The following is reposted from eMarketer Retail
Why Do Digital Players Beat Brick-and-Mortar Retailers at Their Own Game?
Many of the biggest disruptors in brick-and-mortar retail are e-commerce brands that are opening physical stores—not the legacy retailers that have been in the space for years. eMarketer’s Tricia Carr spoke with Jim Cusson, president at retail branding agency Theory House, about why legacy retailers have had trouble catching up to these digital players, and what all retailers need to do to keep their stores relevant to shoppers.
eMarketer: What is the core challenge facing retailers today?
Jim Cusson: The retail landscape is undergoing historic change. Consolidation is sweeping the industry, and there are new players using technology innovation to reinvent the brick-and-mortar experience. The biggest challenge is that legacy retail models can’t evolve quickly enough. These retailers are facing urgent and sometimes complicated challenges, and they’re slow-moving.
People talk about brick-and-mortar retail being dead—that’s absolutely not the case. There are great brands innovating in retail. They’re drawing an audience and developing meaningful relationships with shoppers. But most of them are disruptors, and they’re new to the space.
eMarketer: What factors make stores more attractive than e-commerce to today’s shoppers?
Cusson: Try as they might, retailers have yet to crack the code on the online shopping experience. They can give you price, they can give you choice, but it’s difficult to have a meaningful experience in an online transaction.
The physicality of brick-and-mortar retail [is what sets it apart]. Some shoppers still crave the physical touch and discovery that happens in the store. There is also a social aspect of shopping that’s still relevant to today’s consumer.
eMarketer: For those legacy retailers, what opportunities are there to improve the in-store experience?
Cusson: There’s an opportunity to employ technology to reduce friction in the shopping experience. I shop at Nordstrom Rack, and there are times when it’s very crowded during sales. They arm their employees with iPads so they can check you out anywhere in the store. It makes the experience a lot more pleasant, and you don’t have to wait in line.
Another opportunity is focusing on experience. I wear glasses, and I have traditionally shopped at a national eyeglasses chain, but I have converted to Warby Parker. They use technology to speed up the process, and my experience in the store follows me online.
Here’s an online retailer who has made the shift to brick-and-mortar, and they’re doing it better than retailers who have been doing it for decades. Warby Parker feels like they’re trying to develop a genuine relationship with shoppers, and some of the legacy retailers haven’t embraced that.
eMarketer: What do retailers have to do in the long term to make sure their physical stores survive?
Cusson: The retailers that survive will be the ones that recognize incremental change isn’t good enough. It’s no surprise that Amazon introduced Amazon Go to disrupt brick-and-mortar. You’d think innovation at brick-and-mortar retail would come from brick-and-mortar retailers, but it’s coming from a pure online player. It’s fascinating to watch.
eMarketer: What’s your opinion on the Amazon Go store concept, which completely eliminates the checkout process?
Cusson: Amazon calls it the Just Walk Out Shopping experience—that’s absolutely disruptive. It takes all of the friction out of shopping. We talked about employing technology as a way to reduce friction, and Amazon has hit it out of the park.
eMarketer: Sam’s Club recently launched Scan & Go, letting customers scan items as they shop and pay via the app. Is this a step in the right direction?
Cusson: This is an example of a brick-and-mortar retailer doing incremental improvements. Handheld scanners have existed for the last 10 years in retail. Sam’s Club has basically transferred that technology to your smartphone. Is it an improvement? It is, but from our experience, we know most shoppers don’t want to take on the responsibility of scanning and checking out.
Amazon’s model is disruptive. Simply walk in, grab what you want, walk out and never have to interact with a sales associate or wait in line. They leapfrogged over existing technology, and that’s what it takes to be a leader in retail.
eMarketer: What do retailers need to do this year to make sure their physical stores remain relevant?
Cusson: Don’t be afraid to experiment. When you think about technology, let’s employ technology that the shopper actually desires and benefits from, and not something that just makes your POS [point-of-sale] system more efficient for you.
Focus on the experience. It’s the one lever you can pull over online, and it’s your strongest lever to pull. Online has variety, price and convenience. It’s difficult for any brick-and-mortar retailer to trump that, but the levers they can pull that are difficult to match online are experience, entertainment and education. That’s where they need to focus their attention.