2017 has been a tough year for retail, as evidenced by the bankruptcy filings of notable companies such as Toys ‘R Us, The Limited, Payless Shoes, and RadioShack, to name just a few. This has prompted Harvard Business Review to state the following:
“Retailers must finally wake up to the core terrain over which they’re fighting: customers’ time.”
What Online Retailers Offer
According to Harvard Business Review, E-commerce offers consumers time well saved because shoppers can find what they want, when they want it, with relative ease and convenience. Additionally, the purchased items can be shipped directly to the customers’ homes in a matter of days. And quite often, customers don’t even have to pay shipping costs.
Currently, the U.S. Census Bureau estimated that E-commerce’s share of the U.S. retail market was nearly 10% as of the first quarter of 2017, with online sales growing nearly 10% per year. If this continues, online retailing will claim about 20% of the retail market share in 2025 and about 50% by 2035.
How Traditional Retailers Can Edge Out Online Competition
One way traditional retailers can compete with online retailers is by going online themselves and making their physical stores a pickup location for items ordered online, something that’s becoming increasingly common. Giving customers this option is a good way to increase sales that would otherwise be lost to E-commerce.
Of course, this strategy alone isn’t enough. Retailers must offer compelling reasons for consumers to visit their store. In other words, they have to offer shopping experiences online retailers can’t match.
This is what Harvard Business Review refers to as competing on the basis of time well spent, or offering experiences that are so engaging that consumers cannot help but spend time with you. And guess what? The more time customers spend time in your store, the more money they will spend.
“If you get the customer to stay a few extra moments in the store and spend a little extra money, all while giving them what they wanted, then you’ve won…But if the customer leaves feeling they’ve wasted their time, then the retailer loses.”
~ C. Britt Beemer, chairman of America’s Research Group, a marketing firm, via The Street
For example, Milan-based retailer Eataly (which has 5 stores in the United States) combines all things Italian cooking into one incredible engaging space, including a café, restaurants, a cooking school, and rows upon rows of Italian groceries, kitchenware, and small appliances for sale. Consumers can literally spend hours there—and often do. Shoppers then post photos of their visit to their favorite social media outlets.
Interestingly, Starbucks originally started out as a manufacturer before Howard Schultz transformed it into an “experience stager”. Like Starbucks, many online retailers have recognized the power of physical engagement and are opening up their own brick-and-mortar stores.
“Physical retailers must choose between time-well-saved and time-well-spent strategies, says Harvard Business Review. “Whatever they do, they should be careful not to choose a middle-of-the-road approach that fails to excel at either.”
That means traditional brick-and-mortar stores must win the customer’s time and make it magical by offering engaging and memorable experiences that online retailers simply can’t match.