Retailers: It’s Time to Refine Your Value Proposition

It’s crunch time for retailers. A recent UBS report predicts that 80,000 retail stores will close over the next five years as the huge upswing in online shopping due to the pandemic becomes a more permanent consumer buying pattern. UBS also expects the e-commerce share of total retail sales to grow from 18 percent in 2020 to 27 percent by 2026.

Projections like these are causing anxiety in retail. People who own or rent real estate to operate a store may have expanded their e-commerce operation to stay afloat during the pandemic, but now they’re wondering what the future holds. Now is the time to define — or redefine — your value proposition as a retailer, whether your store is physical, online, or you manage both.

Identify How You Deliver Value to Customers

Retailers have been adapting to changing consumer behavior forever, but the massive, sudden shift to online shopping due to COVID-19 was unprecedented. It erased location boundaries in a dramatic way that will reverberate after the virus is under control. Retailers need to rethink their use of commercial real estate accordingly.

Start by figuring out exactly how you deliver value to customers. Has your store become an efficient distribution center during the pandemic, with people buying online and you getting products to them as quickly as possible? If so, make that your focus. Whether through home delivery, curbside pick-up, or another distribution method, concentrate on efficiency if that’s your superpower.

Maybe the value you deliver is experiential instead. Do customers come to your store for a personalized experience with your brand that they’ll resume in droves once the pandemic is over? If so, focus on that, even though you may have grown online sales during the pandemic out of necessity. The point is this: you’ll thrive if you understand what your customers want and deliver it effectively. There is no one-size-fits-all approach to serving customers post-pandemic.

One Brand, Multiple Distribution Channels

Another issue to address is the notion that online and in-store purchases are separate. The revenue streams may be reported separately, and in some operations, online and in-store sales are under different leadership. But to customers, it’s one brand, and you need to eliminate any disconnect.

This isn’t a new issue either. You may have heard about a big department store whose customer wanted to purchase an item in the store at the lower online price and was told they’d be better off going home and ordering it online. That might make sense to store bean-counters who calculate overhead for online and in-store operations separately, but it’s infuriating to customers.

Instead of cannibalizing sales across channels, understand why customers choose your store, whether via e-commerce, an in-person visit, or both. Align your revenue reporting to reflect that you are one brand with multiple distribution channels. Make sure your communication with customers is consistent across every channel and reflects the value your brand delivers.

Focus on Where You’re Already Winning

Stores that have weathered the pandemic’s economic storm have stayed in business for a reason. Now it’s time to assess what that means for the post-pandemic world. Are you already winning because you’re hyperefficient in the way you distribute products and/or services? Continue to deliver on that promise for your customers, because it’s resonating with them. Do the math to understand the margins for curbside pickup vs. shipping, and if one comes out on top, it’s time to hone in. Now is the time to ask, and answer, critical questions about how you’re serving your customers, and whether that service could be improved upon.

Perhaps you’ve seen success because you deliver a personalized in-store experience that customers love, and for now, you’re keeping people safe by limiting capacity or setting appointment-only visits until you can welcome everyone back. If the value you deliver to your customers is experiential, lean into that success, and continue innovating to keep customers coming back despite capacity restrictions.

Customer service, and a retailer’s value to a customer, will always be a key component of the retail industry, regardless of what the coming years hold. The retailers that make an impact, whether in-person or online, will do so because they understand the value they bring to their customers’ lives, and work every day to innovate their offering. Engaging with customers on the platforms they prefer, providing services in formats that meet customer needs, and creating a seamless customer experience across distribution channels are just some of the ways retailers can define their value to customers and create connections that last long after a purchase is made.

Tara Kelly is the founder, president and CEO of SPLICE Software, a company using big data and AI to create messages that drive customer engagement and the desired call to action.