November 01, 2017 - by Anto Chittilappilly, Co-Founder, President & CTO, Visual IQ
Walking into your local mall these days can be a jarring experience. Some of our biggest retailers—the so-called “anchor tenants”—have gone missing, either as a result of store closings or bankruptcy.
2017 has not been an easy year for the retail industry. Despite the fact that retail spending has grown steadily, more than 6,400 store closures have been announced so far by the likes of Toys R Us, Sears, JC Penney, Macy’s, Gap, Vitamin World, Teavana, Gymboree, Payless, Radio Shack, and many others.
Sears alone has closed approximately 180 Sears and Kmart stores and will close another 150 by the end of the third quarter. The company revealed, “It’s working to transform its business model so that its physical store footprint and digital capabilities match the needs of customers.”
The simplest explanation for the decline of these retailers is the success of Amazon. Between 2010 and 2016, Amazon’s sales in North America quintupled from $16 billion to $80 billion. Sears’ revenue last year was about $22 billion. Essentially, Amazon has added three Sears in six years and half of all U.S. households are now Amazon Prime subscribers.
Amazon is clearly doing many things well. The ease of its online “one-click” navigation; vast inventory; competitive pricing; fast, free shipping (for Prime members); and easy returns have driven growth. Not to mention thousands of credible product descriptions and user reviews.
But these bankruptcies and closures are not just because of Amazon’s success. Experts say there are three main reasons for the retail meltdown:
The good news is that these three reasons reveal several key advantages that brick-and-mortar retailers have over Amazon. By leveraging these differentiators, struggling brands can respond to these trends and gain a competitive edge.
If you are a retail brand, here are ten ways you can compete in 2017 and beyond.
Consumers expect to find you online and to have a good experience. Make sure your ecommerce platform is user-friendly and offers robust product descriptions and reviews.
The experience of shopping—visiting a specific location and seeing a curated selection of items—is still very appealing for many consumers. But when it doesn’t feel special, people don’t see an incremental benefit from going to the store. Make sure your locations look and feel good and that an in-store visit offers value.
Obviously, help from a live human is the main strength of retailers with physical locations. The best sales associates have amazing people skills and the training to be curators for customers. Their superior product knowledge allows them to track things down they know customers will like and make recommendations. Customers want to find “what is out there” and need to have an expert tell them what the best choice is. Make sure to invest in your people.
There is a generational divide between the expectations of Boomer and Millennial shoppers. Millennials are much more mobile and multi-screen, while having high expectations that cross-channel experiences will be consistent and rewarding. Attract and market to millennials so that you can thrive into the next twenty years and beyond.
Social media has shifted the balance of power from brands to consumers. Marketing has changed from a one-way megaphone to a conversation. Make sure you have an active presence on social and participate in the platforms your customers use.
The power of combining online reviews and social media can not be understated. Retailers need a good quantity of unbiased reviews, not just positive ones. Let your customers assess posts online and make their own judgements. Ask for and incentivize reviews during and after purchase.
Successful retailers are re-branding their companies to engage with narrow and specific audiences. They offer exclusive products that are not available elsewhere and/or are created for a specific shopper. For example, In-store brands or collaborations with specific designers that are only available at the designer’s shop and the retailer. Figure out how your products can be exclusive.
The best loyalty programs offer substantial benefits that are exclusive to program members. They go beyond merely offering discounts or points toward future purchases to satisfy a greater need in members’ lives. These customers enjoy special treatment from sales people and the psychological factor of knowing who’s in and who’s out. Construct your loyalty program carefully.
Most importantly, you need to find out what’s working and what’s not. Retailers must connect digital and offline activities and audience data across channels and devices using Multi-Touch Attribution (MTA). MTA is an advanced method of measuring marketing effectiveness that looks at the consumer journey across marketing and advertising channels and tactics.
Leveraging individual, user-level data across addressable channels such as direct mail, online display and paid search, MTA calculates and assigns fractional credit of a KPI event to the marketing touchpoints along the consumer journey that influenced a desired business outcome. Only then will you know what is effective for your brand, your product, and your market.
Future success depends on a healthy ROI for your marketing spend. MTA helps brands measure the effectiveness of every marketing dollar spent. Insights into past performance can be used for better planning and to optimize current and future campaigns. Make sure that you don’t invest time, resources and budget in marketing and advertising that won’t generate sales down the line. Visual IQ can help you optimize and plan more efficiently and effectively—spending only where it’s most needed.
By leveraging key differentiators of the digital and physical arenas, retail brands can gain a competitive edge. See how Visual IQ can help you thrive in the age of Amazon.
Want to see how you can optimize your marketing and advertising performance by audience segment? Request a demo today.
To learn more about how effective attribution can help your business thrive, download our ebook Untangling Attribution’s Web of Confusion: A Primer for Marketers