Don’t Believe the Hype: In-store Retail Isn’t Dead, It Just Needs to Re-tool
In our efforts to push our clients' holistic growth, at PartnerCentric we are consistently researching new innovations and strategies in the industry that can help our clients and our organization stay ahead of the curve. Continuing education is key for us to reexamine our strategies and part of that effort is a monthly internal report called “Trends and Moves.” This report aims to analyze different trends in the industry in order to make predictions, uncover opportunities and to share key takeaways based on research and analysis.
This month, the focus was on retail and, more specifically, the current landscape for online (e-commerce) to offline (in-store). The “death of retail” is an all-too-common phrase that’s been used the past few years, and we wanted to challenge that assertion to see what’s really happening out there.
The State of Retail Investments in Tech
From 2012 to the present there has been a steady increase of investment into in-store tech startups that aim to both optimize the store experience as well as blend the e-commerce and in-store conversion path.
If you look into all total retail startup investments (where people are looking to create new tech startups in the in-store realm vs. e-commerce realm) as a whole, it’s clear that the percentage of e-commerce funding vs. in-store funding has stayed relatively stable for past four years. This is interesting because even though people believe that more money is being funneled into e-commerce (which it is), it’s hardly diminishing in-store. It’s important to remember that e-commerce is still just a portion of a portion of overall retail revenue (though certain verticals are impacted more than others). The foot travel into brick and mortar presences is huge, and we would be remiss to ignore this opportunity based on silos within our clients’ organizations or false assumptions. Additionally, we would not recommend for the in-store retail experience to ever fully fade away, as the value in going to a physical store, experiencing the brand, the products, and the conversion, is undeniable. It’s been well documented that once a customer touches a product, they are considerably more likely to purchase it and that will be extremely challenging for a technical solution to try and fully replace.
Looking again at the investment data, it becomes clear that there is inefficiency and trepidation on investment on the in-store side, but it's not fully warranted. Conversely, there is a clear desire for more experimentation - we are seeing a higher number of deals, utilizing the same investment ratio to the total. Fortunately we are finally seeing more adoption of modern POS systems - this is a critical component to driving traffic to stores (namely, measuring ROI). Those ancient POS systems that block innovation are finally going away.
This is where our strength and opportunity lies as a strategic performance marketing agency - with an increased retailer interest and willingness to experiment in a model that still has significant value but some inefficiency, we can be a source to add value in-store by utilizing the performance model - and have that measurement capability to spin up the feedback loop as well.
How retailers are using in-store tech
We’re seeing many more retailers that are trying to stay ahead of the game by using technology in new and exciting ways. Walmart is possibly in the best position to directly compete with Amazon given their breadth of product and their widespread geographical footprint. Some of the biggest game changers they have invested in so far are:
- Walmart App - Order online, pickup in store
- Walmart Pay - To use through the app in store. Since its release, it’s been used for 45% of payments following the rollout
- Scan and Go - Scan a product with your phone and walk out
- SmartLife - customer service personnel to educate customers
Additionally, Alibaba is opening a massive brick and mortar location in China. This is a critical way to show that there is value to be gained from a physical presence. Finally, despite being often used as a retail deathknell, even malls are investing in customer tracking, marketing startups and logistics for same day delivery. For retailers that can’t invest in this directly, why not utilize what the mall can provide?
Let’s also not forget about the consumer’s experience here. This is the most critical component to re-tooling for the modern consumer. Retailers understand this and are using technology to their advantage in this area as well. Nordstrom is trying out a store that doesn’t stock clothes but customers receive a free consultation with a stylist and can try on and purchase clothing based on the stylist’s insights. Even Starbucks is fully shutting down their e-commerce presence and are lasering in on digital presence as a means to complement the in-store experience.
Last but certainly not least, it’s all about location, location, location. Location based tracking is still developing, but between beacons, wifi, and GPS, we’re starting to see the technology catch up to the value proposition. There is now a cost-per-visit model that allows retailers to pay for each new customer that walks into their store. Additionally, while wifi connection based marketing is not new, mobile marketing platforms like StepsAway are now able to offer an in-store wifi-based solution for individual retailers that can tap into CRM databases and deliver more personalized promotions to the shoppers.
The final point to make here is that retailers absolutely need to start leveraging these in-store technologies - they are built around tracking and can support a pay for performance model to mitigate risk.
The in-store affiliate landscape and what we’ve done
In-store strategy is not new to us - we have been doing this for years. Just like with e-commerce efforts, we’re always looking for ways that our clients can strategically leverage the performance model in-store. We have created successful campaigns for clients and are always looking into new technologies that can support their efforts.
Button is currently the darling of affiliate marketing and is in its second round of funding. It’s a very popular app with strong UX and an example of a company that does it well. Ibotta is another mobile app that, in one example, we leveraged successfully to help a prominent client drive more in-store traffic and sales. Other providers, such as SnipSnap and Revtrax continue to be in our toolbox. And we can’t wait to add more.
There is so much room for improvement for in-store and it’s a huge area for opportunity. Any retailer who is not currently leveraging tracking technologies to enhance and optimize the in-store experience is dismissing the opportunity for targeted new customers and sales. The future is brought to you by technology - so can you really afford to ignore this opportunity?
Want to discuss in-store technology opportunities for your brand?
Send me a message at firstname.lastname@example.org. I look forward to hearing from you!