Kids and kids at heart were equally saddened by the fall of Toys ‘R’ Us, an industry stalwart and the last remaining retail chain that focused exclusively on toys. The store closure announcement removed all hope that the retail giant – a place of nostalgia for parents, a kingdom of wonder for children – could be saved.
What’s even sadder is that Toys ‘R’ Us could have been saved.
The toy-stocked superstore fell victim to a number of retail pitfalls, and it is not alone. Cushman & Wakefield estimates that US store closures will rise 33% in 2018, eliminating more than 12,000 establishments
Between the death of RadioShack, the decline of JCPenney and the implosion of countless others, consumers are getting sick of store closure! signs and headlines. With Sears, Claire’s and Foot Locker ready to shed more outlets, things aren’t looking good for brick-and-mortar retailers.
Given the situation, it may be tempting to cue the Don McLean background music, all the while singing, 2018 is the year retail died! But don’t sound the alarm just yet. There is hope for retailers who are willing to adapt to and embrace the many changes that have evolved consumers’ shopping experience.
Survival Of The Fittest
Many retailers are struggling to overcome the Amazon Effect (among other factors), but it’s time for that to change. While the dot-com giant has proven to be a formidable opponent to traditional shops, there’s no reason why retailers cannot realize their true potential.
In order to overcome some of the retail sector’s biggest challenges, brick and mortar players must be prepared to maximize on opportunities in store, effectively sell and promote goods, fill the gap between digital and physical, which ultimately increases profit and improves their customer experience.
Wallet vs. Demand
This classic problem repeatedly plagued the likes of Toys ‘R’ Us and Sports Authority. Case in point: did you ever think about why you shopped at Toys ‘R’ Us?
Adults went there to buy gifts (“Demand”). The Wallet, however, is one or more degrees separated from the origin of Demand. The Wallet has no desire to go into a store – it’s a chore.
Sports Authority customers faced a similar problem, as customers often shopped in preparation for the new sports season. Then they saw the rising prices and found it difficult to continue.
There’s an alternate scenario – one where bored parents want to kill time with their kids. Upon entering either store, the Wallet has no specific plans to part with money. Parents take the risk anyway, hoping they can get in and out cheaply.
Expectant families are the exception. New parents (“Wallet”) are excited to purchase everything they need. The new baby glow has its limitations, however, so don’t expect the urge to splurge to last long after the:
- Budget has been exceeded for the fourth time
- Newborn arrives
- Second baby comes
Retailers often miss opportunities to unite a resistant Wallet with an eager Demand. Though there are times when it might seem rather easy (ex: expectant families), it is possible to bring Wallet and Demand closer together by:
- Providing customers with a clear and concise listing of all products available in-store
- Explaining where those products are located
- Applying tools that can help customers shop in a more efficient manner, such as maps or digital shopping lists
- Tweaking the store layout to improve shoppability of the store
- Implementing convience programs like buy online pick up in store
Ultimately, when you have a customer who is not bogged down by broken stores, they are less likely to procrastinate and second-guess their purchases.
Digital transformation had nothing to do with internal initiatives. It didn’t matter if Retailer X thought it was a good idea – consumers thought it was a good idea! They fostered an external, cultural change.
Both Toys ‘R’ Us and Sports Authority were given the opportunity to embrace digital transformation and become more integrated with their shopping communities. They ultimately failed, but the results could have been very different.
- Sports Authority: As a parent I wanted to visit the company’s website, declare my child’s sport, league and team, and receive a cornucopia of recommendations for available items.
- Toys ‘R’ Us: Now here was an opportunity to create an app where kids could browse through every toy, build a wish list, then hand it over to Mom and Dad for filtering and sharing (via email, social media, etc.). It could have provided a simple – yet brilliant – shopping solution for birthdays, holidays and other special occasions.
- Staples/Other Office Supply Stores: Imagine a list of all relevant school supplies that generates automatically after declaring a child’s grade and class list. With in-store pickup, this feature would be invaluable to busy parents.
Several retailers have failed to recognize the importance of the store environment, but it is everything to consumers. When stores are old, disheveled, poorly structured, hard to navigate and severely understaffed, customers will go elsewhere, as they are still looking for a unique, yet seamless purchasing experience — this is where a traditional retailer can deliver.
To keep their doors open, retailers should be rethinking the original mold of a brick and mortar store. By maximizing opportunities in store, owning their wallet vs demand, understanding their shoppers, and minimizing the gap between digital and physical, retailers will not have to worry about e-commerce giants, or closing their doors — because they will have increased profit and improved the customer experience.