In the rapidly changing dynamics of global retail, the traditional store environment is being threatened by alternative agencies, and retailers are increasingly seeking to connect with consumers through multi-channel approaches such as direct marketing, internet marketing and loyalty-card segmentation. The vast majority of retail purchases still occur in bricks-and-mortar stores, which makes it increasingly important to acknowledge the need to engage through the physical store, and to revitalise the store experience through sensory engagement.
Deakin University’s Retail Industry Fellow, Steve Ogden-Barnes, presents a new retail acumen series paper on what he calls the ‘sensory store’ – where retailers are not just attuned to sight and sound, but begin to associate aromas and tastes with the in-store experience.
As part of a commitment to driving innovation and professionalisation in the retail industry, a new series of thought white papers – the Retail Acumen series – provides knowledge and insight into key areas of retail and consumer engagement. The first paper, ‘Store sense: Optimising the store environment by engaging the senses’ explores the new retail dynamic post the physical bricks-and-mortar environment which previously provided both the focus and context for customer engagement.
In Australia, the value of online purchases has grown at an average rate of 15% a year since 2005, with predictions that Australian online retail sales will more than double from $16.9 billion in 2009 to $33.3 billion in 2015 [figures from Forrester Research]. At a time when the retail industry is undergoing a period of change not seen since the introduction of the shopping mall, retailers need to think about how they can optimise their competitive advantage and also not overlook the physical store environment.
‘As it becomes increasingly difficult for store-based businesses to compete on price, range, convenience, time saving and transactional efficiency, it’s imperative to create a new and integrated point of competitive advantage and trading philosophy.’
The white paper cites several cases of retailers using digital advances within the store environment, including British supermarket chain Tesco which has set up virtual stores in South Korea under the ‘Homeplus’ brand. These virtual stores use everyday locations such as subways with pictures of everyday products, from milk and apples to pet food and stationery. Using smartphones, customers can shop by scanning in the relevant barcodes and the products automatically land in their online carts. The Homeplus App has been downloaded by 600,000 people since it was launched, and July 2011 online sales increased 200% compared to April 2011.
Retailers should be using the physical retail environment to appeal to all five senses, using sight, sound, touch, smell and taste to enhance the in-store experience at a time when customers have increased expectations and, conversely, there are increasing demands on their attention. Retailers need to use creativity to engage consumers, getting the best out of the physical store while, at the same time, creating their own competitive advantage.
Contact Kelly Kajewski, Alliance Director, for more information on the customised retail learning and development programs that DeakinPrime delivers.