It's no secret the retail industry has seen a decrease in in-store sales over the last few years. Over the course of 2015, the Sears Holdings Corporation, parent company of Sears and Kmart, closed over 230 stores nationwide. As a fashion industry professional with over twenty years experience, I've been on a quest to learn why physical retail is on the decline. The problem stems from more than just issues like subpar customer service, but rather a 180-degree change in customer habits. Here are the four biggest offenders that have contributed to the widespread decline of brick-and-mortar sales.
1. Conscious Customers
The biggest shift in retail has not been the switch from in-store to online shopping, but rather a shift in the customer's approach to purchasing items. The fashion script has been flipped -- customers are no longer compliant consumers but rather savvy shoppers. They compare prices and purchase merchandise through multiple platforms including brick-and-mortar stores as well as department stores online shops, boutiques, designer sites and third party sellers, within a matter of seconds. This type of unique access has created educated customers who understand how and when to purchase clothing and accessories in order to get the best deal.
2. Going Online: Couches vs. Fitting Rooms
Retailers have seen a rapid rise in online sales in the past several years. In 2015, mega e-tailer Amazon saw a 97% increase in sales year-over-year. What does this mean, besides the obvious? While this huge increase in online shopping is helping keep the retail industry afloat, it's also eating away at income at brick-and-mortar stores. The one-click online shopping experience allows customers to buy an entire new wardrobe with ease. Online shopping also means not having to step outside of your comfort zone (literally), and for some, that's worth more than any physical retail experience could ever offer.
3. Sales On Sales On Sales
In an effort to combat the continuous decrease in sales, retailers have shifted their focus to heavy promotional selling. This quick fix may bring customers into stores but over time, it devalues both the brand and the product. Pricing is directly reflective of the quality of the product and brand. When retailers discount their product, they're also cheapening their brand. Don't get me wrong, I love a good sale. However, when retailers put all their eggs in the 40% off basket, customers will always expect a discount and become less inclined to purchase full-price merchandise. Retailers should use promotions as one of their tools in their sales kit - not the only one.
4. Next Gen Shopping
With more and more customers moving to online shopping, physical retailers need to evaluate what's making customers migrate online. If it's foot traffic stores are lacking, retailers need to make sshopping an experience rather than a chore. If customers, especially millennials, are going to spend their time in physical stores, they need to feel stimulated and engaged. Taking risks and allocating budgets towards experiential marketing and technology will get people off the couch and into the fitting rooms. In an effort to create a digital retail experience, retailers should look to omni-channel shopping efforts in store. Incorporating kiosks or handheld mobile devices where clients can purchase additional product from online and other physical stores, while in-store, is one way retailers can stay on top of an ever changing and demanding clientele.
Realistically, brick and mortars aren't going anywhere. In the end, there is nothing as appealing or intoxicating as walking into a store and being greeted by a familiar scent and a smiling face. At Liberty Fairs, we create an experience where the customer is transported and inspired to think differently about fashion. And, hopefully, our vision inspires them to transcend their clients shopping experience.
What are your thoughts on the current climate of the brick-and-mortar shop?