Earlier this year The Wall Street Journal reported on the record number of brick-and-mortar store closures that are hitting the US in 2017. For example, Bebe Store Inc., a women’s clothing retailer, is shutting down 170 physical locations and transferring its activities to online. Overall, more than 8,600 stores are expected to close by the end of this year – a statistic which reminds us of the level of decay we experienced during the 2008 recession.
Online vs Offline Store Experience
So, what makes retail decrease its physical footprint while Ecommerce grows?
The answer is not as simple as it may seem. The Wall Street Journal points out the two core differentiators which slow down the Legacy retailers’ progress. They are: the lack of personalization and automation that is available for customers who make purchases online.
However, it does not mean that the only way out of this situation is to stop all offline activities. Kantar Retail states that online sales makes up only 1% of the USD 674 billion grocery market in the USA. This is the result of the specialty of grocery stores that sell food and the logistics-related difficulties which arise when the offline players introduce fresh product delivery. It means that despite the advantages which online shopping provides, people still prefer to purchase edible groceries offline.
That is why, seeing the opportunities in being able to get a bigger retail market share and neglecting the fact that physical retail loses this game, at least this year, Amazon Inc. is launching the first drive-up grocery stores in Seattle, getting ready to open an Amazon Go shop, and plans to establish at least 2,000 locations. It may look like Amazon is making a very wrong move. On the contrary – it deploys the latest technology to automate the shopping experience and lets customers use their facilities with smartphone only. So, by being able to identify a customer (by smartphone), Amazon makes the most use of its online retailer expertise, and provides maximum personalization by tailoring all marketing messages they send to a specific client.
On June 16, 2017 Amazon announced that it is going to buy Whole Foods for $ 13.7 billion. A rash of negative comments followed this statement. The most popular one explains that customers will lose from this acquisition since Amazon is going to take over the grocery retail market and literally ‘dictate’ their pricing. According to Forbes, this kind of synergy, which combines Amazon’s innovation, online sales and delivery experience with the existing infrastructure provided by Whole Foods will first and foremost make all grocery products available through a single channel, at Amazon’s prices, with an ability to choose between grocery pick up at a brick-and-mortar store or home delivery. At the same time, this decision becomes a good incentive for all grocery stores to review both their operational and marketing activities, and let innovative technologies, like Proximity Marketing, save them.
Physical Stores Missing out Customer Behavior Insights
Coming back to the Amazon example, it is clear that this company has long been in the market and one of the reasons for its success lies in being able to collect and analyze web traffic. Or what hides behind it – customer behavior. Having knowledge of one’s client, Amazon uses this to, for example, upsell an additional book which, as it states, customers tend to buy together. In fact, it does offer the right book.
The very same principle applies to physical stores. Getting to know each customer in person, their preferences and likes, average spend, or visit frequency allows you to reach out to them while they are in the store with the most appropriate offer.
This is where Proximity Marketing, which enables sending of advertising to a person’s smart device based on his / her location and targeting parameters, steps in. This solution takes an innovative approach, which allows one to connect with customers while they are at the point of interest, collect physical insights, and build a complete portfolio of the target audience by successfully bridging the online and offline behavior analytics.
In other words, Proximity Marketing can provide the brick-and-mortar stores with the currently missing data and allow for building a successful marketing strategy.