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Retailing in 2019

23.07.19 12:39 PM By sreerag

Big shakedown, big opportunity!

You would have probably seen the headlines about J.C. Penney and Sears closing stores, and even entire malls shutting down. For the sake of nostalgia or simple bargain hunting, you might have browsed liquidation sales of retail chains completely heading out of business, like Payless or Toys R Us.

But whilst the so-called retail apocalypse is undeniably wreaking havoc in the shopping industry, not all physical retailers are floundering. Many of the top retailers are actually adding more stores in 2019.


What's enabled these stores to thrive despite the gloomy, ultra- competitive state of the physical retail world? And how can these retailers justify expanding at a time when Amazon appears to be gobbling up increasingly more of our shopping dollars each day? For one thing, most of the retailers which are expanding are discounters, including dollar stores and chains full of arbitrary closeout and leftover inventory like Marshalls and T.J. The success of those low-price retailers might seem curious: Given historically low unemployment rates and what's widely regarded as economic boom times, you may expect shoppers to shift to high end stores instead of sifting for deals in the sales rack. 

But regardless of robust employment, wages remain low for many workers, hence the need to keep scrimping at the dollar store. What's more, beyond cheap prices, what a lot of the physical retailers expanding today have in common is that their shopping experience is something of a treasure hunt that cannot easily be replicated online. The inventory at a dollar store or Marshalls is continuously changing, with every aisle full of quirks, surprises, and sale items that you might literally never see again. Not national brands, and super low prices. Aldi had roughly 1, 800 stores as of last fall, and it’s expected to open 100 more stores in 2019. Aerie is planning to add 60 to 75 New Stores Aerie, the clothing brand aimed at young women owned by American Eagle.

Store as a Media


While the erstwhile retail behemoths are trying to re-invent, there is a curious shift taking shape in retail, one which seems to be eluding the industry’s brands and retailers. It’s that until recently the purpose of shops was to distribute products. Shops had been in a lot of cases the only means of availing supply of products to a marketplace. The retail industry framework was completely based from the revenue it generates – shop rentals, retailer’s health and placement in a shopping mall. 

And there is the problem. In the post internet world, where with one click access customer can buy from anywhere and everywhere distribution has got relegated to economical and speedy delivery.

 

The earlier concept of stack it high and also watch it fly has turned into pile it low and hope it moves out too, as big box shops scramble to reduce inventories in the face of declining or flat sales. The knee jerk response among many is to downsize the role of the shop. 

Others are embracing the buzzword of omni channel resigning into the idea that all stores now act as one. You see, what's actually evolving is a brand new and far more complicated role for the store one which many digital native brands and direct to consumer brands such as Google, Bonobos,  Warby Parker, Casper are affirming it, as they each embark on creating their very own, branded, physical stores, which are more a media for communicating the brand’s purpose whilst learning from customers and improving their products and offerings.

The realization among these successful brands is a need to animate a physical presence and visceral experience for their consumers to fully actualize their brands. The need for the stores is not to move products, but more critically, to move minds and hearts to sell the idea, essence and also values of the brand all of that a lot more traditionally been considered as the role of media. 

Which brings us to a critical point. The physical shop is becoming media. What used to be a supply channel is becoming a media channel and also likewise, media channels are increasingly becoming the store. Virtual storefronts are cropping up in forms of media. And every day, new integrations and applications that allow us to purchase, in a friction-free way, straight from media formats. Media is no longer just a benign messaging vehicle, but additionally an instant distribution channel.

 

Brand marketeers need no longer rely on driving consumers to the shop but look at driving the store to the customer wherever and every time they need that store to be. So increasingly, the principal role of the store won't be to sell product, but rather to deliver the most relevant, and also emotionally galvanizing experience possible, to create an essential level brand affinity, trust and also allegiance none of which inevitably results in immediate, or location specific revenue recognition. It’s not really that stores won't sell products. Obviously, they will. But the way brands look at retail stores from a way to distribute their products will change to one where they communicate the brand’s message, help customers discover the product benefit, address an existing or latent need, build a brand and sell.

 

Opportunity for startup brands

 

While large and well-funded brands can look at creating their retail experience, Startups should look at creating and building a brand across all sales, distribution and media channels. Listing and selling on marketplaces like Amazon, listing and being seen on the shelves of relevant category retailers like Walmart, Best Buy and be open to exploring new retail formats like The Solution Bar at Sharaf DG. Startups should focus their efforts on channels that provide easy and cost-effective access, data and insights around customer feedback, marketing, product demonstration and sales.

At The Solution Bar, a startup can kickstart their retail journey in Dubai and Abu Dhabi in less than 10 days, access customers from 90 different nationalities, get valuable customer feedback to improve product features and offerings while building a brand by associating with a trusted and leading retailer.

 

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