How Brick-and-Mortar Retailers Can Stand Up to E-Commerce

Brick-and-mortar retailers have been finding it difficult to offer pricing that’s competitive with e-commerce sites, which have the advantage of massive scope and scale, according to a report Frost & Sullivan’s Stratecast service released Wednesday.

E-commerce will account for nearly 18 percent of the total retail market by 2025, the report projects.

B&M retailers have an advantage, though, which lies in their ability to offer customers a personalized experience.

However, given that consumers have so many stores to choose from, retailers should adopt end-to-end solutions that use cutting-edge technology to make personalized service cost-effective, the report recommends.

“Leveraging the personal touch requires a new approach to brick and mortar business; one which emphasizesservice over scale, purpose over place, and a fanatical focus on experience over transactions,” the Frost report says. “Achieving thiscannot be accomplished through point solutions, where diverse technologies are forced to fit together. Only awell-integrated solution that encompasses all aspects of the shopper continuum can enable the brick and mortarretailer to compete with and dominate the retail space.”

Building an online presence is a necessity for B&M retailers, but their investments in automation should emphasize improvements in the interactive experience they offer, the report advises.

Tech for the B&M Retailer

Among possible tech approaches: B&M retailers could give sales clerks a mobile point-of-service terminal and deploy POS technology and enterprise resource planning systems that deliver customer-specific information to sales clerks in near-real time.

“It’s important to acquire technology that can augment existing technology,” said report author Michael Jude, a research manager at Stratecast/Frost & Sullivan.

“The new technology should interface with existing solutions until critical mass is achieved,” he told CRM Buyer.

Telemetry that detects shoppers’ real-time preferences — the part of the store they lingered in longest, the items hey looked at, and the items they asked to see, for example — “can be used to optimize the experience of shopping,” Jude noted.

“The key is not so much making sales people mobile,” he said. “It’s making them mobile and armed with information.”

Currently installed POS technology in general is woefully out of date, and “just getting up to the 21st Century would be good,” noted Paula Rosenblum, managing partner at RSR Research.

However, implementing “employee-facing technologies — so they can be as educated as the customers they’re trying to serve — is more important than facial recognition and other really cutting-edge technologies,” she told CRM Buyer.

Training is essential, Rosenblum said, noting that “training for existing store associates is pathetic — less than 10 hours per year.”

Battling the Online Try-Before-You-Buy Buzz

Amazon recently announced Prime Wardrobe, a try-before-you-buy apparel shopping service for Prime members, which gives customers seven days to try items, offers free returns, and gives discounts of up to 20 percent on purchases.

However, “especially with clothing, there’s an instant gratification aspect to shopping that e-commerce can’t duplicate,” Frost’s Jude said.

Further, online shopping is done for utilitarian purposes, not gratification, he maintained.

“Consumers are increasingly selecting activities that emphasize the experience rather than the utility. Onlineshopping tends to be more utilitarian and tends to emphasize price; while local retail outlets tend to emphasizethe shopping experience in their advertising,” Jude wrote in the Frost report. “Brick and mortar retailers that wish to thrive need to up theexperience factor; making a store a place to experience products and services in new and innovative ways, whilemaking the actual mechanics of purchasing easy and practically transparent.”

Prime Wardrobe “is a brute-force tactic to solving the discovery problem faced by online retailers, especially in apparel, because apparel is something that’s very personal to an individual and is less utility based,” observed Matthew Bertulli, CEO of Demac Media and author of Anything, Anywhere: The Future of Retail and How to Build a Digital-First Roadmap to Growth.

This “will be game-changing in the mass market apparel verticals,” he told CRM Buyer, but “it’s just more fun to browse around a physical clothing store and touch and feel things than it is to order 10 items, wait for them to show up, try them on, and then go through the headache of returning what you don’t want.”

Further, “the direct-to-consumer business has always had crazy-high return rates,” RSR’s Rosenblum observed.

The B&M Retail Sky Is Not Falling

“This whole retail apocalypse story is a complete false flag,” Rosenblum said. “The only retail segment that has more stores closing than opening this year are department stores, and that’s a vertical that has a whole lot of problems.”

In fact, more than 4,000 new stores opened in 2017, according to the National Retail Foundation, which found that there were just as many department chains opening new stores as there were closing them.

It’s simply not true that e-commerce has been sucking the profits away from B&M retailers, Rosenblum said, noting that “data from our store survey said the biggest contribution to performance still comes from stores.”

Richard Adhikari

Richard Adhikari has been an ECT News Network reporter since 2008. His areas of focus include cybersecurity, mobile technologies, CRM, databases, software development, mainframe and mid-range computing, and application development. He has written and edited for numerous publications, including Information Week and Computerworld. He is the author of two books on client/server technology. Email Richard.

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