CEO, Jeff Green Partners
Any successful retailer wants to grow, but how many want to own a bricks-and-mortar retail operation these days? The question is especially interesting if they already enjoy the efficiencies and “clean room” advantages of a catalog and/or online retail presence.
The answer, of course, is that plenty of retailers do—and for very good reasons. The majority of consumers still need to feel and touch “the goods” and interact with an enthusiastic and knowledgeable sales staff. Within brighter, well-designed environs, from lifestyle or town centers to new urban platforms, we are enjoying the social and self-rewarding aspects of shopping more than ever these days.
Thus, while the story of bricks-and-mortar retailers learning to do the web is well told, it pays to consider the reverse: online or catalog original operations making their way into the physical world of “regular-price” retail locations. We can point to some pioneers like Brookstone; some stalled or stumbling translations, a la Gateway; store-within-a-store strategies like Lands End; and smashing successes like Cabela’s pantheons to hunting and fishing; or the Apple Store, with sales per sf approaching four Gs.
Overall, the jury may still be out on the wisdom of going bricks and mortar. Some will do better than others, as in any form of business endeavor. However, look for more and more contestants in this retail game, for online or catalog firms will continue to be a rich source of new store concepts—something all retail developers, and consumers, prize dearly. The reason is simple. The successful online or catalog operator already has an established identity and track record, with well-defined customers in hand. What better way to jump-start cash registers?
More to the point, understanding must always precede execution. Each retailer must know why they are “going physical,” fitting this new venue within their overall business and growth strategies. There can be many reasons, including:
• a way to establish brand awareness (the marquee or flagship store);
• a way to expand customer service for necessities like pickups, repair and returns, although these locations would more likely be the result of already having a large chain of stores that require such support;
• supplementing the customer experience, to allow contact with the merchandise;
• fulfilling the sense that one must complete the customer-access “dance card” troika of online, catalog and store to be competitive; an example is the recent entry in retail locations by Snapfish, the well-established online photo processing operator;
• or as the most logical path to expansion, especially for publicly traded companies being pressured by the investment community to grow as an entity, or at least remain competitive.
The last is the most realistic or typical in today’s retail environment, where market share is the ultimate prize. To a certain extent, the reasons for opening stores may vary by retail category, as businesses are guided by their competitive niches and the experiences of their peer group. Undoubtedly, comprehensive relationships with retail developers help the next iteration of a brand get choice locations in new retail centers. This, in turn, impacts decisions about location and rate of growth—which can be good or bad.
Whatever the type of goods being sold, the online or catalog retailer is endowed with great customer data; a wonderful and rational security blanket for the winds of commerce. The wisest path to the transition is to mine that data for all it is worth, identifying where current customers are located and where future ones may be, based on demographics and psychographics. Many retailers have adroitly followed this safe and smart path to bricks-and-mortar retail.
That doesn’t mean that we can have some fun (a store here, a store there), or that there haven’t been many pleasant surprises, with more likely to occur. Apple may have begun its retail stores to generate buzz about the brand and new models. Maybe, Steve Jobs just wanted to see the Apple name in mall lights. But look what has transpired, with the Apple Store now one of the most sought-after tenants by retail developers. Of course, iPod mania didn’t hurt. And hasn’t Cabela’s been able to capture what every other physical retailer has struggled with, getting men to spend quality time shopping?
Getting the translation right
In retrospect, it seems that it was so easy for Apple. There may be accidental empires in the software world, but there are few in retail. Apple understood from the start that it couldn’t be all things to all people. It targeted the experience for the fun-technologically inclined and carried through by hiring young, enthusiastic and knowledgeable staff people. Einstein might rate the Genius Bar a notch or two less than that, but it fits Apple’s bill well.
In many respects, online (and catalog) retail is a magic act. The online experience is backed by exceptional systems of credit card verification, inventory management, distribution and fulfillment, in addition to marketing savvy. Whether we linger to read all the user reviews on Amazon.com before buying a DVD or buy ink jet cartridges, we push a button and the merchandise just appears–often the next day. It’s fun to browse in a book store, but nothing could be faster or easier than buying a book on Abebooks.com. By the way, Abebooks now has overseas sites much like eBay. Could a new form of the used bookstore be far behind?
A store is something else. There are complex relationships with developers and leasing agents, co-tenants to consider, positioning within a center, vehicular and pedestrian traffic patterns, signage. Are you being asked to drive shoppers to a center or coming along for the ride? The list goes on, including those items noted at the start of this article.
At the store level, the key is reinforcing the experience and reputation the retailer has already established online or with a catalog. A staffer more interested in chatting with friends dropping by can squash the most sterling identity. If anything, the store should get us to think “that’s exactly what I thought the store should be like,” then go at least one step beyond.
The surest route to the physical store remains profiling the internet or catalog customer and finding out where those people live throughout the country. These demographic pockets are where the retailer should open their first stores. In this way, by remaining true to one’s customer or interest base, it is much easier to remain true to oneself. Slow and steady, opening stores with the same logic that has guided well all types of retailers, should win the virtual to real retail race. In the process, the retailer can generate even greater enthusiasm and customer loyalty for its approach and appeal to consumers.
Jeff Green is the president and CEO of Mill Valley, CA-based retail consulting firm Jeff Green Partners. Views expressed here are solely the author’s.