From Boston Business Journal
The numbers are in and it’s official: The 2018 holiday shopping season was one of the strongest in years.
Total US retail sales jumped 5.1 percent this November and December from the previous year, according to data from Mastercard SpendingPulse, which tracks both online and in-store spending. American shoppers spent over $850 billion this season.
Not all retailers are rejoicing, however. While total sales were higher than years past, much of that growth is attributable to the rise of ecommerce. According to Mastercard, online sales rose 19 percent from 2017. Department stores, on the other hand, saw a 1 percent decline in sales from a year ago. This follows two years with growth below 2 percent.
Poor weather and store closures are the reasons given for traditional retail’s shortcomings this holiday. But that doesn’t add up. The weather in December was relatively mild across much of the country. Besides, the shakeout ought to have been a boon to the brick-and-mortar retailers still standing. With less competition, surviving stores should have captured new spending from displaced customers. So what gives?
It seems now is the time for traditional retailers to — pardon the pun — take stock and devise a more strategic approach to their long-term sustainability. Here are three evidence-based ideas of what they need to do to win back shoppers.
Prioritize the customer experience. To succeed in the digital era, traditional retail needs to play to its strengths. After all, a physical store has qualities that a virtual one doesn’t. Like ambiance. And merchandise. And actual human beings.
A new survey from Total Retail finds that 56 percent of Millennnials and 44 percent of Gen Xers shop in a physical store at least once a week—not counting grocery or convenience stores. According to the survey, Millennnials say they “enjoy browsing stores,” like being able “to see, hold, and try on products before (they) buy,” and finally, value “advice from store associates.”
Traditional retailers need to capitalize on these findings by prioritizing the customer experience. This means cultivating an inviting atmosphere in a clean, well-designed store; offering a solid stock of merchandise that customers actually want to buy; and staffing stores with competent sales personnel whose job is to provide impeccable service.
Macy’s is ahead of the curve in some areas. Earlier this year, the company announced plans to spruce up 350 of its most productive stores. These “magnet” stores will receive new carpeting, upgraded lighting, and remodeled dressing rooms. In addition, Macy’s plans to increasing staffing at magnet stores and expand their range of products and services. The magnet stores that have already received face-lifts are surpassing sales expectations.
Read the full post at Boston Business Journal.
Sharmila C. Chatterjee is a Senior Lecturer in Marketing and is the Academic Head for the MBA Track in Enterprise Management (EM) launched at MIT Sloan.