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The Brick and Mortar Paradox

It’s no secret that consumers are shopping differently than they did ten years ago. One of the biggest impacts on shopping behavior has been the rise of large-scale e-tailers like Amazon and the proliferation of the smartphone.

Showrooming

With increasing frequency, shoppers are using their mobile phones to aid in the shopping process. In a recent study by Pew Research, 74% of smartphone users say that, while shopping, they use their phones to get directions or recommendations based on their current location. This is up from 55% from May 2011.

Also on the rise, and dubbed “showrooming,” is the tendency for shoppers to visit brick and mortar stores to touch and feel product, try on clothes, compare speeds and feeds of multiple brands and then, while still standing in the shopping aisle, go online, search for a lower price and make their purchase from their mobile phone. In the same study mentioned earlier from Pew, 52% of American shoppers report using their smartphone to perform research while standing in the aisle of a store and 19% report having completed a purchase online while shopping in store.

Applications like Red Laser and Price Check by Amazon make it easy for consumers to compare and find items at the bar code level to ensure they are buying exactly what they saw in store. When Amazon launched Price Check last holiday season, it promoted the app by granting users a $5 discount off any product if they used the app in-store. This move touched off a furor of complaints as physical retailers lashed out at what they correctly perceived as an attempt to take advantage of their stores while paying customers to not shop there. Target attempted to retaliate by requiring brands to issue products with unique skews. While some did accommodate Target’s request, this short-term solution overlooks the fundamental change in consumer behavior and the inherent strengths of brick and mortar shopping.

The Brick and Mortar Paradox

With a growing number of shoppers “showrooming” and shopping online from home, one would think that e-tailers have it made. Why then in February of this year did Google announced a plan to build a storefront in Dublin? And similarly, why has Amazon contracted space in Seattle for a full retail experience? Jennifer Gosselin, SVP and general manager of Piperlime, which recently announced plans for a storefront in Manhattan said it best, “Our customers have been asking for a place where they can experience Piperlime in person.” While next day shipping is great, it cannot replace the excitement (and often the necessity of) buying and immediately walking out with an item. And though sites are striving to create a brand experience online, there is no substitute for walking into a store, being greeted by an associate and experiencing the store in person.

Store of the Future

Retailers can capitalize on their biggest asset, the store, by making the experience personal and engaging — and luckily technology is evolving to help.

Last month, Neiman Marcus introduced a pilot program called NM Service, an app that lets shoppers know which of their favorite clerks are on the floor when they arrive. The app can also be used to make appointments remotely with salespeople or pick out the items that interest them before they get to the store. Creating relationships between shoppers and associates pays off beyond creating brand affinity as customers who shop with the same associate three times spend almost ten times more than those who go to a random sales clerk.

Macy’s is piloting a program with digital store window mannequins that allow the store to change outfits to suit different crowds during different day parts and adapt to weather patterns. For example, if a snowstorm rolls in, the mannequin dons a down jacket and boots versus if there is an expected heat wave, they can be outfitted digitally with the latest shorts and sundresses. Shoppers may also change what the mannequin wears, creating an engaging, interactive experience that allows the consumer to see the fashion that they find most appealing.

Finally, once solely the domain of tech retailers like Apple, more retailers are embracing mPOS to eliminate lines and impersonal cash-wrap stations. In a recent study by Motorola, 66% of retailers claimed they were interested in Mobile Point of Sale (mPOS) as a core customer service strategy with 42% of retail respondents currently piloting or starting trials within the next 36 months. Again, this not only improves the shopping experience, it pays off in sales. In December 2011, Motorola’s holiday shopper survey found that one-third of store visits ended with an average of $125 unspent due to missed opportunities to purchase. The survey also found that inefficient payment processes were one of the leading contributors to those lost sales. More than 43% of shoppers agreed that their shopping experience improved when store associates used mPOS devices.

So while e-tailers pose a threat to brick and mortar retailers that cannot be ignored, the best course of action, as demonstrated by e-tailers attempt to get into the act, is to capitalize on their greatest asset — their stores. And with that, store experience continues to gain importance as a way to compete with e-tailers and stem the tide of “showroomers” and luckily, technology is evolving to make the in-store experience more convenient, more personal and more engaging.

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