‘In Real Life’ is the Next Frontier of E-Commerce — And Brick-and-Mortar

BY Jim Hopper

With many traditional brick-and-mortar retailers struggling in the new era of retail, online-first retailers such as Warby Parker and even Amazon have become increasingly invested in getting into the physical store game.

These retailers and others like them have mastered the art of getting visitors’ attention online within two to three seconds, keeping it once they’ve got it, making it all about the customer from arrival to checkout, learning as much about the customer as possible along the way, and continuing the conversation well beyond their visit. Yet, they realize there are still three things standing between them and their customers: physical space, a human connection, and coveted in-store/in-person data.

The natural next frontier for these retailers is "in real life," and it is allowing them to move effortlessly between online and offline. At the same time, traditional retailers are taking note and realizing there’s a lot online can teach them about offline.

Here are some early signs of online’s influence in the physical space:

Retailers are transforming their physical space into experience space.

To the online retailer, determining what to do with time and space is easy: create memorable experiences. This is in contrast to traditional retailers, many who have historically filled the gap between the customer walking in and out of the door with…practically nothing. Their disproportionate emphasis on the transaction has overshadowed any opportunity for personal interaction.

Retailers like Athleta are taking this insight to heart. The athletic clothing brand continues to offer free high-end fitness classes at its Flatiron location in NYC. Capitalizing on the boutique fitness craze, Athleta drives customers into its store by providing relevant, enjoyable experiences that people can’t get elsewhere, especially online.

Stores are introducing technology that makes shopping an event, rather than a chore.

Online retailers have had to solve many problems that are a function of not having a physical presence. Some of their solutions have been so good that they’re translating to the offline experience, too. Digital fitting rooms, for instance, are helping customers find clothes that fit right on the very first try. These kinds of in-person conveniences may encourage customers to buy, but more importantly, they create longer-lasting value that makes visitors want to come back.

In-person retailers are getting serious about personalizing the customer journey.

It’s only logical that whatever personalization shoppers get online should be exceeded by the personalization they get in person. And yet, the current reality is that in-person shopping is an anonymous experience devoid of even the most basic personalization. While the experience is what makes customers enjoy being there; personalization is what makes customers feel valued when they are.

Melissa Shoes is combining these two things by providing an in-store digital experience where customers’ interaction directly influences opportunities for ongoing personalization. The retailer has set up interactive social displays that encourage store visitors to take pictures of their favorite in-store looks, and then turn their images into social and printed content.

In addition, shoppers can also view digitized look books and virtually send their favorite styles to friends and family. Along the way, visitors answer questions about themselves and their preferences, so that the next time they walk through the front door, Melissa Shoes staff can move beyond the vague, “can I help you?” and instead tailor the customer’s experience to what they already know about her and her preferences.

Savvy retailers heart macro- and micro-influencers.

Gone are the days when brands looked only to celebrities and high-profile social media influencers to spread the word about their wares. This year is the dawn of the micro-influencer: social media users who have relatively smaller audiences but are influential within their respective circles. And, bonus, they legitimately like the brand.

In-Real-Life stores provide a far better backdrop for influencers to influence than online could ever dream of. By pairing meaningful in-person experiences with fodder that encourages visitors to drop everything and let their followers know what’s up, retailers are proactively converting everyday in-store visits into social media currency for influencers of all shapes and followings.

Encouraging customers to use geotags, hashtags and/or the brand’s name in posts not only leads audiences back to the brand, but also lets the retailer keep track of their posts and determine which had the most engagement. Knowing this, the retailer can consider introducing more formal collaborations with the fans behind these high-performing posts.

Customer data makes the customer experience better.

Online retailers live and die by their data, yet when it comes to knowing what their customers are like offline, they’ve got a major knowledge gap. Ironically, many brick and mortar retailers suffer from the same lack of information about their in-store customers. That’s why brands have begun to introduce data collection components to their in-store experiences.

As technology evolves and online and offline are formally integrated, data collection will be more like data transfer, where an online retailer’s knowledge will be immediately available to its offline counterpart, and vice versa. Until then, retailers will continue to use tech-enabled, but still manual, approaches like loyalty reward program sign-ups, competitions, surveys tied to experiences, and customers’ transaction histories, to learn more about them.

Independent of how they get it, data is crucial for retailers’ ongoing marketing and sales efforts. It’s what allows online brands to continually evolve the customer experience online, and more and more, it will be what lets retailers evolve the customer experience in-store.

Offline and online retailers face different challenges, but have very similar goals. By taking the best of both worlds and applying it to the customer experience, retailers can begin to make brick-and-mortar shopping the next big thing.


Jim Hopper is CEO of M-ND, which makes innovative social-experiential marketing tech for brands.

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MARKETING/SOCIAL MEDIA

Study: Top reasons millennial parents prefer stores for BTS shopping

BY Marianne Wilson

When it comes to sticking on budget, millennial parents prefer in-store shopping over digital commerce for back-to-school purchases.

Sixty-five percent of millennial parents believe shopping in-store enables them to more effectively remain within budget goals compared to shopping online, according to a study commissioned by Citi Retail Services. These parents plan to do the majority, 72% on average, of back-to-school shopping in a store rather than online this year.

Remaining on budget is not the only reason millennial parents prefer shopping in-store. Other top reasons are: trying on clothing and testing items (63%); including their child in decisions on what to buy (60%); more easily comparing products (48%); and getting better deals (43%)

The survey indicated that 91% of millennial parents feel that they consider their child’s opinion when back-to-school shopping more than their parents did when they were young. This stat signals that new parents are increasingly leaning on their children's recommendations and input for back-to-school products, the report noted.

“More millennials are entering parenthood, which is having a profound impact on retailers,” said Leslie McNamara, managing director and executive VP of business and market development for Citi Retail Services. “These parents place tremendous value on their children’s opinions when shopping and are not as swayed by brand on big ticket items like electronics. Retailers can incorporate this into their approach when marketing to millennials, whose habits may defy generalizations as they enter the next stage of their lives.”

The survey revealed that millennial parents do not view back-to-school shopping as exclusively limited to the summer before school starts. Nine out of ten parents expect to buy some items after their child’s first day of class.

On average, they anticipate having more than a quarter (27%) of their back-to-school shopping left after the first day of school. Furthermore, these parents do not expect to have bought their last item until four weeks after the start date, which can mean back-to-school shopping remains a priority for parents into the fall months.

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News

Regulatory Wrap-Up: Updates on paid leave, cybersecurity and trade

BY CSA STAFF

Wages

Kansas City, MO: The voter-approved $15/hr. minimum wage will begin to phase in four days (Aug. 24) before a recently passed state preemption law goes into effect; however, a previously enacted preemption law remains in effect for Kansas City and all other municipalities other than St. Louis (a judge struck down the law’s applicability to St. Louis). City officials have stated they will not enforce the new $10/hr. requirement during that four day period and reaffirmed that a state preemption law remains in effect.


Paid Leave

Michigan: The Michigan Board of State Canvassers gave approval to Michigan Time to Care’s paid leave constitutional amendment. The group can now begin gathering petitions. It has 180 days to collect over 300,000 signatures. The initiative would require businesses to allow employees to accrue one hour of paid leave for every 30 hours worked with a cap of 40 hours of paid leave per year.

Washington: The paid leave funding legislation passed earlier this year mandating weekly paycheck contributions by both employers and employees is currently in the rulemaking process. Multiple public hearings are being held during the month of August with public comments due by Sept. 1.

Albuquerque, NM: Opponents of the paid leave initiative are exhausting all legal options in an effort to remove it from the October ballot, appealing their case to the state supreme court. Ballots must be mailed to residents by Aug. 28, placing the legal challenge under significant time constraints. The initiative would apply to all businesses with a physical presence in the city and mandates that employers provide at least seven days of paid leave to employees.


Taxes

ACA: After the failed effort by Congressional Republicans to repeal the ACA, the IRS is reminding employers that reporting requirements remain in effect. The agency recently announced that it plans to enforce the employer requirements. To date, the IRS has not imposed any penalties even though the reporting rules have been in effect for two years.

California: A California Assemblyman is working on legislation to raise the state’s corporate tax rate from 8.84% to 9.84% for companies with 500 or more employees. The new revenue would be dedicated to building affordable housing. While a bill has not yet been officially introduced, this issue is likely to dominate the policy discussions when the legislature returns later this month.


Menu Labeling

New York: The New York City Health Department agreed to delay enforcement of the menu labeling requirements from Aug. 21 to Aug. 25 to allow negotiations with the affected business community to continue. If no agreement is made, the judge in the case brought by the NRA and NACS seeking to delay the city ordinance is expected to rule on an enforcement timeline by Aug. 25. The city law conflicts with the federal law which does not go into effect until May 7, 2018. Additionally, that law affects a larger pool of businesses. Under the NYC ordinance, foodservice establishments that have 15 or more locations nationwide must disclose calorie counts and other nutritional information as well as post a statement about the daily-recommended caloric intake.


Labor Policy

Labor Day Activism: Each Labor Day, unions and labor advocates celebrate the history of the labor movement, and press coverage around the holiday often focuses on the state of organized labor and ongoing union campaigns. The Fight for $15 campaign, for its part, is collecting petitions to highlight the positive impact of unions.

North Carolina: The Governor signed a new law creating an office to investigate employers who may be misclassifying workers as independent contractors to avoid providing benefits and paying taxes.


Safety

OSHA: In light of a potential security breach, the Occupational Safety and Health Administration announced it was deactivating a recently launched electronic portal for employer injury reporting. The Trump Administration had announced a delay in enforcement of the Obama-era rule requiring employers to report injuries via the portal, but OSHA instead launched the portal in July and some employers had already begun utilizing it.


Cybersecurity

NIST: The National Institute of Standards and Technology, the federal agency responsible for setting numerous standards including for cybersecurity, issued a draft revision of a special report outlining security and privacy controls for information systems. The report provides a catalog of operational protocols intended to protect all types of computer platforms including general purpose computing systems and internet of things devices from hostile attacks, natural disasters, human errors and privacy risks. The draft revision is open for public comment through Sept. 12.


Trade

NAFTA: Trade officials from the U.S., Mexico and Canada concluded the first round of NAFTA renegotiation talks and scheduled the second round Sept. 1-5 in Mexico. The joint press statement released this week focused on positive first steps and restated a commitment to a quick conclusion of the talks. All parties are seeking conclusion prior to domestic campaign seasons — U.S. midterm elections and Mexico’s presidential election. Behind the scenes, tensions were high as the U.S. ruled out minor tweaks and restated its intent for a full renegotiation. Issues such as rules of origin for auto parts, dispute-resolution systems and labor standards will be among the more challenging negotiations.

South Korea: US Trade Representative Robert Lighthizer announced an Aug. 22 special session of the Joint Committee under the Korea-US Free Trade Agreement (KORUS) to be held in Seoul. This marks the beginning of U.S.-initiated discussions regarding the efficacy of the free trade agreement as well as concerns over market access and the growing trade imbalance.

Japan: Following President Trump’s withdrawal from the Pacific Rim trade deal, the U.S. is engaging bilaterally with many of the countries that were partners to the TPP deal. The USTR announced an agreement with Japan to accelerate trade discussions. A day after the announcement, the U.S. raised concerns about tariffs on U.S. beef. No specific timeline of discussions was released.


Other

Texas: The controversial bathroom bill supported by the Governor and senate leadership failed to pass the house during the special session which adjourned this week.


Key Takeaways

The President’s unfortunate remarks over the past week have isolated him politically. His ability to drive outcomes on business community priorities has been incredibly diminished. Corporate leaders will need to refocus on Capitol Hill and work to build consensus among House and Senate leadership to proceed with tax reform and other issues important to operators.

The income inequality narrative took a new turn this week with legislation under discussion in California that would increase the corporate tax rate for “wealthy companies” to subsidize the construction of affordable housing. Similar to the CEO tax in Portland and the millionaire’s tax ballot initiative in Massachusetts, advocates continue to devise new taxes, capitalizing on the income inequality theme and driving an anti-corporate measure.

The business community defeated efforts in Texas to pass a bathroom bill modeled off of the North Carolina bill. It’s a notable victory given the Governor, Lieutenant Governor and many members of legislature were vocal supporters of the legislation.

Legislature Status for Week of 8/21/17

The United States Senate is in recess with pro forma sessions every 3 days until Sept 5

The United States House is in recess with pro forma sessions every 3 days until Sept 5

Ten state legislatures are currently in regular session

o CA, IL, MA, MI, NJ, NC, NY. OH, PA, WI

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We've recently launched a podcast that focuses on politics and policy for the restaurant industry. You can listen to the "Working Lunch" podcast by clicking here or subscribe on iTunes here.


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The Regulatory Wrap-Up is presented by Align Public Strategies. Click here to learn how Align can provide your brand with the counsel and insight you need to navigate the policy and political issues impacting retail.

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