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3 Key Takeaways from the Shoptalk Conference

More than 3,000 people attended the three-day Shoptalk conference in Las Vegas last week. The attendees came from all segments of the retail industry: stores, suppliers, startup innovators, data analysts and venture capitalists.

Top of mind for many of the attendees was the question “Are physical stores still relevant?” The fate of the physical store generated significant discussion, especially given the questionable health of the retail sector after the recent 1Q reports of poor sales coming from Macy’s, Kohl’s and Target.

The future of stores may be at risk as shoppers increasingly shift from offline to online channels. Some analysts even speculate that online leader Amazon could surpass Macy’s as the nation’s largest apparel seller next year. Stores as we know them today may not be the ones we will shop in the future.

A wide range of topics were discussed during the conference, but one thing was clear - 'bricks and clicks' both matter.

1. Major Retailers are Trimming Down but the Physical Store Isn’t Dead. They’re Transforming.

In an opening keynote, Gerald Storch, CEO of Hudson Bay Company, acknowledged that the US has way too many stores. However, physical stores and malls are still relevant today.

Traditional brick-and-mortar stores have core advantages, such as merchandising, customer service and logistics. These, as well as the space for human connection and interaction, simply cannot be performed optimally online. The human element matters greatly to consumers.

A wide range of brands showed examples of how their stores intend to meet the need for new store experiences. Target's Chief Strategy and Innovation Officer Casey Carl discussed how the chain is testing out new retail concepts, such as their “Open House” experimental store that showcased smart technology for the home, including baby monitors and sprinklers.

Similarly, Brendan Cahill of Penguin Random House said that they were opening direct-to-consumer concept stores that introduced new ways for consumers to explore print books. Steven Lowy, Co-CEO of Westfield Corp, explained their vision of reinventing the mall, mixing technology, food, entertainment and leisure.

"I don't think the concept of the department store will go away. They will be different in shape and form,” said Terry Lundgren, Macy’s CEO. “If the department store was not around today, someone in Silicon Valley would be inventing it."

2. Stores Have the Advantage as Distribution Hubs

According to Storch, the direct-to-home supply chain costs three times more than store-based supply chain models. This is an advantage that physical retail stores have, and a challenge that remains difficult for online-only retailers

Macy’s was one of the first major retailers to use a few years ago. Since then, many retailers have followed suit to help facilitate faster deliveries and happier customers. Today, about a quarter of Target stores ship orders straight to consumer homes.

The ship-from-store fulfillment model ship-from-store strategy does have some costs, and retailers are learning their lessons. Many stores often faced the problem of not having the right inventory in store at the right time. More importantly, stores were understaffed to accommodate fulfillment work, in addition to providing in-store customer service that fluctuated based on traffic.

Stores are being stretched to take on different roles. Michael Tobin, senior VP of strategy and innovation at Macy's, says that they’re working on these issues and testing out new approaches to workload management. This includes matching tasks to available resources, meaning that in-store staff will be assigned specific tasks based on demand as soon as they show up to work and clock in.

3. Online-Only Retailers are Expanding with Physical Stores

Many retailers that started out as purely online stores are branching out with physical stores. These include Amazon, Birchbox, Casper, JustFab and Amazon. More and more online-only retailers are starting to realize that consumers crave the shopping experience.

"The future doesn't belong to Internet-only companies," Storch said in his keynote. "It belongs to customer-facing brands that meet the needs of the customer, however she wants it, whenever she wants it. All companies will be Internet companies, or they won't be companies at all."

The bricks and clicks model is growing, with many retailers seeking to complement the online experience with an offline, customer-facing shopping experience. Digital brands like Bonobos, Casper, and Warby Parker are changing the traditional definition of what an in-store experience can mean for consumers. This may involve consumers buying the product without actually walking out with it.

“Our guide shops are not a store but a great customer experience,” said Andy Dunn, CEO of Bonobos, a men’s fashion brand that originally started as online only. Bonobos now operates 21 physical stores that are called "guide shops." There, customers can get fitted, and their orders will be delivered to their home. Shoppers, however, can't take the products with them. Dunn explains that instant gratification only works for food and essentials.

 

Albert Ong

Albert Ong

Albert Ong is the marketing manager at Jazva, an all-in-one ecommerce platform for multi-channel sellers. When not leading content strategy, Albert spends his time listening to audiobooks, writing science fiction, and binge-watching Netflix.

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