How Can Physical Stores Win Back on The Competition?
E-commerce has challenged the way physical retailers have been operating thus far. Better comprehension of the customer, targeted service and technology has enabled online stores to gain a competitive edge against brick-and-mortar stores. Now the question is… how can the physical stores win back their edge on this competition?
In this article, I have gone through the retail (localization) technologies of today, and outlined how the State-Of-The-Art (SOTA) store of 2022 can operate in a simple scenario.
How does e-commerce compare to brick-and-mortar?
Brick-and-mortar and E-commerce have been fighting for consumers' attention and dollars for many years. One might think that e-commerce is already the leader of retail sales, but this is way far from the truth, with brick-and-mortar sales accounting for 94% of the total retail sales.
However, it's unfair to compare online sales with brick-and-mortar sales due to the age factor. E-commerce is still a relatively new business, and with the rate of growth it has demonstrated in recent years, this statistic may soon change.
What gives an edge to e-commerce?
We cannot ignore various advantages that e-commerce has brought that haven't been possible before. Just one click, and your order is at your door the next day (if not the same day). This is indeed the number one reason why people prefer shopping online - (free) delivery.
Other key reasons include the ability to use coupons and apply discounts (41 percent), read other customers' reviews (35 percent), easily return purchased items (33 percent), and a quick checkout process (30 percent) (Globalwebindex.com).
In Ariadne's project with City of Traunstein, I have observed that there is a significant 42% decrease in the number of people during the event hours. The reason? It is the rainy weather. It means that if a different day has been chosen for the event, it would attract more people, which would end up as more footfall for the nearby stores and businesses.
Another interesting finding from the same project was the effect of the frequency of the events. This might sound confusing, so let me explain with an example:
There are two sides to the success of e-commerce. One side is the advantages above, that comes with the nature of online sales. Other side is the ability to track visitors' behaviours and understand the customers. For instance, how many people land on the product webpage, how much time they spend, what actions/clicks they previously and subsequently take and so on… Having this data, online businesses are able to change their layout, optimize their online marketplaces and better serve customers' needs, which leads to gaining more website traffic and sales
If the brick-and-mortar businesses bring these advantages of e-commerce into their stores, or let's say, combine them with their existing services, can they heat up the competition? Or first… can they actually bring these to the stores?
Let's consider a scenario.
Customer journey in a winner store
A beautiful Saturday morning, after a family brunch, you decide to go to a furniture store to buy a TV unit for your living room. You take your phone and check the store, and see that there are 184 people currently inside (1). Hmm… not bad you think, we can have a nice time there, and hopefully have no queue at the checkout.
You arrive at the store, see the empty parking slots in your phone (2) and navigate to the closest available slot (3).
As usual, you leave your car and head to the gate, and the heat of the store welcomes you inside. Not just the heat, but a notification on your phone: “Thank you for your visit, enjoy our 15% discount gift in our restaurant” (4). You pass through the mattresses, then sofas before the TV units. A sofa draws your attention and you start looking into it. It looks great but you are not sure about some aspects, so you take out your phone and see your location in the store (5). Next to your location, you also see the sofa icon and click it on the map, 4.8 stars, 56 reviews (6)… hmm, not bad. You scroll down and read some reviews about people's experiences, now you want to buy the sofa but need answers to a few questions before finally deciding. Right when you need some assistance, a store associate approaches you (7) with a smiling face and goes “Hi, would you like any help?”. You direct your questions and are pleased with the answers, but looking at the price again, you decide to postpone your purchase.