brands. Another one of your advantages is a robust selection of inventory whereas the discounter selling upscale apparel tends to have one of this and none of that in the right size. I’d suggest that if you build a larger, more comfortable dressing room where you can plug in your iPhone and push a button for a latte, sales will drop. Not only will the customer linger in your comfy dressing rooms, but they may be inclined to shop you online. There is a reason dressing rooms are small, bright, and uncomfortable, with benches are barely big enough for you to sit down. The retailer knows that dressing rooms don’t sell anything.
If you must make a comfy dressing room…
Call me a dreamer or just plain retail smart after spending 25+ years in big box stores. My idea of the modern dressing room adds digital intelligence over mood lighting, comfy seating and places to plug in. A smarter idea would be to keep dressing rooms small, but embed a large touch screen enable with a personal digital shopping assistant that would link to the registered customer automatically. A registered customer’s profile would include personalization with an optional head shot, body dimensions, (shoulder, waist, hip, weight, height and other personal aesthetics) that would allow creation of a digital mannikin. Digital tags on the clothing carried into the dressing room (that could double as shrinkage control devices), would automatically populate the “selection” area to allow the shopper to dress their digital mannikin by dragging and dropping clothes icons. The screen would also make suggestions based on the customers buying habits, fashion trends and product pushes. Think of paper dolls, but ramp it up to digital wire frame technology. The shopper in the dressing room could then “summon” additional selections to try on at the push on the screen. The customer could also pay and then give to the attendant to remove tags, bag and then send to the checkout so that shopping could continue.
Do you want to take that home today or…
The dressing room of the future will help close the door on price competition. In that dressing room with the interactive screen, once clothing is selected, a few things can happen. If the customer is not registered to the store, it should entice them to do so and can capture two bird with one net. A customer can register, customize a profile in the booth and get that store credit card at the same time. A first purchase reward for registration, that expires upon exiting the store, would incentivize “buy now”. Another path to reduce costs and offer competitive prices is through offering buying options. “Free Shipping AND Save 15% if you choose home delivery on the items chosen”. By offering more colors, bigger rewards and other incentives for buying online (while in the store), the retailer reduces cost by being able to warehouse inventory. The customer receives personal service and unlike the online shopping experience, still gets exposed to impulse buying opportunities. The dressing room will also seed impulsive sales which can magically appear at the door!
The personal digital shopping assistant advantage
The “PDSA” in the dressing room can also extend to digital kiosks on the main retail floor. Similar registration, clothes modeling and buying functions would offer a hybrid “online, while in the store” shopping experience. One advantage to offering digitally enhanced shopping kiosks enabled with the “PSDA” is that it would be fun, especially for families with children. The PDSA could reduce cash register lines by processing the sale. In all cases the PDSA would capture data that could be leverage to increase sales. Even better the digital shopping assistant could follow a shopper throughout the store and offer a final thank-you as they exit the store.
Pushing obsolete away incrementally
The goal of the smart dressing room and attendant personal digital shopping assistant is to stimulate offline sales in the retail box environment. Ideally the PDSA will be part of a modern, box retail shopping environment that increases store margins by reducing costs and helping customer buy more or “accessorize” every sale.