Why foot traffic still matters in retail and banking, even in the era of digital transformation
From K-mart to Sears, Radio Shack to hhgregg, 2017 marked a record year in retail store closures across the country with more than 7,000 brick-and-mortar stores shuttering by December 31. Not since the financial meltdown in 2008 has the retail sector experienced so many store shutdowns. It’s not just retail commerce that’s struggling. Banks also experienced a record branch closure rate in 2017. Three-quarters into the year, we’re seeing that 2018 is on pace to meet or beat the 2017 shutdown levels with Walgreens, Toys R Us, and the Gap expected to close hundreds of retail locations by the end of the year.
Now, it would be easy to write-off this closure craze as the result of e-commerce alone – a natural result of shifting consumer preference toward everything online. After all, the perception is that e-commerce is just booming and Amazon is a hungry, hungry hippo gobbling up everything in its path. The reality is that e-commerce is more like a tortoise than a hare – growing steadily with online shares of retail sales going from 10.1% in 2017 to 11.6% in 2018. Since the majority of consumers are still buying in-store and 60% are visiting a bank branch for opening accounts, there is a pressing need for the in-person experience.
Brands have come to realize that in-store and in-branch will never be able to compete on convenience, so they should stop trying. There will always be more variety and volume online. What banks and retail brands can do is find ways to optimize the in-person experience. Adding value to the retail experience is one way to maximize a visit. Brands should ask themselves, “What are things that can only be done in-person?” It’s a reimagining of the service-set and purpose of the physical store or bank branch. It’s also not digital versus physical, but a holistic strategy that orchestrates all of channels of experience.
Realistically, in-person at a store or branch is where the high-value transactions take place. If you’re buying a car, you want to test drive it. If you are opening up a new type of investment or bank account, you want your questions answered. And if you are shopping for a perfect wedding dress, you want to try it on while you sip champagne. Of course, routine purchases and transactions have migrated online. Everyday bank deposits – automate them! Grocery store shopping – deliver them! But for other more personal and particular transactions, we crave human interaction to inform our decision-making.
Focus on Experiences
Time-starved and multitasked, consumers need an easy button for life. Successful brands understand the value and service inherent in each channel of experience – online and in-person – and find ways to leverage them to benefit the consumer. One example of leveraging the best features of each channel is in-store pickup. Consumers can conveniently shop online, but if they need something faster than UPS can deliver, they drop by the store on the way home from work. The physical channel and digital channel represent different but complimentary rungs, laddering up to a cohesive brand experience.
Consumers today are redefining the path-to-purchase. They want to use all of the tools at their disposal – digital, social and interpersonal – to make the most of their time and attention. So, the goal of retail and bank brands in today’s environment is to help the consumer by creating a frictionless experience. The brands making the most of the physical experience are empowering the consumer to migrate what they want to online and define what they come in-store or in-branch for. Typically, they use in-person interactions for more consultative and customized services, something not easily replicated online.
In-person experiences in retail stores and bank branches are at a crossroads. Consumers are redefining the purpose of the store or branch on the path-to-purchase. Simultaneously, brands are focused on enhancing the physical channel to provide a stickiness to attract and really wow the consumer. While some retail and branch locations may be closed, others will have to be reimagined and repurposed. To address how to meet that new purpose, our next installment will look at the process of optimizing and transforming your branch or retail network in an increasingly digital world.
Source: Sean Keathley, Adrenaline