Buy, buy, says the sign in the shop window; Why, why, says the junk in the yard. —Paul McCartney
Shopping has changed and using a single source is rarely a good idea
Today, July 12, is the big Amazon Prime sale. Think of it as second Christmas. Sales are huge. People who never shop online make purchases during this sale. Traffic numbers are immense. The best deals sell out in a flash. Every other retailer on the Internet cringes when the online juggernaut has this sale. Amazon is so huge, so overwhelming, that no one can afford to compete. Even Wal-Mart doesn’t try to match prices. They do offer free shipping with no minimum purchase, but that’s nowhere near the savings some Amazon deals offer.
This is the way shopping works now. Deep sales, free shipping, and everyone has to find a way to compete with the big guys. There’s always a sale somewhere. No one ever pays list price. Even Amazon stopped showing list prices. Instead, they just show the sale price because that’s what they know people want to see when they shop online. The sale price.
Luxury goods have been in a free-fall all year. Discounters, outlet shops, mid-market retailers, and re-sellers are where all the business is going. Online fashion magazine Business of Fashion says stores need to look and think more like Facebook. The op-ed by John Bricker says that stores need to be more of a social gathering place, not just a place to shop. Coffee bars, art galleries, and social events are all part of the shopping experience as Bricker imagines it.
I’m not sure he goes far enough, though. Â People still shop around. Let’s look at alternatives.
Tighter Integration
Bricker’s article mentions that women in the 25-35 age group pre-shop, arriving at a store already prepared for what they want. Why didn’t they go ahead and make the purchase online? They want to feel what they’re getting. That’s not surprising, but retailers are still not playing that strategy to their full advantage. The online experience needs to merge with the brick-and-mortar experience so tightly that shoppers consider it a single event.
For example, if a woman finds a set of sheets online that appear to be what she wants, she should be able to mark and save that product without putting it in a shopping cart. She already knows she’s not making the purchase online, so why would she put the item in a cart? Yet, if she doesn’t, she loses the location of the item and may have difficulty finding it when she wants to go back. Then, when she gets to the store, she has difficulty finding the sheets she wants midst all the stacks of other sheets. If she doesn’t find them quickly, she leaves frustrated.
Stores would do better to lock down that sale by doing three things:
- Provide a way to save items of interest online
- Encourage the shopper to visit the nearest store to see that item
-  Use the store’s app to guide  the shopper to interested items when they arrive at the store.
Just those three things would increase actual sales by at least 10%.
Help Customers Compare Prices
This is taking a tactic once used in large New York department stores and giving it a digital comeback. Retailers know people shop around online looking for the best deals. Let them do the same in store as well. Wi-Fi connected apps at displays could easily list the price of an item and then show what the same item sells for both online and at other brick-and-mortar stores in the immediate area.
What this strategy does is keep a customer in the store. Â You don’t want to run the risk of them walking out the door to compare prices and never coming back. That already happens far too often for most stores. By allowing customers to comparison shop right there in the store, the retailer could choose to match a competitors price, provide coupons to apply to the sale, and inherently increase the stickiness of keeping people in the store longer.
Of course, this means marketing people have to do a better job watching competitors’ pricing, and that can be a very difficult job. However, with the ability to search instantly across a wide number of sites, building an app that would track such competition on the fly shouldn’t be too terribly difficult. Â For all I know, that software may already exist. If it does, though, it needs to be used more efficiently.
Make The Store A Destination
We read a lot about Millennials looking for experiences. Retailers can tap into that by making shopping more of a destination; a place one wants to go even if they’re not actively in the market for anything the store offers. Sorry, but coffee and art are yesterday’s marketing tactics. Retailers today need to find more event-driven and exciting reasons for people to come through their doors and shop.
I still remember when a specific sporting goods store opened in Atlanta with a 40-foot climbing wall in the store. My boys loved going to that store just to climb the wall. Sure enough, we purchased something every time we went. When that store was bought-out by a competitor, though, they took out the climbing wall. Care to guess how many times I’ve been in any of that retailer’s stores since? Zero. I’ve no immediate need for their products, so I walk on by.
Whether online or brick-and-mortar, retailers have to do more than just offer sales to get people to look. If I were CMO of a major chain right now I would be looking for some way to make stores attractive to Pokèmon Go players. What the store sells is irrelevant. Getting more people through door inevitably means more people are going to shop. Playing to social trends rather than marketing trends may be the stronger strategy for the future.
Increase Visibility Of High Need Items
Briker also mentions that people separate their shopping into two groups: wants and needs. They buy the needs first, often without much comparison shopping, then shop around for the things in their want list. The traditional tactic has been to put high-need items toward the back of the store so that people have to walk past everything else, increasing the possibility of an impulse by. For many years, that strategy has worked.
What grocery store chains such as Kroger have found, though, is that placing high need items such as milk, eggs, and bread near the front of the store, close to the checkout, increases brand loyalty among consumers. When a busy mom needs to pick up a gallon of milk on the way home from work or between shuttling kids from soccer practice to piano lessons, she remembers the store that saves her from walking all the way to the back. She’s more likely to return to the same store when she needs to buy a full basket of groceries.
Fashion retailers, especially department stores, could learn a lot from this tactic. Consider what shoppers most likely need and make it accessible without having to traipse all over the store. A hair straightener is not likely to be a must-have-right-now purchase, but a lipstick is. Sports socks are not sexy, but when the drier eats half your last pair you need a replacement before you go running in the morning. Build brand loyalty among a generation not inclined to be loyal.
Shop Around
More retailers need to consider throwing out the playbook and completely re-examine what it means for people to shop. Even those in the over-65 age group don’t shop with the same habits as they did ten years ago. Everything about shopping is new. The winners are going to be those who don’t look like retailers. Embrace innovation and realize that one has to meld into society to benefit from it.
H&M Closing Stores
Online shopping is where profits are found
The Short Version
Forbes magazine is reporting that fast-fashion retailer H&M is going to start closing under-performing stores and is abandoning its goal of opening 10-15% new stores each year. The chain is moving to put more emphasis on online shopping as it continues to chase a younger demographic that doesn’t shop in stores.
A Bit More Detail
No, your favorite H&M store isn’t going to close tomorrow. Probably. Maybe. Unless it’s one that has been defined as “under-performing.” For now, those are the only stores on the chopping block. The majority of stores in the US and Europe will keep right on putting out the fashion as fast as those factories in Bangladesh and Turkey can churn them out.
For now.
However, H&M’s CEO Karl-Johan Persson has changed his mind about the company’s growth strategy, away from physical stores in Europe and the US and more toward online sales. The reasons are numerous. In posting a six percent increase in sales last year, net income actually dropped almost eleven percent, largely because of increased markdowns necessary to stay competitive. Persson also said that events such as terror attacks and Brexit are creating problems in certain areas of the world.
The move toward a more online strategy isn’t universal, however. Persson says that emerging markets such as India, Mexico, South Africa, and Turkey are growing and will see more stores open. In fact, 430 stores will open this year, including new entry into Kazakhstan, Colombia, The Republic of Georgia, and Taiwan.
As H&M grows its online presence, it looks directly at competing with Amazon, Zalandro, and Alibaba, hoping to capitalize off its online/brick-and-mortar combination. The company still expects a 10-15% annual sales increase despite the shift in focus. They are also expanding their online presence, adding Malaysia, Mexico, Hong Kong, Singapore, Taiwan, and Turkey to the list of cyber markets.
The move by H&M is important in light of the continued struggles that have plagued mall-based retailers over the past several years. Rumors that Hudson’s Bay, who already owns Saks, is making a takeover move on troubled department store Macy’s was greeted with considerable optimism. Traditional fashion retailers are struggling and brick-and-mortar stores are a large cost factor that yields little, if any, profit.
Fast-fashion retailers, such as H&M and Forever21, have been seen as the exception to the decline of retail fashion stores. Where others have failed, fast-fashion outlets have been booming, for the most part. H&M’s change in strategy seems to signal the popping of that bubble.
Again, H&M emphasizes that only under-performing stores are going to close. However, there was no detail defining “under-performing” and whether that might expand should on-line sales beat sales goals. We only know that once a store is targeted for closure, that the door-shuttering will happen quickly. Don’t expect a lot of huge clearance sales.
We also don’t know how this might effect H&M’s partnerships with fashion brands such as Kenzo and its relationships with designers, things that have made the store popular in the past.
What we do know is that this could be a serious blow to real estate and mall developers in the long-term. Any hope for a resurgence based on fast-fashion growth would appear to be crushed. As Amazon and other companies look at faster and cheaper delivery methods, the days of physical in-store shopping look to be shorter than previously anticipated.
At the same time, this move makes the opportunities for smaller boutiques that much stronger. Located in more urban areas in places where storefront rents are not quite so expensive, boutiques counter the online trend with a more intimate shopping experience. As bigger brands drop physical stores to move online, boutique owners are likely to see an increase in traffic, especially from shoppers over 40 who still like to touch and try on clothes before buying.
Either way one looks at the situation, however, the consumer almost certainly comes out the winner.
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