Pick and mix: Changing retailer assortments to hybridisation
by Sanet Yelland. Retailers should combine the creativity and empathy of design thinking when refreshing their store formats to meet the demands of today’s customer.Monday, 04 Oct 2021
by Sanet Yelland. Traditional retail was always comprised of face-to-face interactions. Quite simply, consumers would visit a store to buy products and tangibly interact with items required at the point of purchase. In turn, retailers would use these interactions to establish long-term, high-value relationships with their customers.
Technology amassed one-on-one marketing relationships as consumers began to forgo in-store experiences for hyper convenience and on-demand real-time shopping. When the pandemic impacted how we consume and shop, retailers knew that things would change; however, the level of massive digitalisation across channels and product assortments was unexpected. And so, the hybridisation of the channel and assortment strategies emerged.
What this means for retailers
Hybrid channel strategies vary, dependent on outlets. It might mean cross-functional channel experiences to meet customer demands, opening a pop-up store, offering click and collect streams, or even stocking different assortments in new experiences (e.g., experiential forecourts). Traditional formats…
1. Convenience and time are key. Consider the on-demand moments in the shopping journey where there’s still shopper friction and remove the barriers. This can be influencing a faster click-to-pay, buy online, pick-up in-store, or immediate rewards added to the cart. Also, by allowing shoppers to see if the products they want are available at their convenience, you’re influencing the perception of your channel experience without store experience.
2. Basket fragmentation and channel-centricity. Omnichannel customers love to use the retailer channels made available to them. This can include smartphone apps to compare prices or coupon downloads, or interactive catalogues. Each shopping platform provided by the retailer is a ‘separate channel’. The more channels your customers use, the more valuable your channel outlet and retailer ‘brand love’ experience becomes, e.g., a study of a controlled shopper experience showed they spent an average of 4% more on every shopping occasion in-store and 10% more online than single-channel customers. The shoppers also spent more money in-store with every additional channel used. Customers who used four or more channels spent 9% more in-store, on average, compared to those who used one channel. Retailers that embrace channel diversification through digitised efforts are able to capture bigger shopping baskets with increased loyalty. The same study revealed that six months after an omnichannel shopping experience, customers logged 23% more repeat trips. And they were more likely to recommend the brand than those who used a single channel.
3. Stand out with aligned value propositions. While today’s channel-rich environment and omnichannel capabilities drive the engagement of core shoppers with the retailer, shoppers still have an ‘expectation’ of products, services and experiences aligned to the retailer’s core value proposition and expected benefits. Sometimes finding almost everything at your supermarket may not be congruent with the store and can create negative experiences down the line (overstocked store aisles, items that don’t make logical sense for shoppability, and destination stores that reflect a ‘just stockpile’ mentality). Rather be known for the clear choice selections at better value and increasingly meeting shopper growing demands than having products sitting on shelves.
4. Rethink shopper journeys. To improve store format strategies, retailers would find it advantageous to map shopper decision influence points and understand the shopper purchase part within the customer journey. Retailers can unlock new sources of growth across channel formats by identifying what shoppers want. Some key aspects to this, are:
- What role should the format play within the retailer’s strategy?
- Will it function as a flagship store?
- Will it be a showroom for new products with little to no inventory?
- Will its value proposition attract customers because of price, convenience, service, or new assortments (since a retailer can achieve true distinctiveness in only one or two of these)?
- How will it be positioned against competitors?
Design studio, Fyra created a boutique-style collection point called Box that eases the hassle of online shopping. With brands being pushed to create enjoyable and straightforward ecommerce experiences, the brick-and-mortar space emphasises the value of aesthetic and social elements in stores, but with a fresh experience not expected for the category.
Box was designed for a Finnish postal service. With its brightly hued interior, it has the aesthetic of a boutique while also being home to practical aspects; unboxing recycling zone, digital kiosks, and fitting rooms. Box also features a ‘spotlight section’ for brands to showcase products and a lounge where people can sit and drink coffee.
This demonstrates that reinventing an expectation with convenience, experience and appeal can drive more value to a non-traditional channel format (collect zones) whilst creating a competitor advantage in the target audience segment.
Many retailers still only refresh their store formats in three to five-year cycles – an eternity today, where consumer demands and channel behaviour change. Traditional format redesign is costly, including overhauling departments or the entire store. Today, retailers can develop robust omnichannel format approaches to diversify experiences and test and learn while evolving with customers.
Retailers should combine the creativity and empathy of design thinking with the discipline and speed of agile methodologies focused on continually making one-off, high-impact changes rather than department-wide or storewide remodels. The notion of retailers ‘never being done’ in channel and store format redesign should be an ongoing process of implementing solutions quickly and refining them constantly to respond to evolving consumer needs.
Sanet Yelland is the CEO and founder of Streamline Advertising, a full service agency. She has worked across the industry for 30 years, on clients within financial services, wholesale, retail, FMCG and government sectors on notable brands, including Massmart, Dis-chem, SAA, City of Johannesburg, Nedbank, Absa Bank, and Pick ‘n Pay (Score Supermarkets and RiteValue brands). Yelland started the Young Community Shapers initiative in 2000. This project acknowledges and celebrates the achievements of young people from disadvantaged backgrounds by providing funding, bursaries, and mentorship.
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