Taking a Lesson from Amazon; Why In-Store Sales Are Growing

By Jeff White On Oct 29, 2018

In what seems like an about-face, brick-and-mortar retailers are seeing stronger than expected sales. How are they doing this? Well, according to a recent New York Times article, retailers are taking a page out of Amazon’s playbook to better understand consumer behavior… something Amazon does quite well. These retailers are getting smarter and more strategic by leveraging location intelligence to understand the events people attend, where they go, and what they do in the physical retail world.

Location data, as I like to say, uniquely captures the human experience. When a business accesses this depth of understanding about their customers’ lives, then they can build, plan and engage with people in far more relevant and meaningful ways. Location data and event data could just be the superpower that can help retailers match, or even beat, Amazon.

The National Retail Federation (NRF) predicts that US holiday sales will increase 4.3 percent to 4.8 percent this year. This boost is due to a strong economy, however, sales are expected to be slower than a year ago when consumer spending surged to a 12-year high. As we countdown the weeks to the holiday shopping season, what can retailers do to make sure they are grabbing the attention of shoppers? There are many impactful ways retailers should consider using location insights to create opportunities to keep shoppers in-store and counter Amazon. Understanding where people go and what they do there can help retailers get the basics right, such as creating appealing in-store experiences, maximizing convenience (by offering shop online, pickup or return in-store) and, especially when stores get busy, ensuring staff, inventory and merchandising is located where there’s the most foot traffic.

But for retailers experimenting with new strategies and formats — such as pop-up or mini-me stores, or expanding into new markets — location insights can be mission-critical. Let’s examine more: multi-sensory in-store experiences.

Meet Me In The Mall

Wayfair, the web-only home goods store, is expanding into the physical retail world for the first time this holiday season by launching two pop-up stores. These pop-up stores will allow shoppers to browse more than 300 SKUs of tabletop and housewares products — a mere slice of the company’s 8 million SKUs available online — and order products for next-day or two-day delivery.

In this particular instance, Wayfair has chosen to place the pop-up stores in the Natick Mall in Natick, Massachusetts, as well as the Westfield Garden State Plaza in Paramus, New Jersey. The company doesn’t say how they chose these two locations, but location intelligence data would identify the most promising location to attract their target audience.

Honey, I Shrunk The Store. Why The ‘Mini-Me’ Approach Can Work

Shoppers have, it appears, grown tired of Target’s big box gargantuan stores and its “cool edge” has slipped as a result. In response, Target is going after a new market: young millennials in major metropolitan areas; with plans to open nearly 30 smaller stores in cities in 2018. These smaller Target stores reflect a new “mini-me” trend where smaller store formats offer consumers more convenience and appeal. Instead of getting annoyed by maneuvering big-box stores, this younger generation of shoppers prefers smaller, more intimate versions of these chains.

Location intelligence plays a role in figuring out which markets are appropriate for certain “mini-me” strategies and also which selection of inventory best matches the behaviors and interest of the target shopper in that market. For example, big-box retailers that carry ubiquitous shelves of cosmetics could create market-specific mini-me stores or pop-ups that reflect the seasonal needs — darker lipstick shades for fall, for example — of its target audience.

Using Data To Identify New Markets

Opening a new store is a risky endeavor for any retail brand. Location intelligence should underpin the due diligence research to ascertain which markets and neighborhoods offer the best business opportunity.

For example, Dollar General plans to open 900 stores this year as it deepens its reach into rural America with inexpensive food and clothing. The company is building a huge following in vast rural areas where there are fewer places to shop, particularly in the South and in parts of the Midwest — and where people might be more likely to shop online, for the pure convenience. It’s critical Dollar General understands the dynamics of where people go and what they do in these regions to ensure that their new stores are well-received and offer something accessible, attractive and suitably differentiated from what’s already available or online.

In-store retail is not going away and neither is Amazon. In fact, Amazon is craftily and strategically launching new products and expanding into new markets and channels, presenting even more challenges to brick-and-mortar retailers. For these stores, maintaining the status quo cannot be the strategy. In retail, a “build it and they will come” mantra does not apply. By developing a deep and broad view of not just where your target audience goes but also what they do there — and using those insights to craft new experiences and strategies — can make the difference between boom or bust for brands… and not just this holiday season, but for 2019 and beyond.