Wednesday, May 6, 2015

Retail vs Online?

Borders group, a company that used to operate more than 500 book stores in the US and 150 in Australia and Singapore closed all it’s retail outlets abruptly in 2011, resulting in thousands of job losses.  The longest serving manager with this company affixed a sign to the store, before closing down it’s doors for the last time, stating “Thank you for shopping at Amazon”, clearly blaming the relatively young online giant for taking this company and many others out of business. 

In the last few years many more retail outlets continue to close down or at least loose business to online competitors.

This trend, as expected, started to affect Maltese businesses as well.  During 2014, Malta registered the third largest registered retail sale drop in the EU.  In fact a couple of months ago GRTU published it’s end of year report and stated 24% of businesses are blaming online shopping directly as the main reason they are suffering a decrease in trade levels.
In reality most retail outlets themselves in Malta are probably to blame for their own loss of business because they failed to move ahead with the changing times.  No longer can someone expect customers to buy anything placed in the front display, businessmen have to start promoting and delivering a modern shopping experience that potential customers are seeking.  The customer service in most stores in Malta, just like in Europe, has remained the same when compared to the mid eighties.  One would go in to a store, browse a couple of items, perhaps a sales person might come and ask if you need help with anything, practically no innovation in 30 years, whilst if we had to compare this to the evolution in online shopping from it’s inception in the mid-nineties, today it’s light years ahead, with suggestions, peer and independent review of products, online chekouts and same day deliveries evolving in an online shopping experience that awes even the most technology savvy amongst us.
Most consumers complain that their experience with retail shop outlets is sometimes stressfull due to parking, confusing store layouts and uninformed or a dismissive attitude by staff.  The only advantages that retail outlets enjoy over their online competitors is when consumers are not willing to wait for a product or when they are unsure about the color, size or are not sure about how an item, most probably a piece of clothing, will fit on them.
There are various steps that retail stores can take to fight back though, shopping has to be about entertainment and not just about acquisition.  Some compulsive buyers aren’t able to buy online because they have to see and feel whatever it is they are buying therefore store owners should use this concept as leverage and become more shopper ‘centric’.
The best example of a shopper-centric store, which is not only experiencing more sales but also expanding faster than it’s online counterpart is the Apple store.  Shopping at an Apple store has been described as a unique experience, as staff are extremely knowledgable and passionate about the items they are selling, they allow you to test and try out their products and offer advise on the best gadget to buy without any pressure sales tactics or trying to upsell anything.  After-sales service at the Apple store is no comparison with anything we have come to experience in Malta, you won’t be asked for a receipt or proof of purchase and if you ask for a refund you will be given one in cash, no questions asked and not just a token.  Employees in the Apple Store also ask potential customers to check independent online reviews before they purchase anything and also encourage them to check online and if they find the same item cheaper they usually match the price.
Retail store owners have to start redesigning the shopping experience, realise we are living in a technology oriented world and start meeting customer expectations if they want to survive.  Retailers should start integrating their products being offered in their physical shops with their online presence.  It is somewhat embarassing to have an outdated website showing a photo of the shop’s facade, a proper online presence should at a minimum include an updated list of items currently in stock, allow reviews and integrate with social media coherently.   A trend which is catching up fast worldwide, is the option to buy online and then decide to pick them at a nearby store.  This is not only faster than the post but also more convenient and cheaper as no delivery charges are incurred, whilst at the same time attracting more people in the store to see other items, unfortunately only a handful of Maltese stores are offering this.
Retail shops may introduce some more technological innovation in their stores, hangers with electronic displays showing updated prices, avoiding the embarassement of having a difficult price tag than what the barcode scanner reads at the checkout, and Facebook likes for each item are now becoming a reality, but yet to be seen anywhere in Malta.  Once again in Malta, most in-store TVs are either permanently set on MTV or VH1 showing music videos when such space may be better utilized by installing touchscreens which consumers could use themselves to find an item location, request an item from the stores which is not available on the shelves or check if an item will be available in the near future.
Engaging with consumers need not be creepy or invasive with salespeople rushing in as soon as a potential customer enters a store.  Practically everyone owns a smart phone nowadays, so why not engage with consumers by sending messages, offers and brand information to mobile phones as soon as they enter a retail store.  This relatively low cost solution, known as beacon marketing is gaining traction in the United States and helping drive sales up but is still not popular in Europe.  The smart phone can also be used to make payments without the use of any banking cards or cash and most of the time such solutions are faster and hassle free.

Altough the retail store might be loosing the war against online competition, it is far from dead especially when one considers that recently the online giant Amazon’s CEO stated that they are studying the possibility of investing in real brick and mortar ‘showrooms’ to compliment their online presence.  Therefore, businessmen open your eyes and stop looking at technology and the internet as the enemy, but rather embrace them as the solution to your problems.


Original article:

Notice: Article was originally published on the Sunday Times of Malta, Business & Insurance Supplement, May 6th 2015.  Written by Ian Vella.  Article is being republished here only for information purposes and copyright is shared between the author and editor therefore republication is not allowed unless written consent is obtained by all parties.

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