Borders Group, a company that used to operate more than 500 bookshops in the US and 150 in Australia and Singapore, closed all its retail outlets abruptly in 2011. This resulted in thousands of job losses.
In one of the shops, the manager, who had been working for the company for years, put up a sign saying, “Thank you for shopping at Amazon”, before pulling down the shutters for the last time.
The sign clearly blamed the online giant for putting Borders and countless other shops out of business.
Since then, other retail outlets have continued to close down or to lose business, blaming online competition for their destiny. As expected, this trend started to affect Maltese businesses as well. In 2014, Malta registered the third largest retail sales drop in the EU. In fact a couple of months ago, the General Retailers and Traders Union published its end of year report in which statistics showed how 24 per cent of businesses are directly blaming online shopping for their decrease in trade levels.
In reality, the reason is probably not that simple or straightforward. Retail outlets must also carry some of the blame for their own loss of business because they have failed to adapt to the changing times.
Nowadays, customers have high expectations and are well informed. Customers will not buy anything that is placed in a shop window. Therefore, businesses have to promote, offer and deliver a modern shopping experience that caters to customers’ expectations.
Customer service, for instance, is essential. However, in Malta as well as in the rest of Europe, customer service has remained largely unchanged in these past years. The normal exchange is for a customer to walk into a shop, browse the items on offer, and try to attract the attention of a salesperson. It’s a process that has practically remained unchanged for decades.
On the other hand, online shopping is much more personal and engaging with suggestions, peer and independent product reviews, online checkouts and same day deliveries. This combination delivers an online shopping experience that impresses even the most technology savvy among us.
A lot of customers complain that their experience with retail shop outlets is sometimes stressful due to lack of parking, confusing shop layouts, uninformed staff and an indifferent attitude. In comparison, online shopping provides an informative and comparative experience without the parking issues.
Still, retail outlets do have some advantages over their online counterparts. Products can be experienced and tried on: in a high street retail outlet, you can make a more informed decision about the colour, size and fit of a product than on a website.
Also, there are various strategies that retail shops can adopt to compete with online shops. Shopping, after all, is not just about acquisition – it also has to be an entertaining process. There are customers who don’t buy online because they have to see and feel whatever it is they are buying. Therefore retail shops can use this concept as leverage and become more shopper-centric.
One of the best examples of a shopper-centric shop – which in these past years not only has experienced a growth in sales but has also expanded faster than its online counterpart – is the Apple store. Shopping at an Apple store is as a unique experience, as all members of staff are extremely knowledgeable and passionate about the items they are selling. Moreover, they allow you to test and try out their products and offer advice on the best technology to buy without any pressure sales tactics or trying to upsell anything.
Moreover, the after-sales service at any Apple store is outstanding. If you want to exchange a product, you will not be asked for a receipt or proof of purchase. And if you ask for a refund you will be given one in cash, no questions asked. Sales staff also ask potential customers to check independent online reviews before they purchase anything. And if you find the same item cheaper anywhere else, Apple stores usually match the price.
If they want to survive, retail shop owners have to start redesigning the shopping experience, meet customer expectations and embrace technology rather than fight it. Retailers should start integrating their services and products in their physical shops with their online presence. It is somewhat embarrassing to have an outdated website showing a photo of the shop’s façade – a proper online presence should at a minimum include an updated list of items currently in stock, allow reviews and integrate with social media.
One trend which is catching up fast worldwide is the option to buy online and then collect your items at a nearby shop. This is not only faster than the post but also more convenient and cheaper as no delivery charges are incurred, while at the same time attracting more people in-shop to see other items. Unfortunately, to date, only a handful of Maltese shops are offering this.
Retail shops can also introduce in-shop technological innovation, like hangers with electronic displays showing updated prices and even hangers which show you an item’s Facebook likes in real time. Locally, most in-shop TVs are either permanently set on MTV or VH1 showing music videos when such space may be better utilised by installing touch screens which consumers can use themselves to find the location of a particular item, request an item which is not available on the shelves or check if an item will be available in the near future.
Also, engaging with customers doesn’t need to be invasive. Practically everyone owns a smartphone nowadays, so why not engage with customers by sending messages, offers and brand information.
This relatively low cost solution, known as beacon marketing, is gaining traction in the US but is still not popular in Europe. Smartphones can also be used to make payments without the use of any banking cards or cash and most of the time such solutions are faster and hassle free.
Although the retail shop might be losing the war against online competition, it is far from dead especially when you consider that recently Amazon’s CEO stated that they are studying the possibility of investing in real brick and mortar showrooms to complement their online presence. Also, retail shop owners should stop viewing technology as the enemy and embrace it as a tool and solution.
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