Retail sales have been sluggish, and although Kiplinger is forecasting a stronger second half to 2016, it’s still not enough to make anyone feel good.
Blaming a lack of consumer spending on a recession is easy, but the data shows something more profound. People are still spending money, but instead of shelling out for new possessions, they’re now splurging on experiences. While retail sales slumped in 2015, airlines, restaurants, and the entertainment industry enjoyed healthy growth.
In order to drive transactions and stay competitive moving forward, businesses that sell directly to customers need to focus more on delivering experiences that bolster their offerings.
3 Steps to Reviving Retail
The dilemma doesn’t solely affect retailers — in the shopping category on iTunes, there are more apps focused on enhancing the shopping experience than on directing e-commerce.
With millennials growing up and controlling a larger portion of the economy, we have to cater to a new generation’s needs. To that end, here are three steps to improve sales moving forward:
Create an in-store lifestyle experience
To develop brand affinity, build customer loyalty, and drive sales, retailers need to accurately determine and understand what their strengths and opportunities are. Doing this will help them create unique, customer-centric in-store experiences where strong brand value propositions are brought to life.
Warby Parker, for example, is an eyewear retailer, but in looking at its SoHo store, you’d think it was a library. Shelves are stacked with carefully curated literature, while comfortable chairs invite passersby to take a load off and read. And what do patrons often need in order to indulge in that cozy experience? That’s right — eyeglasses. The experience encourages them to peruse and purchase from Warby Parker’s online store.
Although we used to look at the website as a means of generating foot traffic, this new business model uses the brick-and-mortar store as a means of promoting the website. Unloading inventory online is simply more efficient; products can be delivered pretty much anywhere in the country within a day or two, given the right distribution channels.
Utilize apps to drive mobile users to offline purchases
Just about everyone has a smartphone these days, and in 2015, mobile devices influenced more than $1 trillion of in-store sales. Apps and location-based marketing initiatives capitalize on the ubiquity of mobile to drive the offline shopping experience.
Sephora, for instance, recently launched an app called Pocket Contour, which guides a user through the process of digitally applying makeup to her own selfie. Once she finds the perfect look, the app guides her to products at Sephora that will allow her to recreate it in real life.
Conversion rates on mobile can be amazing when harnessed right. With 78 percent of local searches converting to purchase — and 63 percent of those purchases occurring within a few hours — mobile is a driving factor for in-store purchases.
Focus on one critical piece of data: location, location, location
Context is important when communicating with customers — their objectives in doing an online search while in the store are different than when they’re at home. Putting customers first by using technology to determine where they’re searching from is a critical element of digital marketing campaigns.
Sephora, again, illustrates this concept well: The brand continues to thrive while other retailers struggle, and much of this growth is attributed to its use of mobile technology. Customers can now opt in to beacons throughout the store that deliver deals, promotions, and even birthday benefits via the Sephora to Go app.
During the trial beacon run in San Francisco, 80 percent of Sephora shoppers opted in. Moreover, Swirl — a popular beacon platform — found that 73 percent of shoppers who receive a beacon-triggered message are likely to act upon it. Integrating similar technology into their digital marketing campaigns could be the missing piece for struggling retailers.
The way people view shopping has evolved. With the shift to a mobile-first mentality, it’s more important than ever to utilize mobile devices to help drive sales. Much like Starbucks reinvented the coffee shop as a destination, retailers of all stripes need to provide unique experiences to entice customers to visit them in both realms: brick-and-mortar stores and online outlets.
Otherwise, it won’t be long before the old guard is disrupted by next-generation retailers, who are using nothing more than an experience to convince customers to open up their wallets.
Anthony Nicalo is the VP Platform at mobile customer engagement platform Mobify.