It’s a great question, asked during Fujitsu’s second Connected Retail Webinar in November, which we ran with Planet Retail. The answer you immediately think of is: a retail store must be profitable. Think of all the expensive real estate. Each square-foot of space needs to be generating revenue and, most importantly, profit.
It turns out that many modern retailers don’t think that way. The retail store – especially those known as ‘Flagship stores’ – is more than a profit and loss exercize based on how much real estate they have and how much footfall they generate. The store is all about the brand. It’s about service, experience, and engagement with customers. So, it’s possible to make the bold, but simple statement that, making a profit per square foot is not the point. In truth, it never was.
Some people believe that opening a store online is the way to make money in retail. But, not even Amazon makes a substantial profit on their actual sales. Moving product generates revenue, but not huge amounts of profit. What boosts profits is service. That’s why Amazon is not only offering an array of service options under its Prime label, it’s also moving into the physical retail arena. They understand that being just one of the over 800,000 online stores available on the web does not deliver rising, or even stable profits over the long-term. Research shows that more than 90% of us like to go to physical retail stores, even if we do much of our shopping online.
It’s the totality of the omni-channel experience that counts.
You browse online, maybe buy something, then click-and-collect, or return the item to a physical store. Once you’re there you can be offered multiple opportunities to buy something else, or buy something better (the old up-sell and cross-sell, but in new forms). Planet Retail’s research shows that 56% of consumers want good customer service and, most importantly, knowledgeable and engaging staff.
A retail store is a huge, experiential, tactile marketing opportunity. It’s where your brand comes to life, and where your well-trained and digitally supported (which is where our Playbook comes in) sales staff engage with customers and build loyalty. It’s becoming more and more common for retailers to assign online sales to the physical stores nearest to shoppers (by postal or zip code). That means shoppers can be enticed into the store, or offered the chance to return items instore and either get a refund and try something else. The store gets the benefit of the online sales in their accounts, and a clearer picture of the shopper is created which leads to deeper engagement – and more sales (hopefully).
So, no, your real estate doesn’t have to be profitable, but your brand does. Look at the totality of the experience, and connect it all together.
Download a recording of the webinar and listen to the whole story.