Archives for February 2019

Some start off as pop up stores and move into permanent spaces. Many are locating in upscale, premier malls. Most are what you’d expect — higher-end fashion clothing retailers where customers prefer to try on items before they buy. Some examples include Fabletics, an online active wear retailer, which recently added two dozen stores, and women’s intimates retailer Adore Me, which is planning 300 additional stores.

Other examples where customers want to interact with products before purchasing include mattress maker Casper (already in Target stores), which plans to open 200 of its own stores. The original online eyeglasses retailer, Warby Parker, opened its first retail location in SoHo in 2013. It now has 75 brick-and-mortar stores in the U.S. and more opening soon. Indochino offers tailored suits for men. You send them your measurements or visit one of their stores (now in most major markets) where a professional can take your measurements.

What’s driving this?

Boosting online traffic – For a brand that’s less than 10 years old, new store openings will result in a 45 percent increase (on average) in online traffic according to a recent survey by International Council of Shopping Centers. Plus, acquiring new customers via online marketing is getting more costly and difficult.

Expand customer base – In categories like clothing, there will always be a large customer segment that will only buy if they can first try it on. Yes, items can be returned, but many customers dislike having to re-package and send items back to the online company. Returning items to brick-and-mortar stores is relatively easy especially when it’s a store they visit regularly.

Deeper insights – Online retailers have compiled valuable customer product preferences and buying behaviors, which help them to choose ideal store locations, design appropriate floor plans, and determine optimal product assortment. Plus, gaining face-to-face customer intelligence can lead to new areas of opportunity.

Flexible leasing – Store closings have led to excess retail space and that means landlords are more open to shorter leases and lower rental costs. Plus, landlords can be more flexible when there’s less risk leasing to an established online brand.

Innovative strategies – The showroom model allows customers to interact with products, but they’re shipped from a warehouse. No onsite inventory = less square footage = lower rental costs.

Some will fly and some will flop, but here are some retail trends to keep an eye on this year.

Pop up Stores – Millennials enjoy discovering new store experiences. As more stores close, there will continue to be an excess supply of retail space making landlords more flexible and open to offering short-term rental deals – which is needed to make pop up stores a viable option.

Stores within Stores – Best Buy has perfected this concept with significant floor space in every store dedicated to brands like Apple, Microsoft and Samsung. For the manufacturer, it’s an opportunity to get more involved in creating merchandising design and participate in the customer shopping experience.

Pop ups within a Store – Nordstrom takes it one step further with “Pop-In@Nordstrom, a themed shopping experience that allows customers to shop new and exclusive merchandise from their favorite brands.” E.g. Sleep-In@Nordstrom features Casper mattress products plus an assortment of home and wellness essentials including skincare, accessories, pajamas and restful technology.

Social Shopping – Social media platforms like Facebook and Instagram are making it easier to shop directly from these sites as brands can now allow users to buy products directly from a post.

Creative in-store Experiences – To attract customers, retailers are enhancing spaces inside stores – some even good enough to trigger in-store selfies. E.g. Some Timberland stores features a 3,500 sq. ft. space decked with Birch trees, hanging plants, and moss.

Cross-merchandising – Not a new idea (think S’mores end-aisle display at your grocery store), cross merchandising has quietly exploded online as the digital platform is a perfect venue for easily showing “customers also purchased” and bundle promotion offers. X merch is more challenging to implement at the physical store level, but the boost in incremental profits can make it well worth the effort. You may even start seeing messaging in-store that you see online such as, “If you like this, you may like this.”

Digital Displays – Kohl’s has mastered the use of digital price displays in their stores. Kroger’s new shelving system uses digital displays to indicate prices, promotions, nutritional and dietary information. Kroger can also generate new revenue by selling digital ad space on the displays.

Blockchain – Gaining maximum efficiency within the supply and distribution chain is crucial to successful category management. Blockchain technology may provide a reliable platform for managing and tracking shipments while reducing fraud, paperwork and delays.

QR Code comeback?

QR (Quick Response) codes were all the rage back in 2010, but never gained much consumer acceptance and quickly faded. But they’re now very popular in China and they’re starting to make a comeback in America, thanks to Snapchat.

Snapchat created their own version (known as Snapcodes with the ghost outline) and integrated them into their app. It allows users to share their account with other Snapchat users by hovering their cameras over their Snapcode. Snap says users are scanning 8 million codes a day.

Apple must see something as they recently added a QR code reader right within the cameras of their newer iPhones, removing the need for users to download any extra apps. Some retailers are taking advantage of the QR codes for payment convenience. Target recently added a QR code-based payment system allowing shoppers to scan the code at checkout for instant payments.

Looks like everything is on the table for 2019. Cutting edge and older technologies. New and not-so-new merchandising methods. It should be an interesting year. Stay tuned.