MARKET COMMENTARY

Today’s Hybrid Retail Experience

As stores reopen, brick-and-mortar companies are evolving not only to survive, but to reclaim market share momentum. See how retailers are combining new online and in-store experiences to attract customers.

08.03.2021 - Fiduciary Trust Canada

Gone are the days of crowds stampeding down department store aisles during annual storewide sales. For over a year, COVID-19 realities increased the popularity of online shopping for everything from furniture to groceries. As stores fully reopen, brick-and-mortar companies are evolving not only to survive in the highly competitive retail space, but to reclaim market share momentum. And they are doing so in multiple ways.

Conventional strategies using a brick-and-mortar-only or digital-only approach to attract and sell to customers are being replaced by an emphasis on omnichannel strategies. They are all about building the right combination of online options (i.e., channels) and brick-and-mortar spaces to provide a seamless and appealing shopping experience for consumers.[1] The focus is on integrating technology into human-centric environments that deliver a unique experience. What does that look like? It depends.

For instance, consumers are accustomed to IKEA’s approach. The global firm uses its physical stores as shopping options and fulfillment centres, which helps strengthen logistics efficiencies. Combining its online platform with its physical store, a customer can connect with IKEA using their website or app to browse, personalize, and purchase products. Customers can meet with an IKEA service representative online or in-person at the store to further customize or learn more about the product.[2]

Looking at a different example, Nike is moving away from their traditional wholesale distribution model and experimenting with small concept stores. The Nike Live Store, with a growing number of locations including Tokyo, New York, Long Beach, and Eugene, Oregon (Nike’s birthplace), is designed to offer its members the ultimate in community-focused experiences. Drawing on detailed member data, the company tailors its products and services to suit local needs, including offering community meeting spaces and community-partnered programs. Technology is integrated at every turn. For instance, Nike Live offers an in-store digital vending machine offering members “free” products and gifts during their visit.[3]

The proof of omnichannel strategies is in the purchasing, and research shows they are working. Forbes reports that such retailers’ customers are more loyal and spend more as they are engaged via multiple digital platforms and then drawn to the physical space for a unique consumer experience.[4] Sales from US brick-and-mortar stores grew at an annualized 3% over the past five years. As of February 2021, brick-and-mortar sales had grown 6.5% at an annualized rate over the past year while being affected by lockdowns during the same period.[5]

The proof of omnichannel strategies is in the purchasing, and research shows they are working.

As COVID-19 restrictions ease and the path ahead becomes clearer, expect to see further changes in the brick-and-mortar landscape such as more downsizing of more stores and the increased role of larger former store spaces as fulfillment centres.[6] Whatever shape storefront retail may take, if it is certain a vibrant experience awaits, customers will be drawn to see what is in store.  

 

FOOTNOTES

  1. Emma Sopadjieva, Utpal M. Dholakia, and Beth Benjamin, “A Study of 46,000 Shoppers Shows That Omnichannel Retailing Works,” Harvard Business Review, January 3, 2017, https://hbr.org/2017/01/a-study-of-46000-shoppers-shows-that-omnichannel-retailing-works.
  2. Thomas Stackpole, “Inside IKEA’s Digital Transformation,” Harvard Business Review, June 4, 2021, https://hbr.org/2021/06/inside-ikeas-digital-transformation.
  3. Cara Salpini, “Nike pushes small-format expansion with new Nike Live store in Oregon,” RetailDive, January 22, 2021, https://www.retaildive.com.
  4. Calvin Schnure, “Brick-And-Mortar Retail Is Bouncing Back,” Forbes, March 18, 2021, https://www.forbes.com.
  5. Calvin Schnure, “Brick-And-Mortar Retail Is Bouncing Back.”
  6. Marc Bain, “Five ways stores are evolving as e-commerce takes off,” Quartz, May 16, 2021, https://qz.com.

MARKET COMMENTARY

Office Etiquette For The Times

08.03.2021 Fiduciary Trust Canada

To shake or not to shake hands? As in-person business life re-emerges, it’s an important question along with other considerations such as properly riding elevators and managing voice levels. Learn some options.

Office Etiquette For The TimesNEXT POST

MARKET COMMENTARY

Staying Active With Bonds

08.03.2021 Scott Guitard, Vice President, Portfolio Manager

What purpose do bonds still play (if any) in a multi-asset portfolio? Take time to learn our answers and why it’s critical to understand what’s in your fixed income portfolio.

Staying Active With BondsPREVIOUS POST