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Retail commerce | Marketing

From Retail Apocalypse to Retail Reinvention

illustration of a retail laptop with a flow chart showing the rise and fall
Bricks-and-mortar shops should follow the evolutionary example of the travel industry

Stores throughout the U.S. are closing, cutting back, and going bankrupt in what has been termed a "retail apocalypse." Some may blame online commerce for the shuttering of thousands of bricks-and-mortar stores, but more accurately, the cause is retail's failure to adapt to a new world of online channels, big data and analytics, and empowered consumers.


Fashion brand Michael Kors Holdings reported it would close 125 stores after reporting an 11.3% percent drop in year-over-year fourth-quarter sales. Children's apparel retailer Gymboree is closing 350 of its 1,200 stores under a bankruptcy restructuring, and department store chain Sears is bleeding cash, with quarterly sales down 20% year-over-year. Payless ShoeSource filed for bankruptcy protection; department store retailer Macy's has announced store closures; and apparel retailers American Apparel, The Limited, Vanity, and Wet Seal; Family Christian Stores; appliance and electronics retailer hhgregg; and outdoor sporting-goods chain Gander Mountain have shuttered in the past year.


The retail industry needs a reinvention, and fast. A handful of retailers are embracing innovation— grocery chain Kroger, for example, is installing "smart shelves" to help shepherd customers with digital recognition and customised offers. But most are struggling, trying to make an obsolete business model work in a digital world. They see online as a secondary channel. They stubbornly cling to the idea that customers want to make purchases in physical stores only, and even when they do incorporate a digital channel, they generally fail to integrate it with their bricks-and-mortar channel.



How the travel industry reinvented itself

Retail might want to take a page from the travel industry's playbook to help it thrive in the current omnichannel world. It wasn't that long ago when travel agencies were in every strip mall, and booking a trip meant sitting at a desk with a friendly agent, looking at brochures, and handing over cash to receive a paper ticket. Those travel agencies with the colorful tourism posters in the window are all but obsolete, but the travel booking industry is nonetheless flourishing in a new form.


What the travel agency did, but many retailers have not yet done, is wholly embrace the online channel to add back in the level of personalisation that was temporarily lost when physical travel agencies closed their doors.


Physical retailers rally around the claim that personalised service is essential, and they are correct. But they are wrong in believing that such service can be delivered only in a physical setting by humans, interacting face-to-face with consumers.


Travel agencies have already been down that path, with the earliest booking engines being fairly basic and with little customisation, few features, and scant customer service. They quickly adapt to the online world, however, with new features, mobile apps, chatbots, and live agents behind the scenes. Sabre, for example, is currently testing a "virtual travel agent" powered by the Microsoft Bot Framework and Microsoft Cognitive Services, tools that add a new level of intelligence and humanlike conversation to machine-to-human interactions.


Travel booking sites have also been quick to embrace mobile, encouraged by rising consumer demand. According to analysis by hotel price-comparison platform HotelsCombined, hotel bookings made via mobile increased 67% in the U.S. in 2016 from the previous year.


"HotelsCombined noticed the shift toward mobile bookings back in 2014 and invested heavily in developing our mobile product to ensure we provided customers with the same experience that they would get on desktop. Since then we have seen mobile bookings continue to grow year on year while desktop bookings have decreased. We believe that this number will continue to rise as more and more people embrace a mobile or a tablet as their primary device," says Chris Rivett, HotelsCombined's head of marketing, Australia/New Zealand.


The same type of technology may well be the foundation of retail of the future, in a new type of Hybrid physical/digital retail presence that is already beginning to emerge.



Is bricks-and-mortar retail obsolete?

The National Association of Career Travel Agents in the U.S. conducted a survey suggesting that the term "travel agent" is nearly obsolete. What's more, those who are still in business have adapted to offer a more bespoke service that goes far beyond simple booking and bridges the gap between online and physical.


By the same token, retailers who stick to bricks-and-mortar as their primary channel and either see ecommerce as secondary or ignore it completely are fast becoming outdated. Drawing from the example of the travel industry, which has successfully made the transition, brick-and-mortar retailers must take positive steps to remain competitive. These include:


•viewing the web as equal in importance to bricks-and-mortar

•embracing mobile as a primary means of consumer interaction

•incorporating new hybrid methods that successfully bring a highly personalised customer experience to the online world

•bringing new digital tools into the physical world to create new hybrid experiences.


Will the retail apocalypse continue? It is very likely. But it doesn't mean the end of retail; it only means its reinvention.



author: Dan Blacharski

Dan Blacharski

Dan Blacharski is a thought leader and PR counsel to several internet startups and the author of Dotcloud Boom: How Born-in-the-Cloud Entrepreneurs Are Shaking Up the World's Biggest Tech Companies and Creating the Next Generation of Startup Millionaires.


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