By Michael Seid, Managing Director, MSA Worldwide
When executed properly, retailers and restaurants are essentially theater, designed to engage consumers and deliver successfully on a company’s brand promise. While consistency in delivery to consumers is at the heart of every great brand, franchising – with its systems for training and support – is especially gifted at delivering its products and services uniformly. But the prescribed franchise system is really just a floor.
It is how each franchisee is able to maximize the experience for consumers, within the franchisor’s system, that leads to great operations and financial performance.
Consumers are overwhelmed with choice today. While price and convenience have become the hallmarks of the electronic merchant, it is the ability of the brick-and-mortar merchant to make a connection and engage with the shopper in real time that is retail’s most effective and competitive tool. Creating an environment that attracts customers into stores is essential. What is most important, however, is winning customer loyalty so that they return as repeat buyers. Retail Theatrics – delivering a retail experience with the unique excitement that only a live presentation allows – provides the buyer with an informative and differentiated experience.
Retailing has been transforming itself for quite some time now; operating a brick-and-mortar location was a lot simpler before Al Gore invented the Internet.
Customers no longer follow the old retail rule that if we put a store in a high traffic area, with good visibility, great signage and a few strong anchors drawing a similar customer profile – they will come; and that if we provide them with friendly customer service – they will buy. The Internet has opened up the world of “non-geographic” retail, where consumers no longer need to visit any brick-and-mortar location to make their purchases.
The challenge today is to make every consumer visit to your location a compelling necessity – not merely an alternative to another retailer or etailer simply because your location may be more convenient.
In less than two decades, detailing has become the biggest challenge to brick-and-mortar retailers. Despite the natural reaction to fight back against the transition, brick and mortar operators need instead to embrace the change, include electronic information in their land locations, and try to understand how retailing has impacted their customers. New technology is not going away, and it is fruitless to ignore it. Unless merchants learn how to blend technology into the retail experience, detailing in every fashion will undermine much of what we recognize today as landed locations.
Adapting to Demographic Changes
The Internet is only one factor that has changed. We are in a demographics shift where the population is more diverse in age, background, ethnicity, and expectations. How consumers shop today has changed.
What their priorities are in making their decision to buy has changed. Where they shop has changed. And when they want to buy has changed. Amazon is expected to offer more than 85% of what we buy, and for many shoppers has become their everything store. The problem for brick-and-mortar retailers in competing with Amazon, and other etailers, is that their cost differential allows them to meet most of what our customers buy at better pricing, and with better delivery, than most landed stores can muster. While brands will endure, a landed location’s growth or decline will ultimately depend on the loyalty and satisfaction of its customers. As brick-and-mortar operators, your expertise in how you use your brands; how you merchandise your floor; and how you engage your unique customer will all determine your ultimate survival and financial success.
Retailing was difficult in 2015, with sales growing at about 2%. The WSJ reported that 2015 was the weakest year for retail sales growth since the recent recession ended. And, this was in a year that saw a collapse in gasoline prices that should have been a major stimulus for retailers. But dollar sales may no longer be the relevant indicator of real consumer consumption since foot traffic was actually higher in 2015 than 2014. Measured in the number of units sold, consumers’ purchases in 2015 were up but, measured in dollar sales, retail was flat – and with it went much of brick-and-mortar’s profitability.
We are not going to change the movement to detailing without considering how we need to approach today’s landed buyer. While online pricing with lower costs is certainly a factor in making online sales, there is also the perception that etailers are more convenient, less time-consuming, able to provide more information, and – in the world of Amazon Prime – more trouble-free. The good news is that some studies are showing that the trend can be reversed. This assumption is logical, as there is really nothing that can match a face-to-face retailing experience – when it is done right.
Compare the theater of an Apple store and the experience of a big-box retailer like Best Buy. Both sell similar products to similar consumers, and yet there is a palpable excitement in every Apple retail store that is absent from a visit to any big-box retailer. The information available about Apple products both within the store and online, and their methods of dealing with customers are advantages that other electronic big-box retailers have been unable to match. To be sustainable, retailers will be required to bring their brands and their in-store experience to life by engaging customers differently than in the past.
Franchisees are fortunate in that the brands they license from their franchisors generally lend immediate credibility to consumers. There is a halo effect where the consumer’s positive feeling about a brand extends to each of the locations that share in the use of that brand name. You see this also with retailers that leverage the products of well-known celebrities or respected designers – even when the name on the product is not generally what the celebrity or designer is known for. Think of Ralph Lauren paint at Home Depot, Martha Stewart sheets and bedding at Macy’s, or Polo Ralph Lauren at Saks. How you leverage and present the brands at your disposal impacts the consumer’s perception of how they value you as a merchant to shop at.
I am likely a fairly good example of today’s active and maturing buyer. I have a reached a point in life where I have a few extra dollars in my pocket; I have stayed in the same home for a bit of time and regularly replenish quite a lot of what I own. My disposable income makes me a target for most retailers. If you count my biological rings I am a baby boomer; but if you look at my retail profile, I shop like a millennial. I listen to way to much Phish and Moe and not enough Jackson Brown, Rolling Stones and the Beatles to fit nicely into where I should be by age; I am computer and social media-literate; and, Amazon Prime and I are attached at the hip. Labeling consumers by age is over-used and as I am an example, millennials come in all ages. We may still be shopping at brick-and-mortar stores, but more and more we are purchasing online.
Regardless of what you are selling today, standing still and operating as you have done in the past is not an option today. Good service, consistency, and convenience are no longer sufficient to be competitive. If they were, Sears and JC Penney would still be relevant in the retail world. Retailers need to transform their stores into brand experiences, because today’s consumer has an overwhelming array of options on where and how to buy. A successful retail experience is anything but standard, and we need to make the retail experience unique and memorable – delivering it in a way that engages consumers and successfully delivers on our brand promise.
Giving consumers a compelling reason to leave the comfort of their homes and the ease of online shopping is not something traditional retailing methods are designed to accomplish. To deliver an experience that has a unique excitement only possible through a live presentation, providing the buyer with an informative and differentiated experience, both merchant and consumer must take part in a scripted yet impromptu retail play. Retail Theatrics is where successful retailers are moving to challenge the ease, price, and perception of quality that retailing now provides. When successfully performed, Retail Theatrics creates an experience that turns customers into fans willing to share their purchasing experience online, through social media and in conversations with their friends.
Although much of the blame for the decline of brick-and-mortar is laid at the foot of the Internet, that is too easy an excuse to hide behind, and not completely true. Great merchants were executing their consumer offering like a theater experience long before the Internet even existed. Today, most augment their landed experience with the inclusion of electronic tools.
Masters of Retail Theatre
I travel a lot, as does most of MSA’s staff; last year I stayed at a Marriott property well over 100 nights. I stay at other properties from time to time, but I trust the Marriott brand and am Lifetime Platinum in their guest program. The information on their website is easily available and is detailed enough to let me know what each property offers and how far it is from where I need to be. Booking a room is fast and convenient and Marriott links to other brands, like Hertz, where I may also need to make a reservation, generally at a discount. I know the quality of the room will be high and consistent regardless of where I am in the world, and I know each room will have the fittings I expect.
Marriott has personalized the relationship with me. I can check in online, and my room key is ready to simply pick up when I arrive. I can also alert them of the time of my arrival so that I know my room will be ready. My general profile lets them know that I require extra towels, a robe and extra feather pillows in my room, and most of their locations have a lounge area for their frequent travelers to rest, have a snack or drink, watch a game on TV, or simply hold a meeting. Other hotel chains have similar features today, but Marriott has earned my loyalty because they have never disappointed me. When I arrive I am greeted generally by name and, as a thank-you, I am offered a gift from their Marriott store or points I can use for another stay. Despite the immense size of their system, they treat me as an individual. Brands that hold surprises for me grab my attention and loyalty. The Costco experience is well known and they dominate their segment in the breadth of offering, price, and service. Recently I was visiting one of MSA’s clients in the jewelry field and asked for recommendations about purchasing a diamond ring for my wife. Their advice surprised me: karate for karat, it turns out that Costco sells the best diamonds on the market and at prices below what most jewelers can purchase at wholesale. Costco goes out of its way to exceeding what you expect from them.
Shopping at Nordstrom is pure theater. Not only does Nordstrom understand retailing, they know what I buy. I appreciate that difference from Macy’s; the Nordstrom sales associate stays with me while I am shopping and makes suggestions on what would look good and what I should avoid. When the sale is completed, they wrap each item in the paper, put the items into a bag, and instead of handing the bag to me over the counter, they walk around and present it to me, making me feel that what I bought was important and that I am important to them also.
Nordstrom also owns my loyalty for other reasons. For example, I had purchased a lightweight leather jacket from them a few years back and when I got home I put on the jacket, caught it on a nail, and put a slight tear in the sleeve. I sent the jacket for repair to a leather repair service and forgot about the incident. That is, until I went into a Nordstrom a year or so later wearing that same jacket. A salesperson I had never met came running up to me and asked if I had purchased the jacket from them. I told him I did and he asked me for the jacket. I thought it odd, but took it off and gave it to him. He went over to the rack, picked out the same jacket in my size, and simply said, “We can’t have you wearing one of our jackets with a tear in it.” The tear was small, repaired, and barely noticeable; he did not know me – nor did he know how much I purchase at Nordstrom. Every committed Nordstrom customer has likely had a similar experience.
It is essential that you understand your brand and why your customers shop with you. Based upon blind taste tests we have participated in when designing retail convenience stores and restaurants that offer coffee, I am convinced that people don’t purchase at Starbucks because of the taste of their coffee. Other specialty coffee chains including Dunkin Donuts, and even some gas station coffee, is often preferred in some blind taste tests. Yet Starbucks has achieved the ability to sell their product at a premium price – and their ability to do so is tied to their retail theatre approach of marketing coffee. The in-store experience at a Starbucks is designed to make you feel more sophisticated than buying coffee elsewhere; they have achieved a similar feeling that people get from a specialty retailer like Bloomingdales. Both Starbucks and Bloomingdales have designed their retail experience to enhance how a person views their self-worth and sophistication by shopping in their stores. Both Starbucks and Dunkin Donuts sell coffee, but each knows its customer, and you can feel the difference in the approach each brand takes.
Disney is another interesting retail merchant. There is a difference in quality and assortment between the merchandise they sell at their theme parks, their branded stores, and the merchandise sold at non-branded retailers. At its heart, Disney is a theater company that sells movie-based merchandise – what Disney calls its franchises.
A few years back, the Disney Stores in the United States, run by a licensee and not by Disney, had become old, were not in good repair, and had a confusing retail mix. Disney launched a new approach to retailing at their London stores, based out of their London offices and leveraging the global Disney team. Through its integration of etail and retail, Disney enabled customers to view and learn about what is available in the stores online. The design of the store also changed, with the addition of a massive video screen playing clips of Disney films and shows and providing other information about Disney. The store designers built a large kiosk for children to play in and watch videos while their parents shopped, and the store improved its lighting and created a colored path on the floor for the customer to follow, enabling them to see more than the typical franchise merchandise they were used to. (Stew Leonard, a specialty grocer in New England, had made the ‘path’ approach part of their retail theatre years before.) Disney also organized the store by movie franchise rather than separating, as many retailers do, girls, boys, men and women – making the family shopping experience easier.
As you enter the new London Disney store, you are greeted by staff wearing headphones that convey to other staff in the store both the franchise merchandise you are looking for and other key information, such as whether you have a child in hand or in a carriage. Depending on that information, the sales staff provides the customer with either a bag or a basket to carry the merchandise they select. As the customer shops and the bag or basket becomes full, the staff takes the merchandise from the customer and brings it to the back of the cash desk, therefore freeing the customer’s hands so they can buy more. The number of cash desks has been increased, using a ‘snake’ approach (similar to that used by Wendy’s) instead of individual cash register lines, and each cash register is carefully watched to keep the wait time to a minimum. Disney’s retail theatre has been developed to enable its stores to be the “happiest place in the mall” for mothers to bring their children to shop. This is the model Disney intends for its other international markets.
Disney isn’t the only retailer using a front-line team to greet customers and communicate with sales associates and other staff. Apple uses a similar approach. The Apple greeter can confirm appointments and wait times at the Genius Bar, and also directly communicate with staff and call them forward to meet with you to discuss what you are shopping for. You can purchase most Apple products at Best Buy, but why would you? There is an excitement about the interactive experience at Apple that stems from their associates, who have extraordinarily deep product knowledge and are seemingly born with a vibrant and helpful personality. The Apple Store is filled with tables full of products you can try out and, like Disney, an area with iPads that children can play with while you shop. You can research products online or at the store, and schedule to pick them up at the local store. You can book time online at the Genius Bar and get updates on the time of your appointment. Most important, from a customer service standpoint, is that rather than sell you the products and have you wait in line at a cash desk, they bring the cash desk to you, as a hand-held credit card reader. In addition to speeding up your shopping experience, Apple is able to capture key information about you so that they can keep you informed later about new products and features they have available. Having the sales associate bring the cash desk to the customer is becoming more and more common with theatre retailers; even brands like Hertz are doing that today.
Integrating Etailing with Brick-and-Mortar Operations
There is little indication that the trend to etail by customers is going to abate. And there are a host of reasons why blending etail and theatre-based brick-and-mortar retailing should be pursued, including the power of technology to improve customer service and reduce the cost of labor. Technology companies like Eleat are revolutionizing how customers in restaurants order and pay. Eleat allows customers to scan a menu, check calorie counts, search for allergy-friendly items, and order their food online on their iPhone or Android device. During the meal, if they choose not to interact with the server, they can order additional items and/or pay for their meal through either the mobile or web app. All of this is connected to the restaurant’s IT system, improving the restaurant’s efficiency with lower labor costs. This is the type of application millennials have been looking for in their sit-down meal experience.
Emailing is not the end of brick-and-mortar retailing. In changing how you approach landed operations to create a complete retail theater experience, ask yourself three basic questions:
- Who is, or who should be, my customer?
- What are the products they want to buy from me?
- How do they want to buy from me?
Selling the features and benefits of the products you offer is fine; but first, ask the customers how they are going to use your products. Your salespeople can’t simply be experts in your products – they have to engage the customer on the level of how the customer is going to use the product, and do it individually. Like an improv actor working with other cast members, they need to create an interactive relationship with the shopper, and in doing so, make them a buyer. Selling today is aspirational, not technical. While price is of course an element of the purchase decision, within limits, theatre retailing levels the playing field, even when there is a price differential that the customer can earn by shopping online.
Engage your customers with information they want in the way they want to receive it. Most people today, not just the X, Y and millennial generations, want to research products online. That is not going to change, and hoping you can make the sale after they go home and do some more research is not logical. Likely, since they have physically seen the products in your store, all you have done by letting them go home and do their research online is enabled them to make their purchases online. Consider including iPads and other electronic methods that your customers can use while in your stores to compare the features and benefits of the individual products, in the way they want to. Rather than fear the Internet as a competitor, consider how you can include it as part of your retailing strategy.
Critique your store as if you were a customer. From the street as you drive by, from your parking lot, and from how you look through your windows – shop your own stores. If your signage is old and tired, if you don’t give the customer a reason to stop and come in, they won’t. It may sound odd, but blocking your windows with big signage eliminates a customer’s ability to feel the excitement of coming into your store. Creating excitement by having a busy store visible to the consumer is necessary for them to even come into your store. Think of letting your customers see into your store, and how you can make them feel the excitement as they drive by at 60 miles an hour. Learn from Apple – bright lighting attracts more than bugs; bright lighting attracts retail customers.
You need to have a staff that looks and acts as good as the products you sell. It’s painful to assess the sales associates you have and discover that some of your most loyal employees are no longer additive to your retailing success. You need to attract, train, manage, motivate and compensate sales associates who can transition to creating a theatre of retailing in your locations if you want to succeed. If staff view digital as a threat and can’t interact with consumers in the way consumers want to shop, they simply can’t become part of your changeover to retail theatre. Connecting with a younger and more etail-centric buyer does not require that your sales staff be in their 30s; it only means that they be able to adapt their style and have an impact on the buyer, regardless of their age.
Let your staff help you consider how information technology can fit into your retail store in assessing how well they can adopt the change. Remember, having the customer research the products you sell in the store online is not a threat, if that is how the consumer is comfortable making their buying decision. If your sales team can’t move away from selling the features and benefits to consumers as if they were a generic customer and instead move to personalize the selling experience in a way your retail audience wants to buy, they are not going to enable you to transform your approach to retailing. Transforming into an interactive selling approach is not an option in the detailing economy; it is essential.
Take your retail floor, graphics, and presentation to new heights and create a meaningful social experience in your physical retail environment. Create an environment that gets your customers out of the warmth and comfort of their homes and into your stores by swiftly exceeding their expectations. Music and video screens with content that engages customers – information that is more than a mere recitation of product features and gives life to how the product is used – graphics that reflect the consumer and how you want the consumer to think of themselves using your products – all are ways to stage the retail floor for success.
Finally, remember that most negative comments online are not about the sales process. People, unfortunately, have come to expect the sales process to be boring, a bit time-consuming, and often painful. Unless they are positively surprised like at Apple or Nordstrom, an average performance likely won’t even be noticed. Negative comments generally are about speed of delivery and the quality of the product and its installation, if that is required. Some of the most positive comments online are often about how you deal with problems when they occur. Understanding the customer experience after the sale is essential to changing how you blend detailing with retailing. Yelp can be your main advocate, or caste a pall over your entire business.
If you are going to a customer’s home, how your sales and installation team look is important. It may still be common with many installation crews, but butt cracks on installers went out with Jackie Gleason. When your sales and installation staff walk into someone’s home in a dirty uniform and work boots not covered in booties to protect a customer’s floors, the customer views that as a lack of common courtesy. When your installation crew does not have the parts needed to complete an installation the first time, your business is not going to be seen as professional. And, it should go without saying that how your delivery vehicles look is important, since they are an extension of your retail environment.
Protecting your online reputation today is essential, and the selling process is only a small part of how consumers will view their retail experience. Extraordinary retailers will not only survive the transition to the retail theater; they will become more extraordinary because of it. Making the transition to an effective landed retailer requires that you examine each level of your shopping experience and redevelop what you do, so that you can positively surprise your shopper and, by doing to, sell to them individually in the way they want to buy.
Do you have further questions about franchising?
MSA can provide expert guidance on developing a successful and sustainable franchise system.