Personalized Physical Stores: The Future of Retail?

Personalized Physical Stores: The Future of Retail?

The rise of e-commerce brought with it a swath of retailers who could no longer keep their brick-and-mortar businesses afloat. In a struggle to stay relevant in this environment, many retailers are trying new tactics to get shoppers back into the store. One of the latest ways to enrich the shopping experience is by offering personalized physical stores.

Let’s Get Physical

Shoppers have become accustomed to the online experience that retailers such as Amazon have been using with great success. Retailers harvest data from online shoppers, including customer profiles, order histories, and click behavior. Technology can harvest the same type of data from in-store shoppers, too. Retailers use this data to try and anticipate what customers might want, and they have been attempting to stay ahead of the curve by providing personalized shopping.

One such attempt at the personalized physical store experience is the Alibaba Group’s “FashionAI” concept store. The first version of the store is a limited-time offering that uses technology such as “smart mirrors” that display product information for whichever product the shopper is touching. The mirror can also recommend other items, and even tell shoppers the location of those items on the shelf. Alibaba’s VP, Zhang Zhuoran, sees the concept store as a way to cater to the needs of consumers.

“The physical world is a wonderful medium, and it’s not going to go away,” said Jeff Bezos in 1999. He was referring to the heady days of early internet shopping, perhaps unaware of how his company would soon dominate the retail world. But now, even Amazon is in on the game to draw customers to a physical store, with AmazonGo retail spots and their brick-and-mortar bookstores, which currently hold about 40 percent of all print book sales in the U.S.

The Hands-On Shopping Experience

Despite the convenience of the click-to-buy phenomenon, some people still want to see and feel what they’re buying. In a six-part survey conducted last year by the retail news source Retail Dive, respondents gave a variety of reasons for why they still shop in physical stores, and were categorized based on age, gender, and where they live.

Survey responses ranged from wanting to touch the products before they buy, to the satisfaction of taking the purchases home with them immediately after purchasing, neither of which are possible with e-commerce. Online shopping can be a lonely activity, and 18 percent of the survey respondents said they like the social aspect of going out and interacting with other people.  

As testimony to the notion that physical stores are not dead yet is the fact that in 2017, the National Retail Federation reported that 4,000 new stores opened in 2017, and more retailers said they’d open new stores than those who said they’d close stores.

The Demise of the American Mall

Retail analysts predict that within the next few years, 20 to 25 percent of U.S. malls will close. With online shopping booming, this is no surprise, but what about all the people that say they still want an in-store experience? Where will they go to get their hands on the merchandise?

Mark Cummins, founder of the retail technology company Pointy, indicates that important details get lost in the news storm of big-box stores and malls, such as the fact that retail stores are increasing, as are retail sales. The struggle that retail stores are engaged in arises from the lack of using technology to their advantage. Cummins calls this hybrid of old and new the “click-and-mortar” model, which combines the in-house experience with digital tools to make shopping convenient and familiar.

If You Build It, Will They Come?

When you give shoppers a good enough reason to shop in your store, they will come, but how exactly can a retailer do that? By combining the best of what technology has to offer with personable and personalized service, in simple terms. Here are a few tips for retailers to stay competitive:

  • Hire top-notch staff that can make a connection with people — something even live chat can’t do.
  • Become an omnichannel retailer — sell the same merchandise online as in-store.
  • Reduce checkout time, either with increased registers or with in-app checkout, which has worked well for Sam’s Club.
  • Employ “retailtainment”  — unique, entertaining experiences that happen in-store. One example is New York & Co’s live mannequin window display.
  • Bring community events into the store. For example, Deep Roots Market in Greensboro, NC has a community room that is open to anyone for use as a meeting space.
  • Provide immersive experiences, such as with virtual or augmented reality programs.

The Bottom Line

Not every retailer will need to employ the same tactics; it all depends on their particular target market and customer base. Try the old-fashioned way, and ask your customers, or, even better, use technology, such as big data analytics. Either way, your goal should be to give your customers what they want, so they, in turn, give you what you want — their business.