Five trends brick-and-mortar retailers need to know to reach the 'new kid' in town

By Shelley E. Kohan,

The “new kid” in town is that new and emerging customer taking us all by storm and forever changing our retail landscape – the millennial shopper. They are armed with an arsenal of information to assist them in making buying decisions and are exceptionally diverse in how and where they shop and how they spend their money. These new kids research products for best value and choices; they have already checked social media sources to learn the approval ratings of the selected product; and, by the way, if they decide to wander into the brick-and-mortar store to purchase, they will double check the pricing options on their mobile device as they are standing in your store looking at the item. Give this important shopper a reason to buy from you and you will win in 2012.

If you’re exclusively involved with brick-and-mortar stores, you may dismiss these trends as detached from your world, but that need not be the case. Here are the five trends you can take advantage of to reach the Social, Local, Mobile (SoLoMo) savvy, new kid in town.

1. Social Commerce
According to the Booz & Co. report, “Turning Like to Buy,” social commerce will become a $30 billion business by 2015, with $14 billion coming from the U.S. As social media continues to be defined, reshaped and understood, it’s the brands that listen, engage and react to their social media dialogues with their customers – from ratings and reviews to Facebook and Twitter – that will come out ahead this year.

Retailers have only begun to scratch the surface in the social arena. For instance, hailed as a virtual pinboard that “lets you organize and share all the beautiful things you find on the web,” Pinterest is the latest and greatest social media opportunity for retailers. A recent survey by Bizrate Insights found one in 3 buyers made a purchase  after viewing a product on Pinterest; and a recent poll by SteelHouse found users were twice as likely to buy from Pinterest than Facebook.

Brick-and-mortar retailers can get in on this action by embracing social tools like Facebook, Twitter, Pinterest, and others. These tools can build your relationships with customers just as they do for online properties. But you can do much more than that. For instance, one clever Brazilian clothier uses “smart hangers” that have digital displays on them to show the number of Facebook Likes existing for each of its stocked products.
2. Local commerce
Today’s millennial customers want a personalized marketing plan directed at them in the exact location where they stand. They want personal invitations to local stores to save money or to be included in local promotions with the products they are truly interested in buying. Today’s customer not only wants to feel special, but also to feel that big retailers understand the needs of their geographic areas. Retailers that can deliver this perception will gain the upper hand. According to RSR’s Retail Supply Chain 2012: Globalization, Localization, and Cross-Channel report, more than 50% of retailers agreed that localizing assortment was a critical strategy for their company. Already, Neiman Marcus and Whole Foods are tailoring print and digital ads based on geographic location.

Here is an area where bricks-and-mortar can really shine. The physical store has the opportunity to become the neighborhood representative of the brand, a local hub and community outreach point. Look to measurement as a key component of this strategy, understanding and managing the results of your marketing, layout, and product mix down to the street-by-street level.

3. Mobile commerce
Mobile commerce encompasses all mobile selling, payment, and digital voice technology. Today, you can ask your iPhone for directions to a specific retailer. Tomorrow, you will be able to ask your iPhone for a Red Pantone TCX dress with short shelves, 20” from the waist, with v-neck and in organic cotton, to be delivered to your doorstep in two days. A forecast recently released by Business Insider Intelligence expects smartphone sales to exceed 1.5 billion units per year by 2016, nearly twice PC sales, which means there will be many more mobile users than PC users very soon. The great news is that the vast majority of mobile spending is on, leaving a blue ocean for other retailers. Mobile commerce will begin to revolutionize the shopping experience for retailers and designers.

Retailers on the cutting edge of mobile are releasing apps that directly integrate with the physical store experience. These apps might direct users to the nearest location, help them find products on the show floor, offer coupons for products near where they’re shopping, or even alert an in-house personal shopper when a specific customer arrives at the store. Build this functionality into your mobile purchasing app for a truly integrated mobile and in-store shopping experience.

4. Showrooming (or “ShowLoMo”)
There has been a recent spike in showrooming, a challenging and costly practice for many brick and mortar retailers in which customers shop stores for products, try them on, touch and feel them, then walk away buying nothing – at times even damaging floor samples. Instead, they will turn to that arsenal of information they have at their fingertips to find the best pricing for that great product they found in the store. They buy it online, frequently from their mobile devices, and have it delivered to their doorstep (usually free of shipping charges). Target’s move to discontinue the Kindle in stores has been attributed to an increase in showrooming.

To combat this challenge, retailers need to make sure they are being competitive in pricing and “transparent” and/or offering unique products in the stores. Make sure you have consistent pricing across channels. Customers are too smart and they do not feel they should pay a different price based on geographic location or channel (online or brick-and-mortar). It goes against our founding premise of supply and demand, but multi-level pricing will just not sustain over time. The key is to understand the impact of your pricing strategy instead of continuously looking back at your competitors for direction in pricing. Again, research is your friend. Understand what’s happening in stores and use that knowledge to create an environment that keeps shoppers in the door and ultimately sends them to the register with the goods they want.

5. Collaborative consumption
For today’s millennial customer, the need to share, barter, lend, trade, rent, and swap fits right into the need to save the world, recycle, be green, and leave this earth in better shape. Successful companies such as RentTheRunway, Beg, Borrow & Steal, Tie Society, and Zip Car have proven that this concept is officially on the radar. Instead of buying goods, products can be shared, which is more environmentally friendly. Consumers can rent a Chanel handbag for a fraction of the cost of owning one or a Zegna tie can be rented for a month then returned. This trend is superbly explained in the video "What’s Mine Is Yours" by author and social innovator Rachel Botsman. It also offers a new business model retailers can’t ignore – particularly for luxury items.

Your presence in physical locations near the customer is a big asset for collaborative consumption models. Customers who need to take possession of a physical good and then return it in a short period of time are going to strongly reward the retailers who can offer it for pickup in a convenient location on short notice. Even if you have to ship the item but allow it to be returned at your local branch store, the convenience benefit for the customer is still enormous.

Bottom line: Take an omnichannel approach; use analytics
By fully understanding, appreciating and acting on the trends above, a retailer can build a cross-channel synergy – a true omnichannel. Seamless integration of the above channels into one brand for the consumer is essential, especially today. By integrating the e-commerce businesses, aligning them with social media applications AND brick-and-mortar experiences, a retailer can use rich analytics to build a loyal following among its customers.

With the plethora of data that retailers have at their fingertips, especially within digital channels, discovering relevant insights to better understand customer preferences at the customer-specific, personalized level will drive positive ROI. Video and POS analytics are mission-critical for 2012. Applying the same online analytics to understand brick and mortar channels will differentiate the winners and laggards in 2012 and help to woo the new kids, giving you a sustainable competitive advantage.

Shelley E. Kohan is VP of retail consulting at RetailNext and has more than 20 years of experience in the retail industry, focused on luxury brands within the department and specialty store sector. She is an expert in applied big data and retail store operations, to drive sales, increase profits, and improve “store choreography,” and is also an instructor at the Fashion Institute of Technology of the State University of New York, in the Fashion Merchandise Management Department. She can be reached at

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