This year, 2016, is the year of retail redefined. When I say redefined, I mean forever changed. It’s no longer about product on the shelf. Retail is about telling a story. Retail shelves are the new-age magazine cover.
Speaking of stories, ecommerce was the big story of holiday shopping. MasterCard SpendingPulse reports ecommerce grew roughly 20% during the season, compared to 2014. The report also shows overall spending rose 7.9% (1). However, the retail news is not all rosy. As I’m writing this piece, Macy’s, Gap and JCPenney announced store closures.
“Our dependence on stores to serve as distribution points for products is rapidly diminishing as digital media, in all forms, becomes remarkably effective at serving our basic shopping and distribution needs which, until recently, could only be fulfilled by physical stores,” writes Doug Stephens, founder of Retail Prophet. “Now, just about anything we buy can be on our doorstep in a matter of days, if not hours, via a myriad of online shopping options.”
In an Op Ed posted on BusinessOfFashion.com (2), Stephens adds, “The physical store has the potential to be the most powerful and effective form of media available to a brand because it offers an experience, which if crafted properly, cannot be replicated online.” Calling this new breed of stores “experiential retailers,” Stephens suggests they will define the ideal experiential journey, while employing expert “product ambassadors” & technology to deliver something truly unique and memorable.
How can and should beauty retailers adapt? Let’s go back to two of the consumer trends I highlighted in my first article: personalization goes high-tech and lines of distribution are dissolved.
Personalization goes high-tech.
Examples: interactive offerings such as coaches/advisors and beauty bars in-store and apps as a mode for human touch. For example, Ulta Beauty is piloting an app in 30 stores to give associates more information to better serve guests: “Having more information at the fingertips of our associates through the app helps us better serve our guests with a great in-store experience that is highly personalized. We continue to refine the app and are seeing strong potential, particularly on the salon side of our business,” says Dave Kimbell, chief merchandising and marketing officer of Ulta Beauty.
Lines of distribution are not only blurred, they are dissolved.
Business owners have to think about consistency at every touchpoint, regardless of channel. The Future of Retail 2016 report from PSFK supports that distribution lines are dissolved. Researchers pinpoint several ways for retailers to deliver a new shopper experience including:
• Create Confidence - Provide shoppers with the tools and advice they need to discover new products and choose the best option for their own needs.
Product immersion - Let customers get hands-on and test products.
Guided recommendations - Provide customized advice from salespeople to find the right product. From my experience in supporting Skin Authority’s partners, we are finding that in-store kiosks enable salespeople to offer education at point-of-sale, while combined with at-home coaching via the My Skin Authority app. An added bonus with in-store kiosks, they can also be self-serve via virtual coaching, which means the store does not have to add resources.
• Eliminate Obstacles - Use technology and services to streamline the path to purchase so it requires minimal effort.
Anywhere purchasing - Use technology to let customers find and purchase products anywhere (in-store, mobile devices, etc.)
Shop ahead - Make it easy for customers to plan their visit to your physical store.
• Optimize Ownership - Build a support network that provides expert service and continues to educate customers about their purchase after it’s made.
Cultivated expertise - Create educational experiences that teach customers new skills, while also showing them new ways to use your products.
Always-on support - Use customer service technology such as chat, online video, FaceTime, etc., to provide real-time access to experts who can provide advice.
• Cultivate Community - Create opportunities for customers to come together around your brand and add value to your products.
Cultural hubs - Similar to the Apple Store, create space inside your facility to offer complementary services and experiences.
• Promote Transparency - Be open with customers about your products and services.
Storied products - Give customers a behind-the-scenes look at where the products you sell.
Speaking of, the shelf space is a media opportunity to tell a story, so think about how it is curated. Stephens adds, “Skids of products and rows of shelving will give way to more gallery-esque store designs and artful merchandising, allowing space for in-store media and interactivity with product. Social media will be infused into the experience offering at-the-shelf reviews, ratings and comparisons of products. The store in essence will become an immersive and experiential advertisement for the products it represents.”
What does this artful approach to merchandising mean for inventory? Less can be carried, which equals saving money. Again, another benefit of using virtual kiosks and coaches, you don’t have to carry as many SKUs because orders can be placed and shipped virtually.
Ulta Beauty’s Kimbell adds, “In early November, we launched the first phase of our demand forecasting and inventory optimization tool. We call the system “SWIFT,” for Store and Warehouse Inventory Forecasting Tool. With SWIFT, we can produce more accurate forecasts for both stores and ecommerce, resulting in a better inventory position and reducing lost sales from out-of-stocks. SWIFT takes replenishment from a manual process to an automated one and helps us be much more accurate about anticipating future demand and building inventory to support seasonal sales based on holiday or other promotional periods.”
This new model will require retailers to qualify and quantify the experience they deliver, the traffic they generate and, of course, the sales impact generated. Stephens adds that anonymous facial recognition, video analytics, mobile ID tracking, beacon technology and other systems will transform stores into living websites. Kimbell reports Ulta Beauty recently installed beacons into 300 stores. He says the initial purpose is to understand consumer behavior in-store, with plans to use the technology to create a more personalized shopping experience in the future.
About the Author: With more than two decades in beauty, Celeste Hilling is a recognized media expert on the science of skin care and trends in technology. Based in Southern California, Hilling is also the founder, CEO and product formulator for Skin Authority. Skin Authority is the healthy skin lifestyle company utilizing technology to develop pure, powerful products and engaging consumer experiences. More on www.skinauthority.com, Facebook at Skin Authority, Twitter @SkinAuthority and @MissSkin.
Check out the first and second installments in this article series on high-tech shopping trends.
Sources
1. http://newsroom.mastercard.com/news-briefs/a-happy-holiday-season-for-re...
2. http://www.businessoffashion.com/articles/opinion/future-retail-end-whol...
3. http://www.slideshare.net/PSFK/psfk-future-of-retail-2016-summary-report
[Image courtesy of Skin Authority]