Author: Rosilynn Yoon
You’ve seen the news. Retail darlings like Toys-R-Us, Bed-Bath-and-Beyond, and Guitar Center have succumbed to bankruptcy over the past decade, and headlines heralding the demise of retail are abundant. Is brick-and-mortar dead? Is the future of retail simply e-commerce?
Yes and no. Experts anticipate that 72% of retail sales will occur in brick-and-mortar stores in 2024. At the same time, UBS predicts 50,000 retail stores closing by 2028. With so much uncertainty swirling around the category, we’re sharing four ways retailers can keep their online and in-person endeavors successful in 2024 and beyond.
Use a physical location to complement & boost digital shopping:
Location, location, location still rings true. However in today’s environment, digital sales can increase in the halo of a physical store. Customers are more likely to do in-store pick-ups and returns, and delivery is quicker. Take Warby Parker, for example. Executives see online sales in the area roughly triple when they open a new location.
Leverage a smaller footprint:
Retail spaces are becoming experience hubs, minimizing the need to carry large quantities of inventory. A few months ago, Macy’s announced (again) they're shutting down 30% of their stores, and they’re pivoting to expand a smaller concept’s (Bloomie’s) footprint. Nordstrom and other retail giants are also scaling down square footage. Even IKEA, the furniture amusement park, is adapting to the smaller store strategy. Consumers still want the experience, but they are likely to order online after doing so.
Use Generative AI to boost productivity:
Generative AI is revolutionizing every industry, and retail is no exception. AI is helping retailers streamline a host of processes: customer service, marketing, product design, inventory, pricing, and supply-chain management. TD Cowen estimates that artificial intelligence could increase retailer gross margins by up to 0.6 percentage points, while lowering labor costs by 2 to 9%. Here are some examples of how retailers are using generative AI:
Tap into the power of hyper-personalization:
How do retailers create a store for the future? How do they take advantage of new tech to create a space-age experience for the consumer? By hyper-personalizing experiences for customers. Here’s an example of how Farfetch, an e-commerce company focused on luxury clothing and products, is evolving their stores:
Imagine walking into a Farfetch retail store. A universal login recognizes your arrival. You’re browsing the RFID-enabled clothing racks. They detect which products you’re browsing and auto-populate your wishlist—all while tracking the colors and sizes you’re looking at. You make your way to the dressing room, and a digital mirror shows you this wishlist. Then you’re ready to check out anywhere in the store, and of course, all of this data is then used to enhance your next online shopping experience with the brand.
These changes can feel overwhelming to retailers, but there’s hope. Shopping has always elicited a feeling in consumers; it just manifests differently in this day and age. This feeling, the tangible experience your brand provides, should be at the heart of any evolution.