HRG

By Jen Johnston, senior marketing services account manager, as seen in Mass Market Retailers

The retail landscape is rapidly evolving. Consumer expectations related to technology, novelty, convenience and experience are driving the movement. Those businesses that refuse to innovate are being met with dwindling profits and store closures.

However, many stores are taking informed leaps of faith and trying out new store formats, services and displays. While not everything will stick, trying out new techniques in these three areas can keep retailers at the forefront of prosperity and thriving for years to come.

Retailers across channels have launched smaller-format stores in urban and suburban areas, with the intent to attract professional Millennials with young children. Target Corp. plans to have 130 small-format stores by the end of the year. The stores are 25% grocery, with the remainder focusing on home goods; apparel; and health, wellness and beauty products.

Sears is also planning to open three new small stores after filing for bankruptcy earlier this year. And while Whole Foods Market is converting its 365 stores to the corporate banner, the small-footprint stores will not be altered. Meijer Inc. and Dollar General Corp. are also paring down their store size.

Even Aldi, a grocer already considered to have a small floor plan, is trying even smaller Aldi Local stores in Europe. If successful, perhaps Aldi would bring this concept to the U.S. Aldi is also innovating by collaborating with Kohl’s Corp.’s department stores by leasing space. It may be a win for both companies, as a recent survey by Field Agent showed that 49% of shoppers would be more likely to shop at Kohl’s if an Aldi were next store, and 52% would shop at an Aldi if a Kohl’s were next store.

interior of retailerStore-with-a-store attempts are another area of promise. As one of the pioneers, Sephora USA Inc.’s existence inside hundreds of J.C. Penny Co. stores has proven successful for both retailers.

More recently, Kroger Co. has begun testing the store-within-a-store concept at Walgreens, bringing fresh food to the pharmacy under the Kroger Express banner. Kroger is also testing a twist on the popular Buy Online Pick Up In Store (BOPIS) model, allowing shoppers to pick up their grocery order at selected Walgreens ­locations.

As a service, BOPIS is picking up steam among retailers, so it will soon be a consumer expectation. By 2021, 90% of retailers are expected to offer a BOPIS option to their customers.

BOPIS evolved to compete with Amazon, and retailers are continuously improving their omnichannel strategy. Amazon is improving as well, only going the other way, from online to brick-and-mortar. New Hope Network said that analysts expect 3,000 Amazon Go cashierless stores by 2021.

One unique service that surprised the industry was the acceptance of Amazon returns at Kohls. After about a year and a half of trial, research firm Earnest Research saw that most stores accepting the Amazon returns experienced year-over-year revenue growth well above that of the ­others.

Retailers found ways to take advantage of the white space available over the holidays created by the absence of Toys “R” Us. Amazon published its first-ever printed toy guide and sent it to millions of households along with distribution at Whole Foods. Target upped its toy inventory and distributed a meaty catalog of its own. And even Party City opened 50 pop-up toy shops called Toy City.

To accommodate the changing needs of retailers and facilitate a unique consumer shopping experience, fixture companies are offering innovation as well. Some companies offer universal systems that connect existing inserts into a base tray which has conductors for back lighting to illuminate the product choices for shoppers. There are also advancements in anti-sweep fixtures to help reduce shrinkage from theft.

Energy-saving displays are in vogue, with refrigerated cases at Target having automatic lights and Walgreens experimenting with digital coolers and freezers that contain screens which show the product inside along with pricing and can be updated by the click of a button. The screens can also determine shopper traits like age and gender in order to target specific ads.

Retailers are also using “smart mirrors” at the shelf and in the dressing room to help shoppers make decisions and provide the merchants with valuable information on shopper preferences so recommendations can be made.

Merchants and brands alike must be innovative and nimble at retail today. Outside-the-box thinking will help businesses achieve next-level status and keep consumers coming back for more.