The next time you find yourself in any major city take a moment and look around. Almost without exception the retail landscape you see around you was built in the pre-internet era. And in that pre-internet era, several things were true. Firstly, physical stores were essential for three primary reasons; to merchandise products, to convey product information and to transact sales. Secondly, stores were regarded as the most efficient means of doing all three of these things. And finally, as long as you bought enough media to drive consumers to your door, stores were the final stage of the marketing funnel—the point of purchase.
And so, the retail you see around you in that city center, wherever you may be, was purpose-built for one thing and one thing only—the distribution of products.
In a post-internet era, however, none of this holds true. In a post-internet world, digital media has increasingly become the consumer’s first stop on the path to purchase. Case-in-point, Amazon is now the default destination for 66%[1] of general consumer product searches in the U.S. market and that number actually rises to a whopping 76%[2] when the consumer knows precisely what they’re looking for. It’s also true that through digital media, a brand can merchandise vastly more products, provide better and more robust product information and transact sales in just a click or two. Media is no longer merely a means of driving customers to stores. Media is the store—at least in the consumer’s mind. And it is media that is rapidly becoming the more efficient means of distributing products.
From cars, clothes and luxury watches to homes and healthcare, media is becoming the biggest of all big-box stores, where anything the consumer desires can be found. In fact, within 15 years, we at Retail Prophet estimate that the online economy will begin to equal or dwarf the offline economy. Logically, as the scale and scope of online shopping grows exponentially, trips to a store of any kind will become far less frequent than today.
So, it’s perfectly logical to wonder then, if media in all its various forms is stepping in to fulfill the traditional functions of physical stores, why will we need physical stores at all? Why endure the expense, the operational headaches and the limitations inherent in physical stores, if media is the store? Why bother?
And this is where things get exciting.
It’s exciting because there is a correlating transformation taking place as it pertains to physical stores. Physical stores are becoming a media channel. And if properly executed, stores can actually be the most measurable and manageable media channel that a brand can use to galvanize a relationship with a consumer. Stores are no longer necessarily the last step of the consumer journey, but increasingly they are the first exposure a consumer may have to a retailer or brand. Not the end, but the beginning of the relationship.
But to unlock the current and future value that physical stores can deliver, and to enable their transformational potential, we have to stop thinking of them primarily as a cost of distribution and instead begin to regard them as a primary means of customer acquisition. The truth is there is simply no better place than the physical realm to introduce a customer to your brand story in a meaningful way. No better venue to engage them physically, cognitively and emotionally in a brand experience, and no better channel through which a long-term relationship can be forged.
We also know, thanks to research from the International Council of Shopping Centers, that the mere presence of a store in a given market can boost the brand’s online sales in that geography by anywhere from 27-35%[3]!
That said, to do all this requires a complete rethinking of every aspect of how stores are planned, located, built, managed and especially measured. It demands that we re-imagine everything including hiring, training and organizational structures.
At Retail Prophet we’ve developed a perspective on the key steps that brands can take to embark on this transformation, and invite you to enjoy this on-demand webinar where I paint a picture of The Store of the Future, while providing actionable steps to get started building your own.
[1] Business Insider March 20, 2019 Amazon rules the product search process: Greg Magana https://www.businessinsider.com/online-shoppers-rely-heavily-on-amazon-2019-3
[2] Yahoo Finance March 19, 2019 https://finance.yahoo.com/news/74-consumers-amazon-apos-ready-160012520.html
[3] International Council of Shopping Centers, 2019, The Halo Effect http://reports.icsc.org/thehaloeffect#q1-correct
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