Mapping Out a Retail Reinvention Game Plan
Today’s consumers expect a retail experience that is differentiated, but also upholds the basic amenities they’ve valued for decades – a clean environment that is easy to navigate and appealing to multiple senses.
However, as technology has evolved, these same individuals now seek multi-channel compatibility and real-time interaction to drive more informed purchasing decisions and a better overall shopping experience.
For retailers, there is pressure to adhere to both customers and market trends while maintaining their own efficiency. Today, reinvention is a “must,” not a “nice to have.” While it can seem like anything but a straightforward endeavor, a successful retail reinvention project can generate higher traffic and attachment rates, better customer loyalty and, overall, a stronger revenue stream.
Reinvention represents a perfect marriage between retailers and the customers they serve. Retailer project owners must closely collaborate with their marketing, merchandising and operations executives throughout planning and execution to achieve their “happily ever after.”
So how can today’s retailers map out a reinvention game plan? By working with their team to evaluate four critical questions, retailers ultimately can reposition their stores as memorable, must-visit consumer destinations.
Modern shopping centers are littered with the ghosts of big-box retailers who struggled to adapt to shifting markets. In many cases, these vacancies symbolize reinvention that either came too late or missed the mark with customers, the retailer’s business plan or both.
When evaluating reinvention, retailers’ strategies must emphasize long-term benefits, rather than reinventing just to reinvent. Typically, the reasoning is rooted in achieving four common goals:
• A specialized brand identity that “breaks through the clutter.”
• A more innovative approach to serving changing customer needs.
• An enhanced operational model that anticipates and delivers against their own future vision.
• A boost in revenue.
How retailers prioritize and act against these will vary depending on the industry and business model. Often, retailers find themselves in “reactive mode,” constantly changing just to keep up but ultimately losing sight of the bigger picture. This lack of vision only fuels the downward spiral that can potentially cripple retail operations.
What do customers want?
Above all else, today’s shoppers expect a seamless omnichannel experience. Although e-commerce channels are often seen as competition, smart retailers can accommodate customers by linking their online and brick-and-mortar operations.
Today’s buyers also take greater diligence in how they spend. A 2017 Salesforce report found that more than three-fourths 79%) of shoppers research a product or service online before purchasing at a store. For brick-and-mortar retailers, this signals a need to replicate the ease of the online experience in real life. Employees should be prepared for customers to enter the store with detailed product questions, but also with greater motivation to buy.
It’s also clear that customers want to gather a wealth of information as they contemplate their purchase. Today’s online portals enable users to upload photos to their computer and literally see themselves in a piece of clothing or holding a piece of equipment.
Brick-and-mortar shops can capitalize on similar innovations, from mirror displays that allow customers to virtually “model” outfits and accessories to sensor-triggered signage that provides background or promotional information when customers approach a product.
Is the reinvention vision realistic?
A successful retail reinvention plan must balance creativity and practicality. It’s unlikely that retailers will have the resources or capabilities to make their entire revitalization dream a reality (at least in the immediate future), and they instead must work with their marketing, merchandising and logistics colleagues to decide which components will generate the greatest return without significantly disrupting operations.
As new and interactive in-store technologies become the norm, retailers must think through the full scope of such integrations. Would these displays and programs easily comply with existing IT infrastructures, or will businesses need additional equipment to optimize performance? Are these platforms scalable to welcome real-time pricing updates and new products?
It’s also possible that change-ready retailers may want to overhaul their look and feel altogether. Store design is a foundational reinvention component and requires thorough consideration. Even the most modern approaches must account for consumers’ fundamental desire for an intuitive layout, as well as the resources required to assist guests, replenish inventory and manage traffic.
The growth of BOPIS (Buy Online, Pick-Up In Store) shopping and a renewed emphasis on e-commerce synergy should also factor into any retail makeover. Retail teams need to not only consider the most convenient ways to accommodate these customers, but also how to balance e-commerce with traditional shopping in terms of pickup positioning, service promotion and overall execution.
A reinvention plan is only as good as the people who can fulfill it. Retail teams must be mindful of future store staffing and evaluate potential changes to their hiring and employee training process. Eager consumers won’t wait through a “new store transition” period, and retailers will need on-floor teams to be immediately familiar with new layouts and technologies. This may dictate a shift in worker profile from the type hired in previous years to one who is more adaptable and tech-savvy.
When is it time to consider modifying a reinvention plan?
Most retail remodeling projects last anywhere from several months to several years, and market conditions certainly can change during these windows. Retail planning teams need to be agile and modify plans in real-time.
Given the intricacies of managing a multi-store reinvention project, many retailers are foregoing the traditional approach of hiring multiple “boutique” firms to handle individual components – such as design and implementation – in favor of fully-integrated, single source partners that can provide end-to-end consultation. The right partner can also deliver retail strategists that can advise on market trends and customer sentiments. Through a more holistic approach, businesses can better align marketing, merchandising and operational needs, and eliminate both costly mid-project rework and rollout hassles.
Although it’s easy to feel the burdens of reinvention, retailers should recognize the broader value of refreshing their brand and building stronger connections with customers. By aligning multiple business units to develop and execute a streamlined, thorough plan, retailers can reap the benefits for years to come.
Ron Lutz, is executive VP and chief client officer at Miller Zell, a fully-integrated retail experience solutions company.
Starbucks reins in expansion, ramps up store closings
Starbucks Corp. is slowing down U.S. store expansion and increasing the pace of store closures in the face of slowing same-store sales.
The coffee giant on Tuesday said it expects a 1% increase in global same-store sales in its third (current quarter), below analysts expectations of a 2.9% increase. As part of a streamlining initiative, Starbucks is “optimizing” its U.S. store portfolio at a more rapid pace in fiscal 2019, and will close about 150 company-operated underperforming stores in its most densely populated markets (up from an historical average of 50 annual). New store growth will focus on under-penetrated markets. It also is slowing licensed-store growth.
“We must move faster to address the more rapidly changing preferences and needs of our customers,” said Starbucks president and CEO Kevin Johnson. “Over the past year we have taken several actions to streamline the company, positioning us to increase our innovation agility as an organization and enhance focus on our core value drivers which serve as the foundation to re-accelerate growth and create long-term shareholder value.”
Starbucks said it is actively expanding the breadth and depth of digital relationships with current and new customers. The company has added 5 million new digitally registered customers since April 2018, and 2 million active Starbucks Rewards members year-over-year to 15 million, up 13% from the previous year.
The retailer expects newer digital initiatives to contribute one to two points of comp growth in the U.S. in 2019, supported by a redesigned Starbucks Rewards program that provides customers more choice around redemptions and payment, as well as expanded personalization capabilities for customers that have a digital relationship with the company.
Starbucks said that it expects to return about $25 billion in cash to shareholders in the form of share buybacks and dividends through 2020. This is a $10 billion increase from the forecast the company set last November. The company will hike its quarterly dividend by 20%.
Sugarfina going global
Luxury candy brand Sugarfina is expanding into Asia.
Sugarfina will open its first store outside of North America this summer, in the upscale Harbour City mall Hong Kong. The company will partner with franchise operator Upper East Holdings LTD.
“We’ve been dreaming of expanding Sugarfina globally since the early days of the brand,” said Rosie O’Neill and Josh Resnick, co-founders and co-CEOs of Sugarfina. “Hong Kong is the window into Asia and Upper East Holdings is the ideal partner to establish our brand in the region.”
A recipient of Chain Store Age’s 2016 Breakout Retailers Awards, Sugarfina is known for its luxe packaging and innovative confections, made by artisan candy makers around the globe. More than three quarters of Sugarfina offerings are exclusive and can’t be found at any other candy store.
The 900-sq.-ft. Hong Kong boutique will feature Sugarfina’s crisp aqua and white color scheme and upscale, sophisticated ambience. The brand plans to open additional locations in Hong Kong with Upper East Holdings, and continue expanding internationally through similar partnerships.
“We were mesmerized by Sugarfina’s sophisticated concept and innovative candy flavors,” said Tammy Wu and Stephen Yeung, Directors of Upper East Holdings. “We have always been passionate about finding the perfect luxury confections experience to bring over from the United States and we look forward to working with the creative minds of Sugarfina.”
Sugarfina opened its first location in 2013, in Beverly Hills, Calif. It has more than 50 locations across North America in major cities such as Los Angeles, New York, Boston, Chicago and Vancouver.