Future of Physical stores In digital era ?

Distribution Strategies

Future of Physical stores In digital era ?

Project by : Smruti Thakkar MBA in Luxury Brand Management IFA-Paris

INDEX Introduction Scope of brick & mortar stores Consumer behaviour Digital trend Swot analysis Facts Solution Brands example Conclusion

Introduction ERA OF PHYSICAL STORES

The physical store has changed very little over the past century, but now consumer is demanding industry to digitise and innovate. Retail stores are now evolving to become more focused on providing better experiences. Shoppers increasingly expect stores to deliver a personalised experience similar to the online model. Stores are catching up and are also being enhanced to be more experiential and immersive. Retail stands out as a setting to understand how people interact with new technology that affect all areas of our lives, and many stores are becoming experimental living labs. Store-based retailers must approach the current situation — a rapidly evolving environment — with a fresher approach and a strategy that keeps the threat of digital dominance top of mind. Retail is not dead but it is changing. Brick-and-mortar stores employ new technologies and new models to determine their survival with a shift on online/ E-Commerce.

Scope & Importance of Brick & Mortar stores 85% of retail sales are still made in physical stores today, though there is increasing growth of e-commerce. A brick-andmortar store provides consumers to feel the social and entertaining aspect of shopping. In a brick-and-mortar store the consumers can experience the lifestyle and values of the brand as well as get entertained. One reason for the consumers to use the physical channel is the personalised service. Through physical store the retailer can offer personal service with instore personal stylist & adviser providing meaningful, personalised information tailored for the customer. The consumers desire service and it is a factor motivating to enter a brick-and-mortar store. In a brick-and-mortar store with a stock of items a customer can complete the transaction immediately , which makes the customers feel more comfortable as they do not need to wait for the delivery. In a brick & mortar store the product could be evaluated through all five senses and personalized information is provided by the sales staff which gives the customer more confidence to purchase. Brick-andmortar retailers need to be ready to adapt changing behaviour of customers because of digitalisation & e-commerce. Brickand-mortar stores can innovate, delight and create stronger ties with their customers. Amazon and other major internet players are developing their own brick-and-mortar networks. It is becoming increasingly clear that the future of retail belongs to companies that can offer a true Omnichannel experience. Brick-and-mortar retail stores need to up their game.

Technology could give them a significant boost.

Facts & Data Brick-and-mortar sales account for 94% of the total retail sales.

84% of consumers feel retailers should do more to integrate online & offline channels.

In the last 3 years, more than 45 US retail chains have gone bankrupt.

83 % want their shopping experience to be personalized in some way, and effective personalization can increase store revenues by 20-30%.

Even though the percentage of online retail sales growth is impressive at 16% and total in-store retail sales growth is 3.4%, but still the total revenue of e-commerce activity is $62.5 billion compared to $152.7 billion for in-store retail.

74% still prefer physical stores 36% preferring shopping malls.

49% love the in-store experience : touching and trying things out.

51% would love to navigate, get information and pay using their phone.(omnichannel retail) 71% want store staff to be more knowledgeable.

45% would revisit stores that offered workshops or pop-ups.

56% of click and collect users would like a space to try on clothes and facilitation for their returns and refunds.

69% of millenials see store cards as an incentive to shop again at the store.

Consumer Behaviour Millennials are tech savvy online . They are grown up with technology and expect to quickly find products and services, with very little hassle or friction.They do their research purchasing online before buying in store. They check product ratings and reviews or feedback on retailers online looking for best value and service.

Many millenials prefer visiting stores to check the product size and then they shop online because of various factors like Price, Promos & other incentives.

They identify highly coveted or prestigious brands, product quality, distinctiveness, and timeless style as their top personal criteria when making a luxury purchase decision. 68 % of all Millennials demand an integrated, seamless experience regardless of the channel while shopping in the departmental store, demanding a customer-centric shopping experience. They need to feel of value . From the consumer perspective a store has traditionally been a comfortable environment to seek advice and consider a purchase.

why consumers prefer in-store shopping over online: See & feel the product Product looks Different Long delivery time High shipping cost Complicated return process 0%

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Digitalization Technology will undoubtedly play a major role in the future of retail. With the help of AI and big data, retail could become much more anticipatory. Brands could know our exact needs, sizes and preferences and automatically provide the products we need. If we need a pair of jeans or a bag, algorithms could find exactly what we need and provide us with the right product or at least narrow it down to a few options. There won’t be a need to shop in a physical store because all of our needs will be predicted before we shop.With the advent of internet shopping, brick-and-mortar establishments have faced a steady decline. Most people prefer to shop from the comfort of their homes rather than facing the hustle and bustle of visiting a real-world store.

SWOT Analysis Strength Personal interactions Innovations Customer loyalty Customer satisfaction Immediate delivery of product in-store stylist

Opportunities Maintain customer relationship New resources Rise in Omnichannel distribution strategy

Weakness High cost on creating consumer experience Cost of operationg a physical building Incompetent with online trend Limited hours of service Waiting time for availability

Threats Online disruptors Increase in competition Growth of e-commerce Price

NIKE NIKE NYC HOUSE OF INNOVATION

Nike NYC engages consumers with best-in-class digital and physical services combined with premium products, experiences and features to create a new benchmark for Nike retail.Nike’s newest retail concept, Nike Live, the ground floor features the new Nike Speed Shop - offering on-the-go access to the products local members know and love most. Consumers can shop these uniquely curated NYC favorites alongside seasonal picks, visit the Nike Sneaker Bar for easy access to Nike’s biggest power franchise footwear, or they can reserve items in the Nike App and pick them up in the Speed Shop digital lockers. Nike NYC is designed to allow consumer to shop and experience Nike products the way they want with product floors for Men, Women, Kids, and the footwear-obsessed.Nike have launched Nike App to get information about the product & instant checkout of the product.There is Nike expert studio where there are stylist who help the customer with style & purchase.The Nike sneaker lab have the largest collection of footwear in the globe. The strategy behind this concept store is omnichannel distribution and it helps the customer to give the experience of the store. The idea is to attract online customers.

FIT:MATCH with Brookfield NO MORE DRESSING ROOMS: VIRTUAL FITTING EXPERIENCE

FIT:MATCH combines the latest data science and 3D measurement technology to create a highly integrated online/offline apparel shopping match platform that delivers a transformative retail experience for shoppers and brands. The proprietary AI-powered technology called Fitch, matches shoppers with apparel products that fit them based on accurate biometric data and preferences, and hides the ones that don’t. The rollout of this contactless experience comes as many consumers are shun shopping and fitting rooms due to the coronavirus.

49% of millennial consumers said they would not feel safe trying on clothes in dressing rooms, even after the pandemic subsides. And that percentage was much higher for baby boomers, at 71%. The coronavirus has moved this industry away from high touch to low touch. Such Innovation & integration of technology is adopted by most of the physical stores to not to loose the customers.

Conclusion Now is a great time for retailers to embrace that challenge of bringing technology and data together in the off-line world. Omnichannel distribution strategy of integrating online business with physical stores is rising.

Physical stores are an integral part of retail . Physical stores should use various strategies like pop-up stores , concept stores etc to boost the sales of physical stores. According to my research & data , consumers looks for seemless experience while shopping, so the physical stores should focus on its consumer experience. As consumer wants to feel the product & brand , so it is very essential for the brands having brick & mortar to create a memorable experience through interractive walls or mirrors, AR &VR technology or Personal stylist , anything which makes customer feel valuable. Customer satisfaction is the key to success.

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