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As customers change how they shop, retailers focuses on the in-store experience

Winning shoppers and delighting the digitally savvy consumer

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Rethink, reimagine, and reinvent the retail store

From last year’s so-called retail “apocalypse” to its current “renaissance,” stores have been in the news a lot lately. And while both narratives are overblown, the retail industry is undergoing its biggest transformation in 50 years. Modern technology and competition, and over-building in some regions are factors, but at its core consumers are changing how they shop and engage. Now is the time to rethink the definition of the store and the role — or roles — it plays in customers’ lives. To attract and delight customers, and eager associates, reimagine every aspect of the physical space, and reinvent retail operating models to achieve customer centricity and enable continuous innovation.

Rethink space and delight the digitally savvy consumer

Despite retail’s rich history of grand public showplaces, most stores today are as utilitarian as they are ubiquitous. They are trying to satisfy both the top and bottom of what was once called the purchase funnel: building awareness, driving traffic, and completing  purchase.

Consumers have nearly unlimited choice of when, where and how to shop. Replicating a single formula or store concept across hundreds or thousands of locations is no longer a recipe for success. And there will be fewer locations as well. A 2017 IBM Institute for Business Value (IBV) study showed, for example, that only 22 percent of retailers plan to increase the number of physical stores or selling spaces over the next two years.

Retailers can seek to differentiate their stores by focusing on the in-store experience pre- and post-sales service and social interaction. They can also exploit that they have products on hand, helpful sales associates, and a place for people to meet and socialize. But recent experience demonstrates that taking that type of incremental approach is unlikely to be enough. Today’s retail environment calls for more radical transformation.

Instead of slowly evolving their stores, innovative retailers will rethink how physical space can best serve customers in the context of their lives. The definition of “store” is expanding to include showrooms. For example, the Nordstrom Local showroom format—a store with merchandise on display for shoppers to browse, touch and try—drives customers to purchase online exclusively. On-the-go, self-service options are also becoming more prominent, including the Best Buy Express vending machine and Whole Foods and Walmart’s fully automated online order pickup lockers and towers.

Armed with a detailed understanding of shoppers and the neighborhoods in which they reside, successful retailers will leverage hyper-local data on customers, competitors, weather, and events. In turn, they can tailor individual aspects of their offerings to reflect local customer and market dynamics. So, while a grocery store in one neighborhood may feature an interactive test kitchen and locavore-friendly specialty fare, another may emphasize meal kits and prepared foods. Stock level, staffing, and promotion will vary for home versus away sporting events, and at the store level for fans of major league sports.

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Meet the authors

Karl Haller

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, Global Leader, Consumer Center of Competence, IBM Global Business Services

Cynthia Coulbourne

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, Global Retail Offering and Solutions Lead, Consumer Industry IBM Global Markets

Stephen Laughlin

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, Vice President & General Manager IBM Global Consumer Industry

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