After the Buzz

Online stores have massively affected the way we buy products these days. Online shopping is transparent, fast and often cheap, but the classical retail model has advantages no virtual store can compete with. Yet, the business model needs to move on in order not to loose more ground to the online competition.

When Amazon started back in 1994, only few would have thought which massive and trend setting direction it would elevate not only online bookstores, but also online shopping in general. By applying innovative logistics, superior customer support and very competitive prices, Amazon rules most online markets where the service is available by now.

It took quite some time, but classical retail stores and chains began to feel that there’s a new, serious player, around aiming to become the MVP, leaving classical retail thinking behind, taking advantage of what the Internet and modern e-commerce is capable of. People still went to the stores, they liked to try out products, but bought online.

Look, compare, touch, use, leave

The simple fact that many customers are not buying in store anymore not only arises ethical questions, but hits  retail stores at the only point where they are really vulnerable, money. Or to be precise: Less money than before.

Traditional retail thinking has come to a point were innovation is needed more than ever.

Apple has shown that there are new, fresh and innovative ways of offering a totally branded, consistent and “feels like home” way of running retail stores. The employees are friendly (of course this can be said about many stores, but the people working there are usually really into what they’re doing), you won’t find a single till around the whole store, instead a small device is used to make payments. Combined with the puristic and modern architecture of every store world-wide, this solution really stands out in ways of brand building and brand experience.

People love Apple Stores, they are even eager to get there, escalating the want to buy a part of this consistent brand experience more and more with every visit.

The advantage of touching a product, trying it out and, if necessary, returning it in order to get their money back, get help or immediately buy accessories is owned by physical stores and can never be achieved by online stores, no matter how hard they try. But offline stores can’t rely on these advantages, they need to move on

Trust your customers, be transparent, connect and use technology to win customers

From my point of view, there are four things that make out a great retail shopping experience:

• Friendly staff
• Great presentation and store design
• Reasonable prices
• After sales services that excel

These three things I suspect to be in mind of every retail operator by now, they are essential these days, the classical business model has come to an end for branches that want to stay competitive.

Another important fact about modern retail business is that companies have to trust their customers, even if it takes a lot of trust from the side of the company to do so. People do want to go to stores and do want to pay an extra fee if the shopping experience and service is right. An important part of the mentioned experience is not only to offer a modern shopping experience, but also about being authentic by giving company insights and active consumer communications (for example by using social media). Even if a company messes up, an apology can appeal very much, especially concerning digital natives. Modern communication channels like social networks, microblogging or social features directly integrated into the website of the company can strengthen the brand experience and trustworthiness.

Offer modern and innovative pricing models

When considering the points mentioned above, one crucial and very sensitive point has been left out so far: Pricing.

Online stores have shown that people are eager to get the best prices, yet want a good consulting and after sales service. Technologies like RFID (if used “right”) or the successor of the Barcode, called QR-code can help to establish user-oriented  and user-customized pricing models in the real world, imagine something like this:

A customer enters a brand experience store, after a warm welcome from a member of the staff, he heads into the department he seeks, looking around. A member of the dedicated department staff ask if he can assist, offering a trustworthy consultation rather than a “we need to sell this item”. Afterwards the customer can decide to “play” with the product on their own, help is being available if needed. If a buying decision is made, the customer has the following choices:

As you can see, in this model the customers can choose from multiple “routes”, doing the pricing “on their own”. Theoretically there can be a large gap between the lowest and the highest price. Besides traditional ideas like service charges and warranty extensions, the idea of letting the customer choose from special offers and measures, maybe related to social causes, can generate what I call “Reputatenue”.

Use Reputatenue in order to create intangible value and bind customers

Reputatenue doesn’t influence the revenue directly, but increases the reputation of the company, binding the customer more to it. As more and more customers care about more than just the product they buy, but how the company engages in social matters, treats employees etc., this option should seriously be considered when rethinking not only pricing, but the business model itself.

Thinking further, a customer which is not only avid about the retail shopping experience, the service offered, a reasonable pricing, offering multiple choices for customers including those increasing Reputatenue will stick to the company. In addition to , for example, social online measures, the customer is not only directly connected to the store, brand and company, but experiences further support, news and insights into the company. Meaning: They’ll buy again, transferring intangible values into hard cash. Therefore Reputatenue isn’t just a temporary tool, but an important foundation of modern pricing models.

Conclusion

Modern retailers have to face new challenges. Not only do they need to offer a real shopping experience, but state-of-the-art service offered by motivated staff, relationship building that goes beyond the physical brand experience and “live” a transparent, honest and authentic company to convince the customer, making him want to come back, engage with the company and in the end create a sustainable revenue.

Companies, products and services in this article:

This post is tagged Apple, offline shopping, online shopping, Retail, retail business, strategy