It feels scary out there.
Especially if you run a Brick and Mortar retail Store.
For the last half of 2013 and beginning of 2014, retail sales in the U.S. declined or remained stagnant at best. Nordstrom, traditionally more profitable than many other retail chains, saw their stores reporting flat or slightly down results.
At the end of last quarter Forrester Research released some compelling data regarding how Consumers decide whether to buy at a brick and mortar store or go online.
The data demonstrated that consumers willingness to pay a premium to get a product right away is not that large. For example, 52% of constmers are willing to pay anywhere from 1% t o 5% more for the same product they could get cheaper online while shopping at a traditional retailer. However, when the difference in the price is between 6% t o 10% more, the amount of consumers willing to pay that extra premium drops to 18%.
This clearly shows that the concept of driving customers into the store because the store features everyday low prices is a loosing proposition. The web will always have a cheaper buying option for the customer. Case in point: the results from the online sales of this last Christmas season. Amazon.com prices were on average 15.4% less than the online prices of leading retail chains in selected product categories.
How to Combat the Online Store
- One true fact is that consumers don’t want to buy all their goods from an online store. We all have seen the amount of foot traffic in most malls that can attest to this. Consumers are looking for a shopping experience.
- Nobody likes to be sold to, but most consumers do like to buy. This means that retail establishments need to get away from offering price as the reason to buy and move more towards providing a buying experience.
- When a store begins to offer a unique buying experience the consumer is willing to pay more and price becomes a secondary concern. This may mean that selling easily commoditized products may not be the way to go.
Strategies
- Many families like going to Costco simply for the ability to try samples and see demonstrations. Similarly, people go to neighborhood farmer’s markets to walk around, listen to music, and get access to products that are bigger, fresher, and taste better than the produce found at their local supermarkets.
- When a business knows who their customer is, they can develop a unique shopping experience that will not only draw these consumers to their establishments but have them willing to pay a premium.
- Another strategy that can be implemented is the introduction of loyalty programs through a mobile platform. This kind of program can also make personalized recommendations right to the smart phone of the consumer. These programs can easily be enhanced a geolocation features that directs the customer back to the store when they’re in range.
- An often overlooked area for customer acquisition and nurturing is traditional offline communications, such as mailers or newsletters. These types of communications can focus in on the interests of your target market and provide value.
The bottom line? The traditional Brick and Mortar store can survive. They only need to change the way they do business. The good news is that any retailer store owner can deliver the necessary strategies to draw customers back to it.
These are the kinds of things we explore at the Bay Area Mastermind. To learn more about the group and join us for a test drive just click here.