Retail apocalypse in the US?
Retailers and shopping malls in South Africa can prevent the same thing from happening locally.
With growing urbanisation and globalisation, retail developments in South Africa are looking positive. As cities continue to attract job seekers, the need for services and convenience is being fulfilled by a spate of new shopping malls that are mushrooming nationally.
However, with the uberisation of services and the onslaught of online commerce, customers are increasingly demanding convenience and consistent quality experiences from retailers to augment their shopping journey.
Recent news reports show in the US, retail bankruptcies are expected to lead to the closure of about 3 500 stores in 2017. If this is any indication of things to come, it is important that local retailers and malls complement their investments in location with an experience and convenience that fulfils the demands of today's digital savvy consumers whose spending habits have drastically changed in the age of digital commerce.
Today's digital-savvy customer engages with retailers across multiple touchpoints and channels on completing the customer journey from awareness to purchase through to customer care. Due to the disconnected nature of these channels and systems that support provisioning of products and services, customers often have inconsistent experiences, leading to frustration and abandoning of the purchase.
Retailers, including malls, need to rethink their strategies on supporting the omni-channel customer journey. They need to move away from a conventional strategy of looking at stores as an independent channel, to seamlessly integrating stores with other channels where they play a critical role in fulfilment and facilitate delivery of good experiences.
To achieve this, retailers and shopping mall management must work closely together to understand their customers and complement mutual efforts and investments in shopper tracking and analyses. Malls need to go beyond the traditional ways of customer and traffic analysis. They must include digital technologies that allow for customer profiling, location tracking, behaviour and segmentation tools that supplement the efforts of retailers to establish brand trust and loyalty. While doing this, it is also important that the investments in such technologies should aim to improve convenience and a quality experience at every step of the customer's journey.
In the US, retail bankruptcies are expected to lead to the closure of about 3 500 stores in 2017.
Due to the interlinked nature of their businesses, retailers and shopping malls need to jointly address the challenges around simplifying customer journeys between online and physical channels, and deliver quality experiences with improved convenience in the physical channel.
What must the retailers do?
* Create a flexible store-level architecture that accommodates newer technologies for in-store quality experiences and convenience, while at the same time be open to permitting mall management to add value through their programmes (loyalty), data and insights, plus other complementary technologies. This will also help retailers to transition to a dominant online sales strategy, where stores play a role of delivering the experience and fulfilling the transaction.
* Integrate their brand and experience with that of the mall. This can be done by letting customers have a seamless transition from access to information (on retailers' promotions), services (parking, WiFi) and events at the mall level, to evaluating the goods and purchasing them at the store.
* Build and augment an online presence, such as e-commerce Web sites, to drive online shoppers to the mall and to their stores. This can go to the extent of partnering with third-party online marketplaces and retailers to get online shoppers to visit the store/mall for additional complementary purchases and an enriched shopping experience.
What must the malls do?
Mall management must look at strategic investments that enhance mall shopping experiences and add value to the retail tenant's business operations. Technologies such as beacons and mall kiosks can feed from and into tenants' analytics platforms to facilitate purchasing decisions, navigate the mall and lead shoppers to stores.
The mall can also suggest additional, complementary purchase options. Malls need to ensure displays and promotions are targeted and personalised by leveraging shopper profiles, interests and transaction history. This can be extended to provide personalised recommendations on merchandise and specific retailers. This personalisation can be carried over to the in-store environment, where virtual mirrors and mobile devices can further amplify the quality experience, by providing personalised product recommendations, curated content and solution-driven merchandise to solve key customer problems.
Creation of a mall loyalty and experience platform - which allows complementary retailers to create joint offers or promotions, participate in mall events and woo event audiences into the store - will go a long way to enhancing the customer shopping experience and boosting retailer revenue.
This increased level of collaboration between malls and retailers, and even some standalone online stores, is what will ensure sustainable physical growth and enhanced operations. It is an ecosystem that moves away from the deals, discounts and transactional approaches to a more sustainable experience-driven approach that is premised on value and convenience.
This is an approach that would do much to negate the repetition of events that occurred in the US retail sector from taking place in this country.