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By Janet Valenza
We’ve all heard the bricks and mortar (B&M) retail complaints about showrooming. Someone comes into a store to see, touch and experience the product, only to return home to the Internet to shop the price and buy it elsewhere. Yes it’s true, and a real drag. But what if those same retailers could use this to their advantage? The good news is they can, by displaying samples of e-commerce brands, taking orders through the existing e-commerce brand website, and getting a cut of the deal. Retailers can even charge a base rent, calculated on sales per square foot, using the same type of model that Bloomingdale’s uses for its shop-in-shops. They earn their cut of any sales above the base.
Test New Categories
Retailers can test new categories, without any financial inventory risk. That’s right, the biggest risk in retail is removed. Not only that, instead of laying out cash for inventory, retailers can take it in with the base rent, adding to profitability.
In a clothing boutique, for example, they can test jewelry with a sample presentation that remains live for six weeks in B&M, with the store staff taking orders through the existing brand’s website. If it works, the relationship continues. If not, the brand gets swapped for a new one. B&M retailers now have a risk-free way to build their assortment and their business.
Another benefit is ‘newness.’ The sample presentation creates another reason to invite customers back into the store. It’s a traffic driver. From a publicity standpoint, it’s also newsworthy. Turn it over to a PR agency, along with some well-planned events, and you can blow the doors off!
Expand Business, not Footprint
Now that you understand the basics of this type of arrangement let’s take it a step further. What this arrangement amounts to for B&M operators is a vehicle to expand their business using the existing footprint. In other words, without adding any square feet at all, the possibilities to expand the business across categories are virtually (no pun intended) unlimited.
Picture this: Some beautiful, adjacent well-merchandised little nooks displaying a dozen samples each from multiple new categories with a handy tablet (perhaps mounted on the wall) for a sleek look, along with a well-trained incentivized store sales staff to help customers “round out the brand” using the tablet and close sales. That means each and every square foot in the store becomes endlessly efficient, all risk-free.
Perhaps you are concerned about keeping your customer relationships intact. If they are not already customers then just enter new customers into your own database when they make a purchase. Your customers are also likely buying stuff online anyway. Why not be the resource that introduces them? I refer again to the old adage: Although your business needs new customers too, it’s much easier to sell more of what they want to your existing customers than it is to get a new customer. What I call e-pop-ins is the perfect vehicle to put it to work.
Today in a meeting of CEOs sponsored by the Luxury Marketing Council, I heard Robin Lewis say, “The United States is overstored.” He backed it up with the following statistic: there are 46 square feet of space for every American citizen, compares to three in the UK. Here is a way for you to expand without adding more space in an already over-saturated market.
Besides that, as a B&M retailer, you are providing a very valuable benefit to brands growing up online. That is a chance for shoppers to see, touch and try on their products. Or, in the case of cosmetics, even to smell them. Or, for spices, to taste them. What a way to create a memorable in-store experience. The latest buzz is all about experience and entertainment over acquisition, but I believe that the most exciting stores have the best merchandising combined with the best experiences. Sensory experience leads to emotion, which leads to buying and loyalty. This value cannot be underestimated.
From new product launches to new geographic markets, a physical presentation is a critical element for brands growing up online. Why is this important to stores? Because those brands, by definition, must support the presentation to acquire new customers. When they support it, they drive new customers to your stores. So an added benefit for traditional retailers is new customers too.
A Look at the Future
Let’s take it even one step further and paint the picture of the future. If in fact retailers can spend less time on the trade of buying inventory and turning around and selling it, and more time getting to know their customers better, now we have something.
Retailers can really start to understand how those customers live. What style home do they have? Do they commute to work? If so, from where to where? How? What do they do for fun? How about for relaxation? Are they married? Do they have children? Where do they vacation? The list goes on and on. Retailers can get to know customers as “friends,” instead of constantly worrying about inventory.
What is the benefit in all of this for the stores? Well birthday, anniversary and holidays gifts for starters. Secondly, if you sell a certain type of clothing what’s the best fit in terms of home décor? What does your customers like for their homes? What about resort wear? And for the fitness inclined, how about activity trackers?
The point is, the more the focus goes away from constant inventory management and toward paying attention to customers, the better off you are.
I see it going even beyond that. The stores become the front-end and the brand websites becomes the back-end. What that means is that stores become a sophisticated database of details related to customers’ lifestyles with the appropriate “registry” along with a well segmented and executed online marketing program.
From a creative standpoint, it produces another big WOW! The more retailers can understand their customers’ lifestyle, the more exciting and focused the merchandising and in-store events can become. Not only will the experience be richer, but also the stores will deliver an experience that matches how customers live. In this way, as an independent B&M retailer, you can get everything the big guys get. Now that’s how to make showrooming work for you!
Janet Valenza is president of Pop-Up Artists, a strategic marketing agency that creates focused physical shops for retail and luxury brand clients, integrating e-commerce. She is a former C-suite executive from the Young & Rubicam family of companies. She can be reached at 917.497.5319 or janetv@pop-upartists.com. For more information, visit www.pop-upartists.com.
Jul.
2014
2014
Posted in Contributers, Strategic Marketing
