After a historically disruptive year, physical retail has started a global reset unlike anything seen in modern times. The decline in the productivity of many retail locations has been directly impacted by the upswing in ecommerce and the jump in remote work. Euromonitor reports that goods bought online grew 24% while in-store sales declined 7% in 2020.
It is widely known that consumers have increasingly shifted their purchasing behaviour online in the past year and have become dependent on different digital channels to fulfil their shopping needs. These trends have been even more pronounced with food and beverage categories. Many have found considerable value in their new retail digital shopping behaviours and will retain some of these in the future. What is important to consider is what the economic and health shocks of recent times may mean for local markets and physical stores going forward.
What’s changing in physical retail?
- Stores will continue to close but some will be replaced. As retailers reassess their portfolio of stores, more will come to grips with the fact that traffic does not warrant ongoing investment in some locations. It is projected by UBS that there may be as many as 150K store closures across the combined North American and European markets in the next 5 years. Net store closures will be less, but in most markets, the retail landscape will look much different.
- Some stores are transitioning away from malls to other locations. Department stores have lost their luster, mall traffic is down, and some chains have either gone bankrupt or reduced their presence in less appealing regional malls, focusing on more desirable grade A mall locations, instead. This will leave many other mall heavy retailers to re-evaluate their commitments and consider moving to off-mall locations with higher traffic and revenue opportunities.
- Retailers converting existing locations to dark stores or kitchens. As costs mount for last mile delivery due to online order volume increases and declining store traffic, more retailers and restaurants are opting to convert some stores in urban settings into dark stores. This allows them to better serve digital customers through rapid fulfilment while eliminating the negative experience some shoppers have had with online pickers crowding the store aisles.
- Reconfiguring stores to maximise experience and generate traffic. Retailers may have several categories that have shifted to online, freeing up in-store space. By adding new categories or even a store-within-a store tenant/partners, such as a brand or a service, a retailer can create excitement and drive new sales to the store. Alternatively, with growing online sales, retailers can shift a larger percentage of total operational space to the backroom, reduce selling space and better serve customers placing online orders with more efficient fulfilment from the backroom.
It’s encouraging to see retailers adapting to change and finding ways to better serve their customers, but it begs the question; how are these changes being tracked and how will consumers become aware of and make sense of the updates?
Many departments in a retail enterprise, e.g., finance, merchandising, supply chain, marketing, ecommerce, and of course, real estate, rely on such information to ensure ongoing planning is sound, and everything is well-executed. Manufacturing partners want clean, accurate store information to monitor product performance. Consumers also rely on up-to-date information from retailers to plan store visits, navigate the latest buy online, pick up in store (BOPIS) and curbside procedures, understand what is available in-store and keep up-to-date on operating hours.
In the past year, retailers have made strides in enhancing product data management to make it more appealing for ecommerce, embracing global standards, and partnering with manufacturers on enhancing the attributes to generate better consumer appeal. However, at many retailers, location data remains in a shared spreadsheet or stuck in a siloed software solution that can’t be conveniently and transparently accessed by all departments.
Without good, transparent location data, retailers can potentially limit some of the value that could be driven by improvements in other types of data, including product data. For example, for less frequent customers, specific services or special product offerings and/or a list of departments can be made available for customers to see at a store specific website. This organised product/service content invites them to learn more and conduct more online product research in that local context prior to their store visit.
Benefits of a dynamic, transparent solution for location data
- Retail departments and partners are aligned and have visibility to the most current store information from a single trustworthy source of data, building confidence in decision making.
- Data governance ensures the right people have access to review, write and edit the elements of location data models which increases organisational efficiency.
- Increased variety, quality and depth of attribution, giving the entire organisation a better understanding of stores, as well as more options for advanced analytics.
- Retain a pictorial and versioned history of store/location information and merchandising changes that can be used for future review.
- Increased operational ability and transparency of store/location information with their manufacturer/supplier community which provides greater trust in data to identify opportunities for performance improvement, optimised assortments, or marketing investments..
- Greater transparency into, and more timely information, for consumers which enhances their customer experience, trust and long-term loyalty.
While looking into a crystal ball may not give us complete clarity into the impact on the retail landscape around the world, it is certain many stores will close, relocate and/or reinvent themselves to better serve both online consumer demand and deliver better omnichannel customer experiences. The pace of change can make it challenging for retailers to monitor, document and share reliable data. Accurate and robust location data is important internally, for retailers’ supplier communities and especially for their end customers. Leading retailers can meet these challenges by investing in location data management to achieve location data integrity to better serve their customers and succeed in a rapidly changing omnichannel marketplace.
This blog was written and contributed by:
Industry Strategy Director