Keeping in line with the unfortunate trend of 2015 so far, RetailNext’s latest survey on physical retail has a whole lot more red ink on it than the nation’s merchants wanted to see. On average, traffic to physical stores was down about 9.8 percent on average, while sales have fallen off by 7.6 percent.
However, RetailNext’s VP of retail consulting, Shelley Kohan, said that there’s more to measuring the health and well-being of physical retail than foot traffic and sales numbers.
“We need to measure foot traffic because it is an important metric to the state of physical retail,” Kohan told MPD CEO Karen Webster when asked how relevant foot traffic is anymore as a measure of physical store health. “And we recognize that foot traffic has been falling — in Q1 2015 it was down 7 to 10 percent on average. However, we are also seeing conversions go up and the spend per shopper going up too, on average. What that tells us is that consumers are getting to the stores, they are converting at a higher level and buying more. We are seeing a more committed shopper walking through that door.”
So, that’s the good news. Those “more committed shoppers” pushed Average Transaction Values up .8 percent, Sales per Shopper up 2.3 percent and Conversions up .5 percent, year over year.
That new level of commitment, said Kohan, is not a fluke or blip but instead genuinely reflects consumers who are changing as the environment around them changes and as digital invades every aspect of their lives.
“We think this reflects a new empowered consumer that has done a plethora of research before coming into the store,” Kohan observed.
However, the silver lining of the spend per shopper shouldn’t lull merchants into a false sense of feeling that everything is hunky-dory in physical retail land. Falling foot traffic indicates that merchants need to think differently to better capture the footsteps of changing customer bases. That, Kohan says, means thinking beyond the sale.
“What’s happening in the physical retail environment is that retailers need to focus in on the in-store experience. Today, 90 percent of sales come from physical stores, and 75 percent of consumers have expressed a preference for physically interacting with a product, which is positive for brick-and-mortar,” Kohan told Webster. “What has to happen in that physical space needs to evolve to be more exciting and engaging for the customer.”
Part of that, Kohan said, is a technological effort — as enabling tech makes the shopping experience that much easier and more seamless. But part of it, she said, is that retailers really need to take a step back and consider who the customer is, why they are there and what it is that will hold them back from buying. At the end of the day, the customer wants to have a good time, and it’s within the retailers’ power to provide that for them.
“There are a lot of great retailers out there that have done a great job embracing enabling technology and creating these immersive environments and really eliminating those pain points when they come into the store,” Kohan noted. “And what we are seeing over and over is that those retailers that spend the time and effort building out that loyal customer are going to be the winner in the physical retail space.”
Because as Kohan sees it — doomsday predictions aside — shopping in-store offers something that online does not do quite as well: It is an opportunity to not just shop but also find “entertainment, inspiration and a place to be captivated.”
“I think the physical space offers two really important things,” Kohan offered. “One is the touch and feel and the ability to see the product and get some help in the store and really getting inspired. Often, when you go into the store, you don’t know exactly what you want. People enjoy physically going shopping, and that is not going to ever be replaced online. Shopping is a social experience for too many people.”
So, what happens now? Will the numbers start to go up on the foot traffic/sales side?
Kohan offered no hard predictions, instead noting that, more or less, summer is a time when people are a little more comfortable breaking out their wallets while they are out and about enjoying the good weather, even and especially when on vacation.
“Summer gets people out of the house more, especially in the Northeast where the winter was brutal, which makes more opportunities to capture shoppers. Plus, when people are on vacation, they like to go shopping because it is exciting to buy things in new environments,” Kohan explained.
Because, though it doesn’t get the airtime of basketball, the fanatical dedication of baseball or have quite the excitement of the Olympics — Kohan noted that shopping is something of a sport for many.
A sport, that with mobile and digital devices, has become more interesting and entertaining — and competitive — for merchants. And one that with enabling technologies, they hope, can help drive more sales and create more engagement with their customers.
Let the games begin.