The exponential growth of online sales compared to overall sales, along with new and evolving customer demands and a drop in footfall and loyalty levels
due in part to the latest digital technology, poses a fundamental challenge to retailers:
How do I attract more customers into store instead of losing them to competitors or online channels?
Customers are more demanding and expect to be delighted
Customer expectations of what good looks and feels like in terms of shopping experience have changed. They now demand a simpler and convenient shopping experience with minimal waiting time and maximum product availability, relevant to their needs, personalised and engaging, connected through social media and the latest digital technology, and inspiring.
Importantly, customers increasingly have one single view of the company, not differentiating between online and physical shopping experiences.
Therefore, multi-channel integration, as well as technology and social media integration within the physical store environment are critical, and the most successful retailers have met and exceeded those demands to attract shoppers to their stores and grow their revenue. They have aligned the physical, human and digital dimensions of their stores around customer needs.
“You walk into a retail store, whatever it is, and if there’s a sense of entertainment and excitement and electricity
, you wanna be there
.” – Howard Schultz, CEO of Starbucks
“Brick and mortar is an amazing opportunity to use our stores and our store staff as a vehicle to truly engage with the community” – Jim Brett, President, West Elm
Transforming the store to delight customers
In line with the new customer demands, we now see stores endorsing new roles. They are moving away from a purely transaction mode to being about the interaction and the emotional connections with the brand, turning into destination retailers and even, in some cases, experimentation and education centres – Apple stores being a good example of this.
The way the store layout is designed (physical), the way staff interact with customers and the staff to customer ratio (human) and the extent to which digital technologies are integrated into the in-store experience (digital) – are all instrumental in achieving this move towards stores that fulfil new customer expectations.
What are the benefits of transformed stores for customers?
Transforming stores to effectively meet customer expectations has many potential benefits.
From the customer’s point of view, stores that are aligned to their needs provide an enhanced, more convenient shopping experience, with reduced waiting time at queues, easy navigation and product availability for example. A visit to the store is more relevant to their needs, more engaging, through staff interactions, quality service and advice, and more connected – being able to share and review products on social media.
And what are the benefits for the retailer?
From the retailer’s perspective, this improved experience will drive customer loyalty and repeat purchases, giving shoppers additional reasons to visit as stores evolve toward becoming ‘destination stores’. Customers will also spend more time in store – which holds the potential for higher average basket value purchases and significant sales uplifts.
Disney’s store revamp
, which includes interactive kiosks with touch screens, enabling shoppers to navigate through the product offering, access clips, social media feed and related content, resulted in a 20% increase in profit margins and a significant boost in revenue. A staggering 90% of customers also stated they felt closer to the brand as a result of the new store design – and increasing the emotional links with a brand is more likely to enhance customer loyalty.
In our own experience, store transformation initiatives have delivered impressive benefits and value-add outputs for retailers: sales uplifts of 3 to 5%, 25 to 50% increases in colleague and customer satisfaction, over 2.5% increases in conversion rates, 96% increases in Internal Rates of Return or more and doubled operating profits.
The case is compelling In short, store transformation enables retailers to drive significant sales increases with minimal capital expenditure, thereby transforming their bottom-line profit performance by reallocating and utilising their current resources.