Store design gets all the press … Changing habits produces profitability
If you follow the retail press, there are constant announcements and showcases of new store designs. Nothing wrong with store refreshes to improve categories, adjacencies and "shopability". But, the real secret sauce of retail profitability is the consumer engagement, which transcends the physical store. Genuine consumer engagement depends upon "actors" who make it personal. Store patterns and Associates that elicit the consumer response: "Just Looking", cost millions in lost opportunity. The profitable retail store of the future must change "habits" into behavior that helps consumers find solutions, versus selling them products.
Great entertainment and retail requires: Stage + Actors + Script
One of our most popular blogs on Results Count highlighted the parallels between great theater and retail. To have a great theater experience requires a great combination of staging, acting talent and an engaging script. Is retailing entertainment? In many ways, yes. Stores must create excitement and engagement with consumers that transcends products. If stores only remain a "showcase" for products at low price, game over … ecommerce wins.
I have been working with retailers for three decades on how to change store results. It always amazes me how large chains will invest millions in changing store design and fixtures, but balk at investing in talent or training. To thrive in retail today takes all three. The "stage" is the tangible, sexy part of retail that gets the press. However, in the hundreds of retail pilots I've helped measure, we have consistently found:
- A good store design and staging are necessary, but not sufficient to increase sales
- Great "actors" (RSPs) can change the consumer experience on almost any stage
- The secret sauce that produces significant gains is the "script" to engage consumers
The challenging part of the retail store today is the "intangible" stuff that must be consistently executed every day. Resetting the store stage is the expensive but easy part. The challenge is changing the behavior, which changes the store experience, and ultimately the consumer's behavior.
Consumer behavior and purchase decisions in store
The consumer journey can take many paths and steps from initial research online, to social media, to store visits. However, research still shows that 75% of people still shop in stores for personal purchases of "value". Why? They want to experience the product, and touch and feel it first- hand. They are also looking for advice, assistance to find the best solutions for them, which often transcend a single product purchase.
Studies show that most consumers use a two-step decision process when shopping in store:
- First they decide IF they are going to consider making a purchase today
- Then they decide what they will purchase based on the "value" and how well it will meet their needs and fit their lifestyle
Yes, there are consumers who know exactly what they want. They go find it and purchase that specific item. But, for considered purchases in categories like apparel and electronics, they go through the two step process. The execution of consumer engagement on the retail floor can make or break the process of helping the consumer to buy.
"Can I help you?" = "Just looking" = "I'm not here to purchase today"
The pervasive, prevailing approach of Retail Associates is to ask the age old question "Can I help you?" It elicits almost a 100% Pavlovian consumer response of "Just Looking". Literally by asking that closed question of "can I help you", RSPs are getting the consumers to say out loud and confirm to themselves that they are NOT in the store to make a purchase. This whole "script" or model creates a defensive consumer response to being sold.
Secret Sauce – Moving from "selling" to helping consumers decide
It sounds simple, too simple. How hard can it be to teach RSPs to engage consumers in a way that they can't respond with the line: "No, I'm just looking." Conceptually, it is not hard to understand what is needed. RSPs need to engage consumers with open questions that can't be answered with a simple yes or no. And, they sincerely must be willing to help.
How hard can that be? Time and space does not permit addressing the nuances of hiring the right talent and creating the right atmosphere for Associates. Suffice it to say, you can't train the wrong talent that doesn't want to be working in a store.
What is really the hard part is changing the behaviors of RSPs to engage consumers at a personal level, versus selling products. Old habits die hard! Teaching RSPs a "new script" of engaging consumers around their interests and needs takes time, training and rehearsal. But it can be accomplished. We have developed the processes and tested them many times.
The Golden Metrics of Store Profitability – Conversion and Market Basket
My background is behavioral psychology. We have tried and tested behavioral "scripts" on the retail floor, which consistently work across store types and Associates. It is NOT a quick fix. Lasting behavioral change takes 60 days or longer. But, the results from a behavioral consumer centric engagement model are astounding. I'm not at liberty to disclose proprietary information from our clients, but we have measured substantial incremental sales across many Associates and stores.
The "Secret Sauce" is changing the behavioral "script" from being product centric, to consumer centric. Engaging consumers in exploring what they want to purchase and the value of different choices for them, completely changes the experience. Simply put, consumers like being helped in finding the BEST SOLUTION for them versus being sold.
Secret Sauce - How to improve store sales conversion 15 to 25%
In a series of store case studies, we have seen the average conversion rate go up 10 to as much as 25%. This is the golden metric for retail stores today. Trips to stores have been going down, and traffic is flat. If sales conversion rates can be increased, it means more revenue for the store with the same traffic. For a $10 million store, just a 10% increase in conversion rate can mean an incremental $500K to $1 million in revenue, without having to lower prices or run additional promotions.
The coup de grace of the whole equation of changing the "script" for engagement is that consumers report that the store service and their experiences are "better". As a result, other bottom line metrics increase, such as market basket attach of profitable accessories that complete the solution for the consumer.
The secret sauce for the store of the future will be behavioral change
Why do retailers persist in pouring more investments in building ever more elaborate stages? Because that's the easy, tangible, sexy stuff. Build a new sexy store and they may come initially. But it is the "tough stuff" of working on the behavioral side of consumer experience that will keep them coming, and pay off by producing significant ROI.
The profitable store of the future will not likely be the largest or most glamorous stage. The most significant component of the profitable store of the future will be the intangible behaviors that can't be seen, but will definitely be experienced by the customers … and will show up as results that count on the retailer's bottom line.
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Sources:
- Store Blueprint: Tracy Evans
- Sales Associate Image: Photostock; Freedigitalphotos.net
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