How the Retail Industry Can Adapt
Driving by strip malls might have you thinking they have indeed been stripped as well-known retail chains see stores closing all over the country. Many blame the growing prevalence of e-commerce, but that might not be the only cause of this retail decline.
Instead, it may be a realization that businesses have misread their customers’ goals and desires or did not work to adjust to how customer preferences have changed with how they prefer to shop, leading companies to make changes that hurt their bottom line more than save it. With the retail experience changing thanks to the increase in online accessibility to a wide variety of merchandise, and quick, convenient delivery options, consumers now can easily buy and ship products right to their front door.
Retail chains are now faced with navigating this evolving landscape and funding other avenues to target shoppers, and offering more promotions and incentive programs that speak to their target audience might be the best way to do just that.
As a full solution provider for the Incentive Industry, Rymax can offer various strategies, assist with reward promotions and provide consumer loyalty programs to help encourage sales and shopping loyalties.
A Brief History of Retail
The past forty years have been a tumultuous time for the retail industry. Malls first grew as an American staple in the 1950’s and, before the introduction of online shopping, retail chains raising store after store in the 1980s, customers would flock to brick-and-mortar locations as their only shopping option. Malls hit their peak in popularity in the 1990’s, but by the mid to late 90’s, that popularity started to shift.1
A dramatic turn came in the 1990’s as the internet evolved from a business convenience to a cultural phenomenon. Not only did the world suddenly become smaller and more accessible, but shopping became easier thanks to the rise of online retailers like eBay and Amazon, which expanded from selling books to incorporating additional services between 1998-2004, launching its popular Amazon Prime service in 2005.2
The shoe dropped in the late 2000’s when retail chains realized their business strategies were being decimated by online stores. In a drastic effort to stave off bankruptcy, businesses began to close stores left and right.
Unfortunately, choosing to close locations might not have been the best strategy as it only led to additional profit loss. If a company bases its business plan on drawing customers to its brick-and-mortar locations, closing stores limits public access to their goods and services.
Not All Closures Are the Same
There can be no growth without sales. Where retail businesses may have failed is in finding new ways to incorporate new technology in creating flow into their real-life locations and in considering new-age consumer loyalty tactics and reward promotion necessary to compete adjust to the ecommerce demands. Many companies have looked at the Amazon sales model and determined that they also need dedicated e-commerce but go on to create separate online marketplaces that draw customers away from retail stores.
Treating an online marketplace as distinct from their brick-and-mortar counterparts can not only hurt sales but can promote a lack of integration that doesn’t take full advantage of the benefits physical stores have to offer.
Simply because a location is unsuccessful at pulling the sales numbers that e-commerce can doesn’t mean the store is a failure. Separating these metrics shows only part of the picture since both online and real-life sales represent the success of the business as a whole.
While some stores file for bankruptcy due to an overabundance of locations, others that do so are simply trimming the fat. In order to build a brand, some chains went above and beyond by constructing stores to make a name for themselves across the nation.
Lowe’s provides an excellent example. Their locations have seen a rash of closings all over the country, yet they still hold excellent market share and are considered a healthy company. Their closings are more representative of consolidation and an attempt to redirect funds from extraneous stores that are competing with their own brand.
Other stores like Walgreens are closing recently-acquired Rite-Aid locations for the same reason. These shut-downs aren’t indicative of business loss but instead are sound business strategies, allowing brands to retool themselves for the future of e-commerce integration.
Finding Alternative Retail Sales Channels
Retailers can also get more creative about where they offer products and ways consumers can engage with their brands. For example, partnering with an incentive provider like Rymax offers brands a chance to showcase products to their target audience without having to lift a finger. These programs allow almost any brand – from clothing retailers to kitchen appliances – to reach their target demographics and grow brand exposure.
Rymax currently has exclusive partnerships with 100 brands plus 400 additional partnerships that continue to grow. Retailers are continuously releasing new products into the incentives marketplace, including top-sellers and pre-market releases. If your brand is missing from the incentives marketplace, you could be missing out on valuable sales and revenue.
Incentivizing the Issues
Another way stores can keep pace with an ever-growing digital marketplace is to integrate their physical locations with their own e-commerce sites. This can offer the incentive of options like ship-to-store, which allows customers to avoid pricey shipping costs while simultaneously getting people in-store to do additional shopping when picking up their merchandise.
Many businesses have found incentive programs also help improve their bottom line. Harley Davidson Motorcycles is seeing an upturn in profits thanks in large part to this strategy. By offering customers a sense of exclusivity and rewards for their patronage, retail businesses can influence their clients to return on a regular basis. Another great example is Sephora. As part of their loyalty programs, members can earn points to redeem for rewards and have access to makeup tutorials, make-overs, mixers and other exclusive experiences. In addition, avoiding physical coupons and punch cards for digital offerings via apps and websites can greatly alter how retail businesses interact with their customers on a daily basis.
It’s important to remember that businesses need to evolve with technology and not work against it. By partnering with incentive program providers and integrating online and brick-and-mortar locations into the overall strategy, the retail industry can see fewer profit-related store closures and more success across the board. If you are ready to partner with Rymax to increase your bottom line through an incentives program, contact us today.