When looking at dozens of retail bankruptcies, we find commonalities. And it’s not what you might expect. While the “Retail Apocalypse” works as a headline, the reality is more differentiated than that. DTC (Direct-To-Consumer) brands pushing into physical retail and the demise of many legacy retailers can actually give us hope for the future.
Someone took the time to compile and present all retail bankruptcies of the last 5 years. This timeline, visualized by CB Insights, is both impressive and insightful. Please ignore the sensational headline. Of course, it had to be named “Retail Apocalypse Timeline”. Sigh
When looking through the list of failed retailers, there are a few common denominators. All these companies had – among other issues – these three problems in common:
- legacy systems that slowed down operations
- massive debt they couldn’t pay back
- and/or private equity firms that were looking for short-term gains
Let’s assume you’re not owned by an aggressive private equity firm. Furthermore, you’re not sitting on an insurmountable pile of debt. And let’s also assume that you’re not resisting change when it comes to customer experience and new tools to use. With all these boxes checked, here is the good news: All of this makes you an unlikely candidate for this so-called “Retail Apocalypse”.
With that being said, I am not advocating that it’s time to sit back and relax. Quite the contrary. Online-first brands have discovered the power of brick & mortar. Retailers and brands all over the world engage in an ever-evolving race for vastly improved customer experience.
And we’re back to discussing “Customer Experience”
The idea of experiential retail with ball pits and Instagram walls sounds great, at first. Unfortunately it’s not much more than a flash in the pan and it won’t create a lasting relationship with the consumer. Customer experience – especially when it comes to big-ticket items like furniture – has much more to do with a knowledgeable RSA (Retail Sales Associate) and with a smooth & efficient purchasing process.
RSAs want to meet the customer where they’re at. Instead of lurking behind desks or forcing guests into a physical sales funnel, they accompany and guide their guests.
“No one is behind the counter unless a visitor is ready to check out.” -Trina Chan
Head of Retail at Museum of Ice Cream in this Retaildive article.
Electronics retailer Best Buy has also invested heavily in training store staff, which has helped them with their turnaround efforts. Investments in employees seem to pay off.
The average turnover rate in retail is north of 60%, according to the NRF (National Retail Federation), and retailers collectively lose over 230 million productive days and $19 billion in new staff costs as a result, says Human Resources Today. Even small improvements in this area can yield big results.
What Brick & Mortar Can Learn From DTC Brands
Despite their roots, almost all digitally native brands have expanded from “clicks” to “bricks”. This was done mostly to build brand awareness, loyalty, and to gain trust. When opening physical stores, e-commerce sales (and not necessarily in-store sales) in that area will go up, as confirmed by multiple brands. It looks like the Retail Apocalypse is – in all reality – the apocalypse for pure-play brands.
What traditional retailers can learn from DTC brands, however, is to build their business centered around customer service. The customer and the shopping experience are at the very core of many DTC presences. “We’ve always done it this way” is not going to cut it when competing with big box stores, Amazon, and DTC brands with deep, venture capital-lined pockets.
To be specific, here’s a short list of topics that need to be addressed quickly:
- What is your average checkout time?
- How many times will your RSAs say “I don’t know”?
- How much paper does your guest need to fill out?
- How many times do your RSAs need to leave the customer to look up information?
Instead of trying to hunt the next “Insta” moment – put yourself in the customer’s shoes. Which parts of the sales process in your store can be optimized? How can your RSAs be trained effectively? And last – but definitely not least: Invest in your staff, by giving them reasons to smile. Provide them with the best tools to shine and to wow their guests. Your bottom line will feel the difference.