While Minnesota business can trace its roots back to grain and railroads, and more recently the medical technology business, retail has always been and continues to be significant in the state’s economy. Home to businesses such as Best Buy, Maurices, Christopher & Banks, Gander Mountain, Supervalu and Target, changes in the retail environment send ripples throughout the state economy, which is why the changing nature of retail marketing matters to Minnesota.
Just a few years ago Best Buy became the poster child for a concept that is now part of the retail lexicon—showrooming—which doomsday shopping analysts predicted would be the demise of traditional brick-and-mortar retail. Everybody would go to stores to look at merchandise, only to go home and order online, where they could get lower prices.
Best Buy is still in business, and just when you think you can predict the shopping habits of the American consumer, unpredictability rears it head and behavioral evolution throws us a curve. Witness the spawning of a new phenomenon—reverse showrooming. So check out what you’re interested in online and get your best price, then go to Best Buy where they’ll match the price, talk to a customer service representative who will walk you through all the bells and whistles of the product, then take it home with you. Take that, Amazon.
Yet as online sales continue to increase (some projections have called for up to 30 percent of the total retail economy to be online by 2025), the billion-dollar question retailers are asking is what to do with all the real estate they have. Even though reverse showrooming may be happening, there’s still a lot of brick and mortar to deal with out there.
If you haven’t heard the term yet, you’ll be hearing it a lot if you’re in retail. It’s a concept that will transform traditional retail stores into spaces that create experiential marketing showrooms where consumers can have better, deeper experiences with brands, then simply click to make a purchase and either have the product shipped to their home or to the store. It’s embracing the store-as-showroom idea and turning it on its head by making it into an advantage that can’t be duplicated by an online-only shopping site.
Brick-and-click is about the transformation of the store into a physical location that primarily exists for purposes of making a transaction into a destination where consumers will go to have an experience with a brand.
While it’s not quite there yet, if you look at what the outdoor sports retailer Cabela’s does with its giant aquariums and museum-quality dioramas featuring big game trophies, you get an idea of where retail may be headed in the near future. You can also see the basic idea if you venture to the heart of Manhattan, where brands like Nike have created one-of-a-kind stores that offer more than just merchandise. And then there’s the store that may have been ahead of its time in creating experiential shopping, FAO Schwarz.
In London, the venerable brand Burberry has eliminated the traditional checkout area and instead has comfortable sofas where shoppers can relax while the customer service staffer takes care of their purchase on an iPad.
While stores are pondering how to create unique experiences for customers in-store, they had better be thinking about who’s going to be working in these new showrooms, because the role of the customer service employee is going to change. Not having to worry about stocking shelves and inventorying merchandise will allow staff to focus on customers—what a radical concept.
Technology will enable them to know more about the customer than ever before, which means they’ll be able to ask better questions, make better recommendations and—something coming sooner than you think—offer customized perks. So in addition to your store experience, customer service will be able to offer incentives and perks tailored to your preferences. Rather than the one-size-fits-all plans that typify rewards programs today, retailers will be able to customize what they offer and when, all of it aimed at making the brand experience better, increasing loyalty and ultimately sales.
It’s like the mash-up of algorithms online that makes recommendations and offers to us based on our online behavior, but delivered by a real human who can offer a personal touch, while answering questions, while pointing out the features, advantages and benefits of a product.
Glenn Karwoski (firstname.lastname@example.org) is founder and managing director of Karwoski & Courage, a marketing communications agency. He also teaches in the graduate school at the Opus College of Business at the University of St. Thomas.