REAL ESTATE

5Qs for Paul Hartley on brick-and-mortar’s future

BY Al Urbanski

A study conducted among a representative sample of U.S. consumers found that the highest percentage of omnichannel shopping occurred in the clothing and footwear category, where a third of people said they shopped both in-store and online. We asked Paul Hartley, managing director of Escalent, the market research firm that performed the study, to elaborate on what the near future looked like for brick-and-mortar retail.

E-coms have done a great job of taking apparel share. What challenges and opportunities does this present to clothing retailer in physical stores?
I remember the days when I wrote about how clothes would never be sold online because of the interactive in-store shopping experience, but online retailers have lowered the barriers of purchasing online with options like free, fast shipping and easier returns. They need to think about new ways to display items, maybe creating special stores with greater breadth that compel shoppers to look at the options available and try them on.

Can you point to any brands in this category doing a good job of transitioning to an omnichannel world?
Kohl’s accepting Amazon returns. At the front end of the buyer journey, they’re like to kill each other. On the back-end they want to cooperate. For Kohl’s it brings people into the stores, and it’s easier returns for Amazon. Nordstrom Local, the chain’s small-scale service hubs, are designed for next-day order pickup, onsite alterations, and fast and easy returns. And Walmart is really coming into its own as an omnichannel retailer, having introduced next-day delivery for as much as 75% of the marketplace.

Two-thirds of your respondents said they preferred in-store purchasing for large or expensive items. Does this augur a move to more luxury goods retailers in shopping centers?
Tricky one. Luxury goods is pretty thick in the ground in malls as it is today. Not a lot of other places they can go. Tiffany’s not going to open up next to my local Kroger. Also, the economy is ready for a dip. The first area of retail to get hit will be luxury goods.

One of your recommendations for retailers is to set up pop-up stores to attract specific consumer segments and execute promotions.
We have many clients who get to the end of a research project and want to beta-test it. If they can do pop-ups or get a short-term lease, they can test different models and see what works, so I do see this as a growing trend. We have categories in which people are increasingly becoming omnichannel shoppers, so it makes sense for retailers in those categories to have different footprints.

What about retailers’ use of technology? Is it slow in coming? Name one or two tech-powered initiatives all retailers should be involved in. 
Starbucks is a great example of a company that has seamlessly integrated their rewards and payment all in one place. Consumers are very likely to return to an app – and use it to pay – as they earn loyalty program rewards. Another piece of technology that is expected to grow in the near future is automated checkout technology. Technologies that alleviate traditional retail friction are most likely to see widespread adoption.

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