February 20, 2018 / TAKE A STAND
February 20, 2018
Every day, it seems, there are more headlines about retail failure, struggles, and declining sales at malls. The mixed bag of 2017 included a record for store closings but also the best holiday sales since 2011. If the end of traditional retail is here then there are a number of potential villains. Blame has been cast far and wide…but mainly at Amazon. Among some in specialty retail – particularly independents – the cast of suspects has also included manufacturers and even consumers.
Looking back, though, there are plenty of examples where the seemingly unstoppable competitor did initial damage but the smarter retailers took note and then took action. When Walmart entered Canada, there was widespread speculation that the move meant the death knell for the country’s iconic retailer, Canadian Tire. Twenty plus years later, the Tire continues to thrive. Many expected the rise of Home Depot and Lowes to trigger the end of thousands of independent hardware stores like Ace, Do It Best, and True Value. While the hardware industry has changed, the savviest of the independents continue to serve their communities. Starbucks boom to thousands of locations had a huge effect on traditional coffee shops. Yet years later, small independent coffee houses are thriving because they’ve figured out a way to serve their markets.
Still, there’s no doubt that consumer buying habits have changed—spurred along by online retailers like Amazon, Backcountry, Chewy’s, and Chain Reaction, as well as consumer direct models like Bonobos, Canyon Bicycle, Dollar Shave Club, Stitch Fix, and Warby Parker. Meanwhile, some online retailers are going the other way as shown by Amazon’s opening of bookstores and the Whole Foods acquisition, along with the opening of shops by other previously online only retailers. And Walmart has evolved as well with the acquisitions of Jet and Bonobos and into specialty with Moosejaw.
Given that backdrop, is the traditional retail environment – and specialty retail, in particular – really doomed?
In the course of my work as founder of Bottle Rocket Advisors, co-founder and president of a cycling products company, and as global strategy officer, VP marketing, and CFO at WD-40, I’ve visited more than 600 independent retailer locations and hundreds of other retailers in the US, Canada, Europe, and Latin America. It was a broad mix of retail types at all levels of success and struggle.
Along the way, I crossed paths with a distinguished group of specialty retail experts including…
J. Beth Annon, past president of the National Bike Dealers Association, and a veteran of 20+ years of retail store ownership. Deb Benjamin, former shop owner, and principal of SportDeb, a sales agency serving the cycling, outdoor, and running channels. Josh Boggs, veteran retailer, and sales manager of Trek South Carolina. John Bradley, former retailer, and sales & marketing leader with companies such as Schwinn, Trek, and WD-40. Sam Hoyt, owner of Maple Street Associates, an agency that guides outdoor retailers and brands in growing their businesses. Jeremy Leifheit, a specialist in consumer experience, customer retention, and organizational design in beauty, cycling, and outdoor retail.
Collectively, we’ve visited and worked with thousands of specialty retailers and spent time with even more consumers. We’ve seen the good, bad, and ugly. And we’ve seen retailers that figure out ways to succeed year after year. From our experiences, I put together a list of nine habits that make the difference for those perennial standout retailers. Here’s what the best retailers do…
Own and Adapt
Clearly, the store owner is the beneficiary of all results, good or bad. Still, many retailers settle into focusing on causes rather than solutions. Given the retail turmoil in recent years, it’s understandable that some struggle with the challenges. “The ‘old guard’ retailers fall into the trap of ‘we’ve always done it this way,’ rather than identifying changes in retail and how customers shop, then molding themselves to fit that profile,” Boggs said.
Rather than locking in, a better approach is to follow the adage that freedom is the acceptance of personal responsibility. “The best retailers get past the frustration and always maintain a growth mindset,” according to Hoyt. “That orientation toward growth forces a constant look for ways to improve the business.” That means they take responsibility for changing and evolving their business as conditions change.
Know Their Market
If location is a key to real estate success, it’s also true for retail. But a good location isn’t enough. Market knowledge should rate right alongside location for owners too. “The most successful retailers understand their market and customer base, get involved in their local community, and they stay relevant,” Annon said. “Because of all that work, they are top of mind when a consumer thinks about their product category.”
Annon would know. Her bike shop in Davis, CA stood out for its reflection of the existing market and also adapted as trends changed. Delivering exceptional service to customers in an appealing environment with the right mix of product wasn’t just a one-time decision. It was a steady evolution – and many individual decisions – based upon engaging in the market and in the local community. That market knowledge coupled with a willingness to evolve can make a big difference.
Define Who They Are And What They Do… And Then Deliver
In the urgency to pay the bills, there’s a temptation to try to be everything. One client told me that he’d try anything to get by and when he did then he’d try even more. “Eventually, I ended up with a lot of nothing,” he said. “And, believe me, ‘nothing’ was hard to manage.”
“I think there’s a risk of going too wide, of trying to be like a mini-mass retailer serving a specialty category,” Benjamin said. “Customers visit stores expecting expertise. I tell shop owners to define what they do and stay with it. That way, the staff can be knowledgeable about everything in the store…and also be able to sell it.”
Differentiating beyond product assortment can matter too. “Customers want to know who you are, what you stand for…especially in specialty retail,” Leifheit said. “People want to buy into that. REI is now known for its Opt Outside campaign which has nothing to do with product…so it also has nothing to do with price.”
Play To Their Strengths
There’s a reason why the big retailers are covering all the bases online and offline. Physical locations can deliver benefits that can’t come through online. “Amazon has done a fantastic job in delivering convenience and automating cross-selling,” Leifheit said. “What they can’t do is provide a personal interaction so specialty shops should work to be excellent at that.”
Personal relationships and connection can be powerful loyalty builders. “Customers can get products online,” Bradley said, “but they can’t get face-to-face coaching, advice, and community. And those needs are always relevant.”
And then there’s the segment of customers who want their items now. “Consumers like instant gratification,” Annon said, “and that’s one thing that only brick and mortar stores can deliver. But they’ve got to have the inventory.”
While the atmosphere may appear casual in many specialty retail channels, the behind the scenes process shouldn’t be. “The best retailers decide the customer experience they want to have and then have a system in place to deliver it,” according to Benjamin. “That system should cover staff training, appearance, interaction, and merchandising.” The best retailers don’t leave anything to chance. If the goal is to deliver a consistently exceptional customer experience then the process needs to back it up.
Create an Environment that People Want to Visit… And Then Change It
From front to back, retailers should be thinking about what could entice a customers to come in, stay, buy, and come back. First impressions start at the front door. “We open the door for customers and greet them,” Boggs said. “The response is almost always the same: a big smile and a comment like ‘great service!’”
While consistency in layout allows customers to find what they’re looking for, it doesn’t always facilitate unplanned add-on purchases. Make the environment unique. “Take down the grid wall and the florescent lights and put up some cool custom displays, lights and offer other amenities,” Hoyt said. “It could be coffee or something else. One shop I work with has a barber on staff and does haircuts.”
Create display areas that surprise but don’t lock in. “Think of your shop like a theater, you have to change the movie once in a while to give people a reason to come back,” Bradley said.
Develop Their People Into Experts in the Category and Customer Experience.
How many times have consumers walked into a specialty shop looking for category products and advice but walked out without receiving either one? “As the local bike/run/ski/mountain shop, you have to be the authority in the field. Your people need to know their stuff and they need to be willing and able to share it…in the store, in the community, at events, and on social media,” Hoyt said.
People buy from people. “Developing your staff is a top priority. Customers might come in for a product or a sale but they’ll keep buying if they like the staff,” Hoyt said. “Make sure your staff gets the training and feel valued.”
“I tell our salespeople that they’re selling themselves,” Boggs said. “Please know that YOU are what you’re selling. It’s not a bike, a car, a pair of shoes, a house… it’s you. If the potential customer isn’t comfortable and doesn’t make a connection with you, the sale is as good as dead.”
Product knowledge should be trained, monitored, and tested. Using mystery shoppers is an easy way to understand the experience that your customers are receiving.
Partner Up: Suppliers, Other Businesses, Community Groups
Specialty retail shouldn’t – and can’t – be a solitary effort. The best look for mutually rewarding relationships with suppliers, other businesses, and community groups serving their market. Certainly, this isn’t a new tactic. However, the most effective relationships should involve a regular discussion about how both parties benefit from the collaboration.
“Forming partnerships with manufacturers is crucial,” according to Annon. “Sell and promote those brands that are willing to help you grow. Engagement with suppliers is just as important as customer rapport. Both take time and effort to get right for all.”
Like everything else, these should involve conscious choices. “Be specific about how you can work together for mutual reward,” Hoyt said. “Effective vendor partnerships are a two-way street with the ultimate goal to grow by serving customers together.”
Always be Learning
The most effective retailers are always observing, assessing, and analyzing the customer experience, competition, consumer interactions, training, product assortment, what’s going well, and what’s not. And sometimes in places that aren’t so obvious. “I think retailers should look at different categories for ideas and tools. I hardly ever look at other bicycle retail stores in my own market,” Boggs said. “I’m looking for ideas from outside my industry. What are the car dealerships doing right? Why does this marketing plan succeed for real estate agents? What kind of experience do I want when I drop my vehicle off for service?”
To answer the question, traditional retail may well be doomed but only to the extent that retailers choose to dig in rather than evolve. On the whole, the best retailers are consistent in one significant way: they’re never really done. They follow a cycle of Diagnose, Define, Deliver, and Do It Again. Engaging in the habits above will enable forward-thinking retailers to continue to evolve with consumers.
Read more from Mike.
Original post: Bottle Rocket Advisors