Christmas is just around the corner. The festive TV advertising battle is reaching fever pitch, shop windows are full of seasonal displays, crowds of Christmas shoppers descend upon London’s Oxford Street and there has even been a sprinkling of snow.
Thinking about Christmas, I can’t help but consider the incredible opportunity it presents to the world of bricks-and-mortar retail. Online retail plays to its strengths and maximises its presence at exactly the right moment through calendar events such Black Friday, but what about the world of physical retail? It will be interesting to see how it competes with the huge price reductions offered by e-commerce retailers, with their high volume/low margin business model and fractional real estate costs.
In my view, the answer is for physical retail to understand its own strengths and work on building value, rather than trying to compete with e-tail on a like-for-like basis. Offering price promotions immediately leads to price comparisons, and a token element of service isn’t a strong enough differentiator to compensate for a potentially large price difference versus online retail. However, what high street stores can exclusively offer is experience. By providing a high value – and relevant – experience at the point of purchase, retailers can create a unique offer to convert shoppers.
This isn’t a game of cat and mouse in which the retailer relentlessly chases the consumer. Instead, it’s a game of cats and dogs, and retailers must understand the type of shopper to whom they are appealing. The online method is like throwing a dog a bone: a simple transaction in which price is the primary incentive and offers attract an immediate reaction through a one-proposition-fits-all approach.
Meanwhile, physical retailers have to think more like a cat owner: how can they entice and engage the shopper in a conversation to create experiential moments on the shopper’s terms? Once that curiosity and interest is sparked, there’s a bond formed that can lead to a relationship with meaning.
Today’s stores are focused on traditional engagement models and there are a number of effective case studies: the John Lewis Partnership in the UK, for example, and Target’s REDcard and Eataly’s in-store cookery classes in the US.
But retailers need to take it to the next phase, to couple a home-from-home environment with a broader and more flexible category approach in which the shopper wants to contribute to the retailer’s success. What I’m suggesting is a total reinvention in the way stores operate.
This new relationship would resemble the one that my mother had with her local corner shop – bound by trust. By achieving that, retailers can convert the store visit to a transaction and move beyond the showroom trap in which shoppers peruse in-store but buy online.
This is happening already. New York’s new Muji flagship store offers unique and engaging experiences for everyone: an embroidery station, aroma lab and even a bag maker to custom-design packaging. It’s a place to discover and be yourself, not for a hard sell. American Express’s Plenti programme meanwhile allows customers to redeem points across a variety of retailers, showing that partnering with other companies to deliver an all inclusive category experience can unlock benefits for brand and consumer.
There are also a number of ways in which we can meet shopper needs through personalisation and understanding their values. Values will nearly always win out over money and retailers that can offer an integrated experience that allows customers to build on those will enhance their relationship. Patagonia, an eco-friendly outdoor clothing brand, achieved this with its Common Threads initiative, which enables customers to trade in their used clothing.
Personalisation can be a big win for physical retail because of its potential to create an emotional connection. Whether it’s wall plates naming the best customers at New York steak house Smith & Wollensky’s, being greeted by name on an Emirates flight or a personal welcome from the manager of a hotel, these are moments that make the customer feel special. Although that might come with a higher price tag, the exclusive experience gives it the edge over the cheaper online version.
There’s no better time to introduce initiatives that create an advantage than at Christmas. Footfall is at its highest and stores will attract many occasional shoppers, often while they are out with their family and in festive spirit. This provides the perfect opportunity to offer a positive experience that can create a halo effect for the rest of the year, as well as demonstrate that a return to traditional values at Christmas isn’t purely the domain of TV advertising.
Pietro Leone is EMEA chief executive of Geometry Global
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