Despite many saying no, the Covid-19 pandemic has not given the physical retail sector the death knell. But if companies can’t or won’t adapt, the current inflationary crisis could.
Coming out of the global pandemic, the National Retail Foundation (NRF) said retail sales were “growing at levels not seen in more than 20 years” and predicted sales would grow by between 6% and 8% to more than $4.9 trillion by 2022. But record high inflation is taking almost all the wind out of those sales: this month Target reported the largest drop in equities in 30 years, while walmart and other chain stores pointed to troubling consumer trends — more pennies, a lot more fat to trim — as families look for ways to save with skyrocketing prices.
What physical stores can learn from digital
So how can retailers regain and bounce back lost momentum, especially after months of prolonged shutdowns? The Covid-19 pandemic widened the gap between brick-and-mortar and e-commerce, especially in the areas of impression, engagement and conversion. The pandemic, which $244 billion in 2020 alone for the US e-commerce industry, it has also provided us with billions of data points on the effectiveness of online shopping and the advantages that web commerce offers retailers in terms of tracking their merchandise, engaging customers and optimizing their sales.
In a brick and mortar store, the intricate, detailed details that make or break a sale often boil down to the interactions shoppers have with minimum wage salespeople with little long-term commitment to their role. Which shirt goes with these pants? What bag and shoes can take this outfit from ordinary to extraordinary? In the hands of a skilled seller, deals are closed and shoppers move from browser to buyer.
But the retail industry has always had a problem with sales among sellers, even before the “Great Resignation”, in which almost 44% of employees surveyed in December 2021 and January 2022 were looking for a new position or were planning to search soon. When salespeople leave their jobs, all the data and insider tips that can make or break a shopping experience disappear with them.
Online retailers have significantly more control. Algorithms can offer online shoppers related items to view, while data tracking monitors the entire customer journey, as well as merchandising and inventory, down to the nitty-gritty of what sells best, where, and to whom.
How physical stores can compete
Infographic created by Fiserv CMM
For brick-and-mortar retail to truly compete with e-commerce, the post-pandemic shopping experience will need to be radically different. Technology can serve as a bulwark against high employee turnover, so that even with staff shortages or multiple layoffs, the personal shopping experience can become more consistent and streamlined.
Sellers ultimately gain a monopoly on the essential data that drives a brand’s business. But far too often they don’t have the long-term commitment or loyalty to a brand to handle that data with care. And if they do, they won’t be offered ways to share that data with corporate headquarters or even properly pass it on to the employees who will take it off their hands when their shift is over, or they decide to look for other jobs. That data includes:
• Where do people walk in your store?
• Are they involved in or modifying products?
• Did they end up buying the items they were working on?
• Did a specific style see a lot of engagement but few purchases?
• Were there specific items that sold better when placed together?
Right now, the personal selling experience comes down almost entirely to the interactions between shoppers and employees. Retailers don’t have an automated way to collect the customer journey and merchandise lifecycle data we see in e-commerce. Instead, they rely on staff tasked with selling, storing, servicing, and fulfilling online orders—staff who, in many cases, are too busy or under-equipped to do all of these things at once. This does both brands and their employees a disservice.
But what if data perceived by employees in the store could be automatically collected, filtered, and sent back to HQ to drive C-level decision-making? What if the salesperson who moves a particular style of sweater to another location and finds that sweater starts flying off the shelves, could apply that knowledge to stores across the brand’s network? Merchandising would be improved, allocation would be more specific to remove overstock and stockouts, and store displays would shift from ad-hoc to fully strategic. Optimization, in real time, would become data-based and seamless. (Full disclosure: My company provides these data insights through an in-store tech platform for retail businesses.)
It’s time to use technology to unlock this data from individual merchants and put it into a wider system. The data should be automated and disseminated to employees across the company, gathering meaningful, actionable insights to feed back to headquarters in real-time so that brick-and-mortar stores can be optimized right away. And using that data, retailers can offer customers a personalized, experiential way of shopping that’s more personal and tangible than e-commerce.
According to a recent report from McKinsey, fashion companies are looking for double investing in technologies by 2030 to keep pace with digital natives and gain a competitive advantage. Solutions that can leverage data in-store and feed it back in real-time will provide shoppers with more connected experiences, greater sales opportunities and efficiencies for retailers, and will ultimately change the face of brick-and-mortar retail.