The power paradigm has shifted from the retailer to the customer. Even 20 years ago, businesses served as the lone “source of truth” since they owned and controlled access to product information. Customers were forced to rely on salespeople and store associates to discover and learn about products, visit storefronts to see demos, and slog to multiple stores to do any comparison shopping.
But with the pervasive presence of smartphones granting customer always-on access to the web, customers are more informed (and discerning) than ever. Shoppers now wield the power in these daily transactions. Customers are price-checking products in-store (showrooming, anyone?), reading up on ratings and reviews from fellow shoppers before buying, and demanding a more personalized experience from retailers.
“In a remarkably short period of time, the world has gone from being based on scarcity to being based on abundance. During this paradigm shift, it’s really important for brands to revisit why anyone should care if they exist.”
—Doug Stephens, Industry Expert and Writer of Retail Prophet
To compete and meet these growing demands, retailers are getting creative in order to differentiate their service offerings. In an age where yesterday’s “wow” quickly becomes today’s ordinary, legacy retailers and new brands are amping up their customer service with innovative tactics like in-home visits, customized product offerings, and highly curated collections that curb the problem of decision fatigue.
Surviving (and Thriving) in the Age of Amazon
Some industry experts wrote off Best Buy long ago, particularly when other big-box competitors like Circuit City and HHGregg were forced to shutter. But this legacy electronics retailer is not only surviving, it’s thriving.
To avoid letting its retail stores stagnate, Best Buy doubled-down with major investments in the in-person shopping experience. Recognizing Amazon’s long-term threat, in 2012 it launched its “Renew Blue” strategy. One of the plan’s pillars was to “reinvigorate the customer experience,” and this is where Best Buy has unquestionably succeeded.
While online shopping platforms (ahem, Amazon) have made ordering big-ticket electronics like flat-screen TVs and smartphones easier than ever, Best Buy has focused on filling a gap left by this one-click buying experience: personalized advice.
With countless options at our fingertips (and one-day delivery to our doorstep), consumers are often overwhelmed. That’s where Best Buy stepped in with one of their most successful value propositions—in-home consultations. A salesperson visits a customer’s home and offers tailored recommendations based on their specific needs, whether it’s analyzing your house for smart home product compatibility, providing ideas for your own home theater, or repairing broken appliances.
And sales are growing as a result. Best Buy posted better-than-expected profits this year, including a 6% increase in comparable-store sales in the U.S. and a total of $9.4 billion in fiscal Q2 sales.
Compare this to Amazon’s freshly opened 4 Star Store in New York’s SoHo neighborhood, which is home to a collection of items customers have rated four stars or higher.
At first blush, the store sounds like it’s designed entirely with customers in mind, but early reactions paint a picture of an in-person experience that’s equal parts confusing and impersonal. The store’s product curation feels dispassionate, with inconsistent in-store groupings determined by the hazy logic of an algorithm. “Forget farm-to-table; this is pallet-to-checkout,” writes The New York Times of a recent visit to the Manhattan location. Time, as always, will tell if the idea has staying power.
Why Less is More With Overwhelmed Shoppers
In the wake of the 2008 recession, the retail industry has seen a great collapse of the middle—average brands selling so-so products through bland in-store experiences have disappeared at alarming rates. Now is a very bad time to be boring.
More discerning customers means it’s untenable for brands to attempt to be everything to everyone. As a result, some retailers have responded by specializing, aiming for a level of minimalism with smaller, curated collections of higher quality products.
“For years now brands that execute well on price, dominant assortments, buying efficiency and convenience are winning... Similarly, we find many success stories at the other end of the spectrum. Most established luxury brands are experiencing strong growth, as are higher-end specialty retailers who have a tight customer focus, offer a superior experience and provide a real emotional brand connection.”
—Steven Dennis, Retail Consultant and President of SageBerry Consulting
One such brand that has seen wild success on the specialty retail side of the spectrum is Allbirds. The San Francisco-based footwear brand has sold more than a million shoes based on a simple value proposition: create simple, comfortable shoes made from high-quality, sustainable materials (i.e., wood and wool with laces made from recycled plastic bottles).
That less-is-more mission has differentiated Allbirds in a highly saturated footwear market. As sales soar, the brand secured $50 million in funding this fall and was valued at $1.4 billion in October. Allbirds also opened its first flagship store in NYC with elevated offerings like a “service bar” to help customers find the right size, with plans to open eight more brick-and-mortar stores across the U.S.
On the other end of the spectrum, low-price stores offering economical experiences have also blossomed. Dollar stores like Dollar General and Dollar Tree have opened dozens of stores in the wake of the 2008 recession and have seen a string of strong sales reports as price-conscious consumers capitalize on the opportunity to save money on essentials.
Stores as Shoppable Billboards
Empowered consumers have served as a forcing function for retailers to create elevated in-store experiences. From Allbirds’ footwear service bar to lingerie brand AdoreMe’s “smart” fitting rooms, the industry is rife with examples of retailers providing high-touch service to capture the attention of more discriminating customers.
Another way brands are luring in savvy shoppers is with cohesive omnichannel experiences. Shoppers expect the ability to shop seamlessly whether it’s online or in-store, but only 7% of retailers offer a unified commerce experience by allowing a customer to “start the sale anywhere, finish the sale anywhere.”
Some brands, particularly digital darlings taking the leap into in-person selling, are employing a unique approach to a complementary online-offline shopping experience: creating stores that serve as showrooms. The strategy lures customers across a store’s threshold to touch and try out products, then a salesperson processes the sale online rather than sending customers out weighed down with shopping bags.
With this model, rather than leaning on brick-and-mortar stores purely as revenue drivers, retailers are using them to provide an elevated shopping experience, build brand awareness, and increase online sales as a result.
One such example is luggage seller Away, a digitally native brand that opened a handful of stores in key U.S. markets last year. Instead of focusing on a singular goal (in-store sales), Away treated its brick-and-mortar showrooms as “shoppable billboards” where salespeople could meaningfully engage with customers, help them try out luggage, and ship purchases right to their door. The results? More brand awareness and a 40% spike in online sales for cities with stores.
More direct-to-consumer brands like Away, Casper, and Nest Bedding are creating showrooms and treating physical storefronts as a marketing expense. And this strategy is working: one recent study showed that retailers typically see an average 37% increase in web traffic when they open a physical store and the brand’s “overall image is enhanced.”
Customers Call the Shots
When it comes to evolving customer expectations, creating unforgettable in-store experiences is one part of the winning formula for many retailers. Finding a way to differentiate your retail brand while catering to savvy shoppers is key—and we know it’s tough to strike a balance.
The above examples showcase a few retail brands that have adapted to increasingly astute customers. With so much product information at their fingertips, shoppers are now calling the shots. As a result, retail brands have to get creative to keep up.