Updated: Aug 17, 2021
We have all seen with surprise the closure of large retail chains and the gradual
transformation of shopping centers in recent years, some of which seem abandoned places.
Toys R Us (75 years old), Sears (126 years old), JC Penney (117 years old), Macy’s (176 years old) are some examples of permanent or staggered closures of thousands of stores throughout the country. But what was it that these big chains with sales of trillions of dollars did not understand or anticipate the market change. If you are in the retail business and have survived these changes, maybe you took the necessary measures on time or you are simply on the list of upcoming closures.
WHAT HAS CHANGED IN THE MARKET AND THE CONSUMER’S BEHAVIOR?
What makes these chains close and Amazon continues to surpass sales record. Sales at the close of 2018 USD 240 Billion.
In order to answer this question, we have to understand how the new generations have been turning into the critical buyer’s mass. More and more millennials and centennials will be leading the buyer’s market. To define what we should adjust we must understand how they see the shopping experience and how is their behavior.
For them, there are two clearly differentiated processes (shopping) referred to the process of research, comparison and determination prior to the actual purchase process. Millennials and Centennials make 85% of shopping online while Generation X, and Baby Boomers only reaches 22%.
If the online information is sufficient, attractive, clear and the product is known and does not require from the buyer to check any additional attributes, then the shopping process becomes an immediate purchase. However, Millennials and Centennials still buy 20% of their needs in stores, but from the remaining 80%, about 50% is done through their mobile and 30% online. Never before the mobile had so much power as in these last 5 years.
The process prior to the purchase has become more complicated and detailed, there is much more information available, more access to competitors, different qualities and prices, together with the reviews of other users who post their experience with the product.
The challenge for retail has been to develop brand engagement, create a shopping experience in the store far superior to what has been done. The store should replicate as much as possible the availability and variety that exists in online stores. That is why many chains offer to adjust their price to any offer of lower value in another competitor and additionally offer to order and send by mail without cost any item not available in the store.
Both Millennials and Centenials are generally very spoiled and demanding and want the best at the lowest cost, with the least amount of effort. They carefully decide how to spend their money and more than a purchase they seeks an experience that leads to the purchase.
You have to make them feel recognized and important. The key to recurring purchases overpass the actual product and is more related to the way they felt when buying it, and consequently how they feel when they use it. This whole subject of sensations, preferences and habits is very complex and requires a lot of information analysis (data). That is why data management becomes the main competitive advantage.
One of the reasons why online sales are more successful, is because even before buying there is a lot of information from the buyer available to help the companies make decisions.
When we are buying online they know, how old we are, where we live, how many times we have purchased this item, what’s our favorite color etc. etc. Data and more data is required to generate the necessary changes that eventually turn into a purchase.
Change promotions, colors and forms of presentation online is exponentially easier than changing at the store and therefore the response online is much faster. In this process of searching and gathering information, the most incredible mathematical algorithms have been created that only with the Google search of an article, in minutes we started receiving promotions and advertising without ever having made a purchase or formal request.
Followed by the next time you log in to your Amazon account this item will be the first article advertised. It is no a coincidence that you ask Alexa for information “where is Cancun” and almost immediately we get offers from travel agencies with plans and airline tickets specials to that destination. The key is how to handle the information.
As we get to know the consumer, we will be better able to meet their needs and develop individual marketing and promotion plans.The retail business will not disappear, but it has suffered and will continue to have substantial changes to which we must adjust and have to focus on:
Optimize the experience in the store
Use all the possible consumer’s data to optimize the sales
Customized marketing campaigns with an emphasis on social media
Analysis of trends and opportunities
Without realizing we are giving information since we arrived at the store, some chains like Walmart are using RFID tags with identification that are read via radiofrequency.
WHAT DOES THIS MEAN?
This means that from the moment we took the item and the label tells the store how long we hold the product until payment This indicates if we went just to buy this item or if it was in our shopping cart for 40 minutes. Also indicates if we were attracted by the promotion on the shelf and immediately gives the instruction for replenishment and inventory discharge. If required will also send the order to the supplier for the new dispatch.
In addition, facial recognition programs are used to determine customer satisfaction with each product. We are in the information era, and without it is impossible to survive, we have to adjust our processes as soon as possible to what the result of the analysis of data and consumer behavior indicates, we must develop the brand engagement, participate and connect through social media and create the best possible shopping experience for the consumer. Only then can they have recurring purchases and continue participating in this increasingly competitive market.