The Future of Retail – 2020 and Beyond Retail Apocalypse Or Retail Opportunity? the FUTURE of RETAIL – 2020 and BEYOND

The Future of Retail – 2020 and Beyond Retail Apocalypse or Retail Opportunity? THE FUTURE OF RETAIL – 2020 AND BEYOND

It seems that every week, we have news Are things really as bad as they seem? Is Unsurprisingly, the key to adapting headlines bemoaning the collapse of yet today’s changing retail atmosphere the successfully in today’s shifting market is to another retailer, while analysists make dire sign of deep decay within the industry, understand what those shifts are, where predictions about empty shopping centers or are we simply seeing a few growing they’re headed, and how they change the and failed big-box stores. pains as the market adjusts to changing overall retail landscape. consumer behavior?

How Retail Is Changing

Retail Under Pressure property is always an issue, due to climate challenges. whether it’s rent, location, or And lastly, there’s inflation There’s no doubt that retail just the size of the store. Next, in the employee market, as is changing, says Andrew there’s competition with online, base wages are pushed up Myers, WorkJam’s vice with the storefront becoming in many parts of the world.” president of Asia Pacific more of a showroom. Then, and global digital strategy, The other thing that’s the cost of goods is changing, and former Chief Operating changing? The customers. whether it’s electronics Officer at Target Australia. from China being more “Bricks and mortar businesses expensive due to inflation are facing four types of and geopolitical forces, or challenges,” says Myers. “First, the cost of produce climbing

A Shift in the Buyer’s Journey From a retail point of view, Because information and this could look like a teenager advertising reach consumers Most every retailer is realizing she needs a new in a never-ending stream, familiar with the buyer’s pair of shoes to go with her the customer can slip back journey. The basic concept new dress, then looking at to the consideration stage of it is that customers go various styles of shoes, and in a heartbeat, once more through three stages prior then deciding on a sandal and looking at their options. to making a purchase: picking which store to visit first. A Culture of Consumers • Awareness: At this point, It all sounds neat and tidy. the customer isn’t looking In addition to the buyer’s As it turns out, however, for solutions to their journey being less this model is becoming problem. In fact, they’re straightforward, there is outdated. No longer are just starting to become another massive way in buyers moving in a straight aware of what their problem which retail has changed line down the sales funnel. is in the first place. as Millennials and Gen Z Instead, the easy online develop increased purchasing • Consideration: The access to product information, power, and that’s in the customer knows they reviews, and competition rise of community. have a problem to solve means the buyer’s journey has and they’re starting In 1990, a typical apparel become labyrinthine in nature. to look at options. shopping experience for a Now, our teenager may be at 20-year old would have been • Decision: They’ve decided the store, item in hand, ready to head to the mall with some exactly how they want to buy, but then decides at friends, browse around the to solve their problem the last minute to check out stores, try on some things, – now they just need to her Instagram feed…and sees make some purchases, and decide on a vendor. a pair of sandals she thinks head home. It was done in one she might like even more.

trip, with one relatively self- marketplaces’ websites, So what of brick and mortar contained unit of influence. looking at reviews, and retailers, then? Where do they checking out customer- fit into this picture, and will Fast-forward to almost submitted photos. they be reduced to fighting 30 years later. over crumbs while online • Selecting a retailer and Now, a 20-year old’s shopping shopping and behemoth putting items in her cart. journey might look like this: marketplaces grab the lion’s She may buy the jeans share of consumers? • Seeing a celebrity that moment, that day, or promoting a brand of a week later. Or, she may jeans on Instagram. decide that those jeans won’t work for her and will • Adding her like and her start back at square one. comments to the post along with thousands of • Once she does purchase other followers, all sharing a pair of jeans, she’ll put in their enjoyment of this them on, snap a selfie, famous influencer’s style. and share it with her own community, exerting her • Going onto Twitter or own influence in turn. Reddit and ask where one can find those jeans for the In short, the customer is fully best price, or if anybody immersed in an ever-evolving else has bought them and marketplace experience what they think of them. where they shape the image of – and are fully immersed • Flipping through multiple in - the brand well before they retailers’ and online even make the purchase.

Is Brick-and-Mortar in Trouble?

As the marketplace evolves, reported that “the food, end of 2019, with a full 36% are brick and mortar stores drug, convenience and mass anticipating a higher store becoming obsolete? It would merchants/warehouse category count by the end of the year certainly seem that way. has reported 3.7 companies than they had in 2018. Only adding stores for every one 7% said they’d have a lower However, while things have that is closing stores.” total store count by year-end. changed, they’re not as dire as they may seem. Despite fears While some retailers are of behemoths like Amazon certainly failing, many more are and Alibaba destroying in- thriving. Indeed, 16 retailers person retail, online sales represent 66% of store closures. still only make up 10% of In fact, a recent report revealed total retail sales. The National that 54% of surveyed retailers Retail Federation recently plan to open new stores by the

closing opening

Even retail leviathan Alibaba finding it easier than ever wouldn’t honor sales that were What DO consumers and its industry-dominating before to never again darken on the website. My mom still want from their retail e-commerce site, Taobao, the doors of a store that left shopped there, because she experience, however? are diving into brick-and- a bad taste in their mouths. doesn’t do online shopping, mortar…with a modern twist. but the rest of the family? Sears provides a good example Its FashionAI project combines We never went back.” of what can happen when the ease of online shopping retailers stop putting the This indeed is one of the with the sensory experience of customer first. The Wall Street lessons that we can learn from an in-person store, giving us a Journal reported in 2017 that the failure of large retailers: glimpse of the retail pendulum CEO Eddie Lampert avoided Customer loyalty only goes swinging back to a new, tech- investing in store upgrades so far. If the retailer takes enhanced happy medium. and investments, causing the them for granted and doesn’t This all sounds like relatively stores to fall into disrepair provide a good experience, good news after all. But, that — choosing instead to use they’ll be out the door. doesn’t mean that retailers can company money to buy Sears Andrew Myers agrees that blithely rest on their laurels stock back from investors. retailers cannot afford to and not worry about the “My family always shopped become complacent, adding, changing marketplace. After at Sears,” says one consumer “You can’t keep doing what all, while online doesn’t yet we spoke to. “Our clothing, you’re doing if you’re not make up a huge percentage of our appliances, our furniture, experiencing sales growth. retail, it does provide a viable everything. But the store just People won’t come back on alternative. Consumers are no seemed to not care about their own or because they saw longer forced by geography customers by the end of it. The an ad. You have to be willing to to simply put up with a poor website was terrible to navigate, change how you do business experience from their local the stores were a picked-over and give consumers what they retailer. They can and will mess, the appliance service want from a retail experience.” take their business online, went downhill, and the stores

What Consumers Want Now

Seeking a Positive • 92% of consumers consistent experience across Customer Experience polled said they would all of a business’ channels, stop purchasing from a but only 29% receive it. While it’s cheering news to company after three or hear that brick-and-mortar is • 54% of customers make fewer poor customer still important, the increase in decisions based on service experiences. available consumer options customer service, with 19% means that retailers need • 26% would stop after just considering it the most to bring their A-game. one bad experience. important deciding factor. Gladly’s 2018 Customer • Customers only want to Customer service, however, Service Expectations Survey have to explain a problem is only a small part of the laid out the cold, hard facts: once, not multiple times to puzzle, says Andrew Myers. multiple people. 71% want a

“You need to look at the overall in-person experiences? scented body lotion, as the case Market research expert customer experience. The sales You bet it does. may be). But the principle still Angela Woo agrees: associates could be unfailingly applies: When it comes to full No matter how engaging the attentive and helpful. But sensory experiences, online still “It’s clear that even as the online shopping experience, what if the prices are different cannot compare to in-person. online experience grows it still cannot replace the between the store and online? richer and more pervasive, sensory experience of in- Apple Stores are another What if the ambience in the the online-only approach isn’t person shopping. Think, for excellent example of a retailer store is off-putting? What are necessarily going to move the example, of your average Bath that creates a complete sensory the delivery and return policies needle as much as a blended and Body Works store. Even experience and a sense of like? Even something as simple approach that utilizes the though their website sales are community. Apple devotees as not enough hooks in the best of online engagement bustling, their same-store sales don’t go to an Apple Store for change rooms can negatively alongside the best of an still grew by 12% during the a quick in-and-out, generally. affect the customer experience. in-person interaction.” past holiday quarter. Walk into They browse, they hang out, Ideally, the online and in- any of their retail stores and they try new products, they Why? Even in an age of person platforms should be it’s easy to see why: Scent is engage with each other. The virtual reality, you still can’t well-integrated, thoughtful, their main value proposition stores, products, and website get the same emotional and designed to produce and the key component of all cultivate an experience and physical connection a cohesive and positive their brand experience. No of ultra-modern, cutting online. The senses play an experience, with everything matter how enticing the edge technology enhanced important role in evoking working together seamlessly.” product descriptions online, by sparse, clean beauty, these emotions, helping to Creating Connections reading about Warm Vanilla and the entire experience is shape an experience — and Sugar just isn’t the same as meant to evoke a feeling of the related brand perception As we mentioned, today’s smelling it for yourself. belonging to a cool, smart, — in ways that attendees consumers are seeking a and creative in-group. don’t even realize.” marketplace experience Comparing online shopping to with full brand immersion. brick-and-mortar when scent The key to that experience? is your product may seem Your people. Does that leave room for like low-hanging fruit (or fruit-

Store Employees: Retailer’s most (notoriously) underrated asset

So, let’s recap. In the meantime, retailers are highly engaged employee facing increased pressures due is enthusiastic about – and Consumers want: to competition from online dedicated to – their job. They’re • A consistent and positive stores and rising costs. passionate about what they brand experience across do, care deeply about the There’s an answer that multiple channels performance of the company, addresses pretty much and take their contribution and • Full-sensory immersion all of these problems: work seriously as it pertains in a sense of community Employee engagement. to the bigger picture. and marketplace

What Is an Engaged Employee? It’s easy picture why having • Easy access to products Being an engaged employee an engaged workforce would and information about goes further than simply being benefit your business, but let’s those products content at work. Instead, a examine the exact benefits,

particularly in light of the basically ignores you until you philosophy is Nordstrom. While analysis of the changing walk up to the register, and it has encountered peaks and consumer marketplace. you’ve got the general idea. troughs like any retailer, and Remember: 26% of consumers is continuing to evolve, this Benefits of Employee in the Gladly survey would family-operated luxury retailer Engagement shun a store after one bad has continually maintained Customer Satisfaction customer service experience, a strong focus on their and bad customer service employees and on customer This is the big one, the one doesn’t always mean overt service, resulting in decades of that can make or break your rudeness – just being generally upturn. In addition, they enjoy business…and it’s more unhelpful is often enough. better-than-average morale important than ever before. As and retention. Employees are Conversely, an engaged mentioned, consumers have the empowered and trusted (their employee will engender online world at their fingertips employee handbook contains goodwill and a sense of and they will no longer put up only one rule: Use good community with customers. with less-than-stellar service. judgment in all situations.) Having less-than-engaged These are the employees front-line associates makes it an who are friendly and Lower Costs, Higher Profits uphill battle to provide great knowledgeable, who genuinely We’ve seen how costs are service. Even if the associates care about the customers, increasing, whether it’s the are polite and knowledgeable, and who take pride in their cost of goods, the cost of the they simply don’t have the store and its offerings. These store property, or the costs internal motivation to create employees create a positive of staffing due to increased a great customer experience, customer experience that base wages. To offset those often doing the bare minimum leave consumers with a sense costs and continue to be of what’s required to keep their of well-being and belonging. profitable, there are only job. Think of what it’s like to An excellent example of a retail so many avenues available, deal with a sales associate who giant who has mastered this some of which can actually be

detrimental in the long run. even greater need to cut costs. replace one retail employee. If a business has 100,000 Too many retailers have It’s a race to the bottom employees and is operating made the mistake of treating that nobody wins. with a 40% turnover rate, that employees as an easily Instead, retailers can improve turnover is costing the retailer replaceable commodity, productivity, increase profits, over $133 million per year. reducing staffing costs by and reduce in-house costs eliminating their higher-paid, And while most retailers by focusing on improving full-time retail associates recognize that turnover is a employee engagement. and replacing them with serious problem, they may How does it work, though? entry-level part-timers. not be looking at precisely Reduced turnover what it’s costing them, Why is this a mistake? It’s says Andrew Myers: because all too often, the The average turnover for all staffers that were let go were industries in the US is around “A company may allocate the ones with the knowledge, 15%. For retail? It’s over so many millions to their HR experience, and engagement 60%, says the National Retail department, but may not be that had been elevating the Federation. This blisteringly closely tracking on the profit customer experience and the high turnover rate costs and loss reports exactly how overall engagement and morale these retailers a total of $19 that’s used and just how much of the workforce. This may lead billion annually in recruiting, of their budget is going toward to savings in the short term, but hiring, and training. the cost of recruitment.” tends to backfire spectacularly, Reduced Absenteeism as the poorly directed cost If your seasoned associates are engaged with the company cutting results in a decrease Highly engaged employees and stick around for the in service and employee usually won’t miss a shift unless long haul, the savings can engagement, which results their situation is absolutely dire. be vast. It’s estimated that it in lost customers and higher A disengaged employee, on the costs an average of $3,328 to turnover…which results in an other hand? Their absenteeism

rate will be much higher. It may to upsell, or even to make the your employer brand. And be that they simply don’t care. sale in the first place. Conversely, when a retailer has its staff Or perhaps their disengagement a highly engaged employee singing its praises, good things and unhappiness is manifesting is personally dedicated to the follow: a higher caliber of itself with physical symptoms success of the organization. applicants and more of them. that prevent them from coming So, they’ll look for additional Experienced and skilled staff to work. Either way, the numbers sales opportunities whenever from other retailers may even are stark. According to Gallup’s appropriate and will go out of start to jump onto your ship. 2017 State of the American their way to point out exciting This can make an enormous Workplace, workplaces with new products to the customers. difference in the cost of hiring highly engaged employees Along with the increase in sales and the time spent doing so, see 41% less absenteeism. comes an increase in margins. particularly in markets where Engaged employees will unemployment may be low. These numbers can significantly showcase and promote new add to a retailer’s struggles. merchandise, moving it out To sum up, almost all of the When last measured, of the store long before it hits major pain points today’s absenteeism was shown to cost the clearance racks. For more retailers face can be greatly American retailers $84 billion a examples of how to measure the alleviated by increasing year. In addition, absenteeism ROI of an engaged workforce, employee engagement. can cause an ugly chain And as it turns out, there read our white paper, “The reaction in a store: Lowered are exciting new tools that ROI of a Digital Workplace.” morale, increased frustration, make this easier than ever. reduced customer service, Easier hiring and a drop in productivity. When employees are highly Increased profits engaged, they tell their friends. They share it on their social An employee who isn’t engaged networks. They leave Glassdoor isn’t going to go out of their way reviews. In short, they build

The Power of the Digital Workplace

Digital workplace platforms staffers alike. Employees employees can view, trade, such as WorkJam make it struggle to get enough and pick up shifts across easier for retailers to improve hours and often face the multiple retail locations. efficiency and productivity impossible task of balancing A location that needs extra while also increasing multiple discrete part- hands due to an absence or an employee engagement time jobs. This juggling act anticipated increase in traffic (which in turn, also increases leaves managers scrambling can easily post available shifts efficiency and productivity). to handle shift change on the WorkJam platform. requests or to find new staff if Here’s one example: Associates from other locations underemployed employees who were sitting at home and Shift scheduling and leave for greener pastures. would love to pick up extra underemployment are major Now, picture an online shifts, quickly answer the call. pain points for retailers and shift marketplace, where

And presto, the benefits 5. Managers spend virtually on the activities that will design elements that went are multifold: no time handling shift actually move the needle, into the jeans. They knew how changes and can focus and create a seamlessly many we bought and how 1. Store locations have an instead on improving positive, brand-consistent many they needed to sell. And easier way to handle store performance experience for customers. I generally think that that's what absenteeism or increases and coaching staff. helped us get sales growth.” in traffic (such as during Here’s the power of the holiday times). 6. Customers receive a better digital workplace in action: experience. Not only do Target Australia implemented 2. Employees who are they not face a shorthanded WorkJam, which among underemployed stand a store, but the people filling other functions, provided better chance of being in are seasoned staffers detailed product knowledge able to work as many who don’t need to be information and training to hours as they wish. brought up to speed – associates. In the 12-month 3. Shift trades are easy and they can immediately start period after implementation, convenient, making it providing seamless service. they saw a 60% reduction in a much simpler task to customer complaints around Remember: Retailers today balance a job and the product knowledge. are facing increased costs demands that family or and increased competition, Andrew Myers, who was COO schooling can bring. while customers are looking of Target Australia at the time, 4. Employees are much for an exemplary experience adds, “The associates were more likely to stay with the and a sense of community. more confident in not just company if they’re getting By implementing a digital selling a pair of denim jeans, as many hours as they workplace platform, retailers but they knew how the jeans want and are empowered can greatly reduce absenteeism were made and the conditions with the ability to adjust and turnover costs, improve in the factory and whether their shifts when needed. employee engagement and the materials were ethically morale, help managers focus sourced. They knew the various

Conclusion: The Power Is in the People

It’s true that retailers are facing However, the future of retail companies whose employees websites, retailers improve a challenging landscape that remains bright, particularly are informed, engaged, and their chances of successfully is changing more rapidly for those retailers who place helpful – the ones who create navigating today’s tumultuous than ever before. And it’s a priority on employee an immersive customer retail landscape and when the also true that some retailers engagement and the customer experience that engenders dust settles, coming out on top. will be left by the wayside. experience. As consumers loyalty and community. By face an increased number of shifting their focus to their options, they’ll reward those in-store staff and not just their

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