Tales of doom and gloom in the retail arena are easy to find - rumors that Amazon and similar online marketplaces will bring on a revolution, that soon no one will go to physical stores to shop. These doomsayers are right that there’s a change happening in retail--but as we’ve written before--we do not believe that the retail apocalypse means the death of physical retail, just the death of boring retail. As some stores close, a number of retailers have expanded their brick-and-mortar operations by hundreds of stores. So what is it about these companies that keeps customers flowing? How are they surviving the apocalypse?
Avoiding the “boring middle”
Retail strategy advisor Steven Dennis writes that the “boring middle,” a purgatory of purpose between discount/convenience-based shopping and a novel, exciting, experience-based shopping experience, spells death for retailers. For brands like Dollar General, who’re opening 975 stores this year, this means committing to bargains. Their stores feature items at unbeatable low prices, made possible by their simple store design and minimal labor costs (they usually only have two to four employees in a store at a given time). The stores aren’t fancy, but their products are inexpensive and easy to find. They capture a market invested in quick and easy shopping.
Retailers with similar business models, such as Walmart, Aldi, and Dollar Tree, have all expanded their brick-and-mortar operations this year, speaking to the success of the low-cost, low-prices operations.
Making an experience
The other side of the “boring middle” is the experience-based shopping experience that will keep customers coming back. Exciting storefronts, attentive staff, and special events all help bring customers into brick-and-mortar operations. Makeup giants Sephora and Ulta have mastered this form of retail, allowing the stores to grow while selling middle-luxury items that could otherwise be sold by Amazon. Sephora and Ulta’s stores both feature bright, exciting displays, which are particularly appealing when shopping for beauty products. The stores are known for attentive customer support, also uniquely important in beauty to assist less knowledgeable shoppers. They also feature makeover stations with in-store beauticians, as well as other special events where shoppers can try on products or leave with samples. By making their stores an experience, Ulta and Sephora keep shoppers who would otherwise opt for the convenience of online shopping.
While it’s true that retail is changing, there is certainly not an apocalypse. Retailers will have to adjust to the demands of consumers whose interests are moving towards convenience or excitement. In either case, looking to these brands can serve as an optimistic guide to surviving this so called retail apocalypse.