{"id":1174,"date":"2023-11-21T21:16:00","date_gmt":"2023-11-21T21:16:00","guid":{"rendered":"https:\/\/professionalsourcingsolutions.ca\/?p=1174"},"modified":"2023-12-11T21:24:31","modified_gmt":"2023-12-11T21:24:31","slug":"digital-first-navigating-retails-rapidly-changing-landscape","status":"publish","type":"post","link":"https:\/\/professionalsourcingsolutions.ca\/digital-first-navigating-retails-rapidly-changing-landscape\/","title":{"rendered":"Digital-First: Navigating Retail’s Rapidly Changing Landscape"},"content":{"rendered":"\n
\"How<\/figure>\n\n\n\n

<\/p>\n\n\n\n

In the not-so-distant past, the future of physical retail appeared bleak. The global pandemic forced many retailers to close their doors, with over 8,700 stores shuttered in the United States by the end of 2020. Meanwhile, the e-commerce sector experienced a rapid growth rate, more than doubling its previous pace, according to the U.S. Department of Commerce. Retailers faced lockdowns, layoffs, and uncertainty. The question on everyone’s mind was whether traditional retail stores could weather the storm and survive retail’s rapidly changing landscape.<\/p>\n\n\n\n

Fast forward to mid-2022, and it’s evident that physical retail stores have not only survived but are thriving in this new era. As Amish Tolia, Co-CEO of Leap, a retail platform that enables brands to deploy stores and accelerate growth, points out, “The pandemic was challenging for retailers, given their lease obligations\u2026 Those who were nimble [were] able to rapidly rebuild.”<\/p>\n\n\n\n

Today, new store openings are outpacing closures. Retailers have announced plans to open 3,694 new stores as of April 1. This trend shows no signs of slowing down, as evidenced by UBS’s recent decision to cut its five-year outlook for store closures by nearly half.<\/p>\n\n\n\n

Certain categories are leading this growth in store count. In the current year, discount retailers, auto-related businesses, and direct-to-consumer brands will account for over 50% of new store openings. Even legacy retailers, such as Gap, have found reasons to be optimistic, with the company revising its 2022 guidance upward after a productive fourth quarter.<\/p>\n\n\n\n

However, the landscape of physical retail has shifted significantly, and retailers must adapt to meet evolving customer expectations. Consumers now have higher expectations than ever before. The pandemic accelerated the demand for convenience and personalization, and customers now expect complete control over their shopping journeys.<\/p>\n\n\n\n

Retail’s rapidly changing digital-first era has ushered in several key changes in consumer behaviour:<\/h2>\n\n\n\n
    \n
  1. Convenience is Key:<\/strong> Shoppers are looking for convenience in their shopping experiences. Buy-online, pick-up-in-store (BOPIS), appointment shopping, and self-checkout options have become integral to providing a seamless, personalized experience. These options give consumers more control over their shopping processes.<\/li>\n\n\n\n
  2. Safety and Health Precautions:<\/strong> In light of the ongoing pandemic and increased health awareness, consumers will continue to demand options such as curbside pickup and contactless payments to ensure their safety and well-being.<\/li>\n\n\n\n
  3. The Desire for Connection:<\/strong> After two years of social distancing and lockdowns, consumers crave opportunities for community and engagement. Immersive, high-touch experiences, including interactions with knowledgeable salespeople, have become even more essential in a digital-first world.<\/li>\n<\/ol>\n\n\n\n

    These shifting consumer behaviours have had a profound impact on how retailers are operating and growing their physical stores.<\/p>\n\n\n\n

    Changing Retail Location Strategies:<\/strong> <\/h2>\n\n\n\n

    Before the pandemic, retailers primarily focused on high streets in major cities like Los Angeles and New York City. However, the landscape is changing. Retailers are now expanding to smaller markets and non-traditional retail centres.<\/p>\n\n\n\n

    According to Clare Walsh, Director of Leasing Strategy at Asana Partners, “Stores must be convenient. Mixed-use environments are more important than ever. Brands are prioritizing neighbourhoods where their customers live, work, and spend their free time.” This shift is part of a broader move towards providing more accessible and community-centric shopping experiences.<\/p>\n\n\n\n

    Additionally, retailers are tracking population trends and prioritizing year-round warm-weather locations like Florida, Texas, and Arizona. This strategic placement helps retailers combat rising supply chain costs and delays. Brands are leveraging their stores as micro-fulfillment centres, making order fulfillment faster and more efficient.<\/p>\n\n\n\n

    With the move to smaller markets and a focus on convenience, store sizes are also shrinking. According to CoStar, the average new lease in 2021 was 3,000 square feet, the lowest in a decade. Even major retailers such as Macy’s, Target, and Kohl’s have announced smaller store formats.<\/p>\n\n\n\n

    Smaller stores not only reduce real estate costs but also provide opportunities for experimentation. For example, Lululemon uses pop-up stores to test new layouts, host events, and sell excess inventory. These pop-ups also support neighbouring stores during high-traffic shopping periods. Brands like Nordstrom are adopting seasonal pop-ups to stay connected with customers. These smaller, specialized store formats cater to changing consumer preferences and ensure continued relevance in the digital era.<\/p>\n\n\n\n

    Using Stores to Drive Engagement and Loyalty:<\/strong> <\/h2>\n\n\n\n

    Before the pandemic, physical stores were seen as a means of customer acquisition. While this notion remains true, it has become even more apparent in the digital era. The growth of online and social channels has elevated the value of physical stores. Retailers are realizing that their brick-and-mortar locations are essential for driving brand awareness, profitability, and customer lifetime value.<\/p>\n\n\n\n

    Nate Checketts, CEO and co-founder of Rhone, views stores as vital tools for telling the brand’s story. He notes that “the why of brick-and-mortar for us is pretty simple. It works. Our in-store customers are more valuable to us.” Walsh concurs, saying that “stores are critical to driving brand awareness, profitability, [and] lifetime value.”<\/p>\n\n\n\n

    For example, Madison Reed, a hair care company, experienced significant sales growth after opening stores in new markets, emphasizing the “halo effect” these stores had on overall sales. Parachute, a direct-to-consumer home brand, reports up to a 50% higher conversion rate in cities with a physical store.<\/p>\n\n\n\n

    Retailers are using physical stores to deepen consumers’ connections with their brands. In a crowded digital and e-commerce space, physical stores have become hubs for engagement and loyalty.<\/p>\n\n\n\n

    Connecting Online and Offline:<\/strong> <\/h2>\n\n\n\n

    The most significant challenge for may stores with retail’s rapidly changing landscape is creating a seamless and unified customer journey. Shoppers now expect a consistent and cohesive experience across online and offline channels. This poses a significant challenge for retailers, as the customer expects a seamless experience. As Amish Tolia puts it, “While it may be much more complicated from the brand’s perspective, the customer expects it to be seamless, so seamless it must be.”<\/p>\n\n\n\n

    Retailers have a range of options to bridge the gap between online and offline channels, from buy-online, pick-up-in-store (BOPIS) programs to virtual shopping experiences. However, the key to success is to take a custom approach. Retailers must map the customer journey and identify touch points that make the most sense for their business.<\/p>\n\n\n\n

    Digital-First in Practice:<\/strong> <\/h2>\n\n\n\n

    Retailers have embraced various digital tools to create a seamless customer journey in the retail’s rapidly changing landscape. For instance:<\/p>\n\n\n\n