Macy’s will close 125 retail locations by 2023. Is this a harbinger of the end of the physical store? Macy’s calls the move rightsizing, and says this is part of a merchandising transformation that includes an enhanced digital and store experience.
We call it the future of retail: brick-and-mortar stores that are thoughtfully placed and reinvented as part of a true omnichannel strategy.
And we know that Macy’s isn’t alone. GNC, Tailored Brands, Signet, Zara and many others have cut their retail footprints. Coresight tracked 2,145 store closings in the first month of 2021. While some retailers won’t make it out of lockdown, many are seizing the opportunity to grow and thrive in the wake of disruption.
Location Still Matters
Covid-19 has completely transformed the way that people shop, and many of these changes are here to stay. Overall physical traffic at store level has shifted, Nielsen found. While fast-moving consumer goods (FMCG) sales have remained steady, sales have adjusted between different locations. Some stores’ sales were down by as much as 50 percent while sales at others had soared by an equal amount.
In general, traffic has shifted from the communities surrounding where people used to work, such as busy urban centers or office parks, to the suburbs and similar environments where consumers live.
With major companies announcing they’ll let employees work remotely even after lockdowns end, it’s crucial that retailers evaluate their operations on a store-by-store basis.
The era of BOPIS
Closing certain stores is only part of the equation. As Macy’s execs noted, it’s still important to weave physical stores into a true omnichannel strategy. Instore and online are no longer a dichotomy—they’re one whole.
Omnichannel shopping increased by more than 50 percent in 2020, according to Nielsen. But only half of that led to online purchases as consumers discovered that picking up orders in-store provided the best of both worlds. Shopper preference for buying online and picking up in-store (BOPIS) had grown 26 percent by September 2020.
To take advantage of this behavioral shift, retailers are changing store operations to make them work as distribution hubs. Regional supermarket chain Giant Eagle converted three stores to curbside pickup centers. also implemented mobile location services to predict customers’ times of arrival for BOPIS. The system sends alerts to the store as a customer gets close, helping packers to prioritize order fulfillment.
Retailers are also increasing store capacity at busy locations or during peak shopping seasons. For example, lululemon added 70 popup stores over the holiday shopping season to reduce wait times for in-store shopping and to accommodate BOPIS.
A store and more
Retail success in this new era means making physical locations work harder than ever—in the physical and the virtual worlds.
CVS, which already established itself as a healthcare provider via its MinuteClinic, has begun offering COVID-19 vaccinations.
Avon opened Studio 1886 in Los Angeles for consumers and independent sales reps. Eventually, services will include makeovers, skin treatments and in-studio classes. The 19,000-square-foot space will also host in-person and online trainings for sales reps.
In-store classes and workshops are proven traffic-builders. Retailtainment now and in the future will rely as much on the digital realm as the physical one. Walmart has hosted a drive-in movie series and a socially distanced, parking-lot trick-or-treat “adventure.” They followed up with Halloween Camp, a virtual event that included an online game and craft and cooking activities.
One holistic channel
Online and brick-and-mortar is no longer an either/or proposition. Retailers must truly connect online and in-store shopping. A good example is Nordstrom’s Pop-In Shops. These limited-time, themed shops are available in selected stores and online. They feature partnerships with brands including goop, Nike and Poketo, as well as themes like poolside glamour, ‘90s raves and self-love.
Another example is lululemon’s virtual shopping system that lets shoppers video chat with team members to ask questions, get product recommendations and have the sales rep place the order for them—just as they would in the store.
As you make rapid shifts in strategy and operations, it’s important to keep the entire company in the loop and use communications to align the people throughout your organization. Store closings are painful for employees, and those who remain will be called on to help reinvent their roles. It’s also crucial that people in mid-level management roles understand the rationale behind major changes. The stakes for retail are higher than ever, and we can’t afford to leave anyone behind. The good news is that a comprehensive communications solution will unite everyone on your team.
Zipline was built to solve the unique challenges of communication in retail organizations. Reach out to learn more about how your stores can remain a vital part of the retail experience.