Retailers Rethink Store Concepts, Digital Strategies Amid New Realities


Traditional retail locations, ranging from fashion and home furnishings to hardware and department stores, have been forced to make significant changes in the face of heightened competition from eCommerce giants like Amazon and omnichannel powerhouses, like Walmart and its online unit,

In many cases, the stores have been slow to develop their own eCommerce strategies. Meanwhile, their in-store customer base shrinks, as shoppers can now find lower prices and fast delivery with the touch of a few buttons on their smartphone – or even through interactive technology that uses voice recognition.

Nordstrom, the Seattle-based fashion retailer, has aggressively pursued changes in both its in-store presentation to customers and its drive to improve its omnichannel approach with changes to its digital operations.

This week, the retailer named Edmond Mesrobian, the former chief technology officer at the British grocery chain Tesco, as its new CTO. Prior to Tesco, Mesrobian was with the online travel site Expedia.

Last month, the chain announced plans to open a 1,200-square-foot local hub location in Brentwood and a 2,200-square-foot location in downtown Los Angeles, both following the opening of its 1,200-square-foot location in the Melrose section of Los Angeles. The Nordstrom local stores do not carry any actual in-store inventory – they only offer shopper services like in-store tailors and other features.

Nordstrom opened its first full-line men’s store in Manhattan back in April, and is planning a women’s store, scheduled to open in 2019. The company also launched a sleep-in concept in select pop-up stores along with mattress retailer Casper, which offers mattresses with ergonomic technology.

In a presentation last month, CEO Anne Bramman said she expects digital sales to grow about 26 percent in 2017, up to 40 percent by 2022. Chief Digital Officer and President Kenneth Worzel said the company is now a top 10 eCommerce retailer in the U.S., has done about $1 billion in mobile sales and had more than 800 million unique daily visitors to its site.

“We are really seeing the benefits of knitting these experiences together to serve customers whenever, wherever and however they want to be served,” Worzel said.

Home Furnishings Race

IKEA is quietly taking steps to rethink how it approaches the retail business, with a new focus on eCommerce and retail stores located closer to customers, starting this fall with a new location on London’s Tottenham Court Road that will focus on helping customers plan kitchens and wardrobes.

The Swedish home furnishings retailer is planning to cut back on its catalog emphasis and has canceled plans for some new retail locations in an effort to improve its eCommerce platform and digital customer service.

Late last month, the company announced plans for a limited time pop-up event in New York and Chicago called IKEA Inspiration Experience, which will offer customers the chance to see IKEA products from the new 2019 catalog in a live, interactive experience. The chain, known for operating large supercenters in suburban mall complexes, is reportedly looking to expand its presence in major urban centers.

Earlier this year, IKEA expanded its augmented reality app to Android, allowing customers to visualize placement of products in their own homes. The firm also lowered delivery charges and entered into an agreement with TaskRabbit, which offers a team to help customers assemble furniture at home. The company also launched a new co-branded Visa rewards card with Alliance Data.

Just this week, IKEA announced a new 326,000-square-foot customer fulfillment center in Lakeland, Florida, set for a 2019 opening. The center will bring about 200 jobs to the area, serving the Miami, Tampa and Orlando markets, and will also serve as a parcel fulfillment center for the entire southeastern United States. DHL Supply Chain, a unit of Deutsche Post DHL Group, will operate the center.

Wayfair, one of IKEA’s biggest rivals in the eCommerce space, just this week announced a mixed reality experience with Magic Leap, which will allow customers to browse through the store catalog and then sample home furnishings inside their homes.

Nikki Baird, vice president of retail innovation at Aptos, told PYMNTS that numerous stores have worked to enhance their eCommerce business with experimentation in virtual and augmented reality, giving customers a visual representation of what products may look like in their homes.

“It’s almost the basic expectation if you are a home goods retailer,” she said.

Customers can use Helio within the Magic Leap One, Creator Edition web browser to essentially see the three-dimensional product in their physical space. Magic Leap One is also working with The New York Times for three-dimensional storytelling.

“With Magic Leap, we are setting a new precedent for a truly immersive shopping experience leveraging the power of mixed use reality and the ease of web,” said Steve Conine, co-founder and co-chairman of Wayfair, in a statement.



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