What is the difference between selling silver cutlery in a market in Copenhagen a thousand years ago and selling Nudie Jeans in Åhlens City in 2019? It's a bit of a trick question - we don't actually know more about our customers than the Vikings in the market did. Well, we know a little more, but still nowhere near what digital commerce knows. In physical retail, the main problem we're faced with is that we have much left to learn. And it's starting to become urgent.
First, let's look at what customer data looks like in online vs. offline retail:
Online retail customer data
When users enter a website, the visit is registered. Each step the visitor takes on the web provides footprints which you can then analyze. Information about whether the visitor buys or not, what they buy, or when/where the visitor leaves the website without making a purchase, gives you valuable insights. In order to play with conditions that dictate key figures to get better results, you are in (almost) full control by working on the site pages, workflows and sales funnels, check-out functions, and more.
Offline retail customer data
When a visitor enters the store, the visit is recorded (but only if you have technology for visitor counts. It is a little scary that several large chains are missing this today -but that's a different story). In cases where the shop has salespeople available, they can meet the visitor. This meeting takes place “offline.” The next time you are able to record data after the visitor enters the store, is if they buy something at the checkout. (If they do not buy, the "data" fails, but still contributes to the key figure "conversion rate.")
Here's the big difference between online vs. offline. Everything that happens in the meeting with customers remains “blind.” In order to influence the results, the employee must do something different during the meeting with the visitor. Therefore it's not possible to sit at the head office and monitor the results for the visitors in the store.
So how can we have more influence on the results in physical stores?
Online you are always "in control" of results by being able to manually implement changes that lead to better key figures. With offline figures, we need to look to the employees, (ie the regional manager, store managers and salespeople), to influence the results. In other words, you need to target, measure and follow up with employees individually to be able to put in the right efforts and support, which in turn will lead to the better results.
It sounds easy but is far more complicated. The complexity depends on several different things:
- That instead of a handful of people who manipulate the conditions online, there can potentially be hundreds of people offline who may impact result.
- In the retail sector, these hundreds of employees are also spread geographically.
- Most retail companies lack smart digital tools to get real-time data from all these employees, and are constantly a step behind, resulting in a reactive, rather than proactive, organization.
Is it possible to focus on several things at once?
The e-commerce companies that are good are really good. The retail companies that are good in stores are really good. However, I see that many companies find it difficult to simultaneously focus on improving both their online and offline sales performance, which in many cases leads to reduced results. This is despite increasing e-commerce demand, largely due to the fact that 90% of trade in total is actually done offline. Online and offline retail are often managed by different departments but should therefore be optimized simultaneously. Should it be impossible that management can focus on following up activities and results at the same time from both departments?
My tips for influencing offline metrics in a similar way to online metrics:
- Do not measure the results, but measure the key figures that lead to the results
- If possible, measure these key figures at the individual level
- Follow up the key figures regularly
- Put in proactive efforts to help and strengthen employees
- Monitor which efforts lead to improved key figures
- Spread “best-practice”
- Repeat steps 1-6
2018 was the peak for “shop deaths” with the number of most physical store closures. But in 2019 in the US, there has been more store openings than closures, according to a survey by IHL Group.
64% of the store chains in the study opened stores and only 12% closed stores, while 24% left the number of stores unchanged. Furthermore, we also see that more and more e-retail started companies are opening physical locations.
The above figures provide hope for physical retail going forward, and those who can learn and transfer the methods to increase the key figures online to offline will succeed. The winners of the future are those who excel online in combination with offline.
Offline retail needs to adapt to changes and get ready for sales of the future. Want to learn more about how to think about digitalization and developing your sales force? Get our E-Book now.