Physical stores could benefit from competitors
Perhaps what some struggling brick-and-mortar apparel retailers are missing is a close competitor.
H&M recently announced it would be closing more stores, signaling that the pervasive problems of physical retail are now trickling into previously successful divisions like fast fashion. In a recent retail study from location-marketing company Blis, results signaled that proximity to nearby competitive outlets could increase foot traffic.
In the study, H&M enjoyed high foot traffic volumes in almost every city tested, which fits their ‘fast fashion’ retail model. For them, opening new stores in proximity to a more “destination” retailer means they can benefit from the inevitable crossover foot traffic that occurs between retailers in the same sector.
The goal of the study was ultimately to launch Blis’ new Smart Trends. The tool allows brands to gain a fuller, richer view of their customers’ behaviors and how they interact with competitive brands.
“These insights can be used to make strategic decisions about products they carry, store location and targeting techniques,” said Alex Wright, head of insights at Blis.
The two biggest revelations from the study were that though counter-intuitive, opening a new store close to a competitor could be to a competitor’s advantage. And that in certain sectors, such as fashion, the retail week is flatter than assumed—the culture reflects weekday lunchtime shopping when the sampled stores are situated close to work offices.
“Opening new stores in proximity to ‘destination’ retailers (e.g. TopShop) will potentially benefit them by acquiring new shoppers who visit these competitors as part of a more recreational retail experience, rather than the more functional purpose H&M appear to fulfill for many shoppers currently,” Wright said.
In addition, Wright noted that consumers in the study that were mobile users appear to have a distinct demographic profile, primarily younger women demonstrating heavy mobile use in retail environments compared to their male millennial counterparts. Yet older men have are also been using their phones frequently—knowing this information can be powerful for in-store targeting and and media planning. And interestingly, the content being viewed is rarely contextually linked to the activity, perhaps signaling the need to spend more on location-based ads.
Wright expects the trend of store closures to continue and as retailers streamline their store footprints, smaller towns will suffer, “which are already struggling with the challenges posed by increasing rents and decreasing disposable income / consumer confidence.”
Moving into the future, Wright says its easy to just react and post stories about the death of brick-and-mortar, yet that would not be telling the entire story.
“Bricks-and-mortar stores are certainly facing challenges thanks to macro-economic factors and the changing nature of retail, and those that do not appreciate the implications of these on their business will struggle,” he said. “It all comes back to how well they [retailers] can service the requirements of their consumer base – which means understanding those consumers (and those of their competitors) – in order to maintain what works, and tweak what doesn’t.”
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Tags: Alex Wright, Customer Behavior, Fierce Retail, Smart Trends