Convenience can renew its Brick and Mortar lease
With the rapid growth in all digital commerce avenues, all consumer industries are bound to be impacted. There is a point of view held by a few that predicts that the malls and outlets will look like a scene from AMC TV show the Walking dead, cob webs and broken down structures everywhere and no one breathing in site, of course I exaggerate but not by much given some conversations I have had of late. While the access and ease of shopping on our own terms has a wide appeal and will continue to evolve retail as we know it, I do think that in the years to come we are heading for some exciting times, do not panic if you are currently a bricks and mortar business. It is a revolution in the industry that has been stagnant for decades. If you are currently a business owner or an executive in this space it would be natural to wonder how much runway you have left in doing business the traditional way, the answer is very little. It is not business as usual, you need a digital strategy there is no way around that, there are however categories of business that are uniquely tailored to co-exist in a bricks and mortar setting and online in the years to come.
There are the planners among us who can say, my convenience needs can be met online and yes they are correct. Amazon prime has done an amazing job in providing basic necessities across United States, with their annual fee format and 1–2 day promised delivery depending on where you are located, it makes sense to make this part of your shopping routine. There are also regional companies like spud.ca in Canada, that are also making it easy to order your groceries online, delivering local produce within their coverage area again frequency based on where you live in the city. Walmart in US and Canada has started curb side grocery pick up outside their stores to compete in this arena. So yes, the World of convenience and day to day needs will continue to migrate online, Amazon is testing same day and crowd sourced delivery in some major cities to make it even more compelling for the busy bodies to do grocery shopping on their phones and tablets. Reality is though, is that we are not all planners and a supply chain turnaround within an hour of ordering your immediate needs is not widely available. Amazon announced recently that it is now considering physical store locations to compete in the fresh grocery market, they also see the opportunity in the impulsive shopping habits of majority of the consumers. [http://www.curbed.com/2016/10/18/13306002/amazon-retail-stores]
The convenience factor that still exists for things we need in our day to day lives, consumables for the most part, may warrant stopping off at your neighbourhood store. If you are in this business and wondering how will you succeed in the digital future, good news is you can with a few tweaks to your model. You need to be focused in your assortment, competitive on value and efficient in your operations, may seem like basics of any business however they will require to be revisited.
The formula for success lies in resisting the temptation of expanded product selection, you will not be able to out assort the endless virtual aisles of an online store. Criteria for your assortment should begin with a core group of products the absolute minimum you would need to be a viable option, these products that would traditionally turnover the most in your stores. The secondary merchandise should complement these basics, things to consider: any significant ethnic presence in your community, developed environment (Urban, Suburban, etc.) as pack sizes become a consideration, locally produced and grown options, need vs want evaluation. Once we get past this level of assortment consideration, there is a significant risk in how well that merchandise turns and does it really meet the criteria of convenience.
Minimal Labour Investment
As you look to remove cost from the business, labour is a substantial portion that needs to be evaluated, work with your suppliers to ensure that the merchandise arrives in a format that can go to the sales floor with minimal touches. Focused assortment can also help reduce the labour, as it will limit the need for sales floor help. Introducing easy payment options, pre-ordering, self-checkouts, easy to follow signing are all ways you can further reduce reliance on sales floor help.
Competitive to all channels
If your merchandise is turning and your operating costs are low, you can afford to work with a leaner margin, which is critical in bringing you closer in value to the online competitors who don’t incur the same costs. Customers are not going to simply accept a significant upcharge because you have a store in their neighbourhood.
The days of growing or even maintaining physical foot traffic are not coming back. Key to survive is to embrace and not fight the new reality of the digital impact to your business. If you are in this specific market category there is a chance for continual success only by making some fundamental changes to your model, buying yourself enough time to align resources towards an online strategy for the longevity of your business.