GMDC: Retailers need to re-think front-end to survive digital
The Global Market Development Center on Thursday published its latest next practice report, "Rethink Front-end: Innovation, Flexibility and Relevancy Elevate Performance," to help retailers regain relevancy in destination-driven shopping trips lost to digital shopper diversion.
“Digital-savvy shoppers expect prime experiences - in quickness, convenience, solutions and communal feel,” Mark Mechelse, GMDC director of research, industry insights and communications, said. “Mobile is gaining traction year over year, faster than any industry, and will soon top $150 billion in transactions, representing one-third of e-com sales. And while disruption has been occurring at the retail level for many years, the intensity we’ve seen recently is unprecedented and shows no signs of slowing. Front-ends in brick and mortar are at a crucial point of reinvention since they punctuate the store’s devotion to serving customer journeys from start to finish.”
To combat that digital appeal, it's about creating a front-end experience that serves as an engagement center with pop-up shops, food service, spa-like wellness centers, farmers’ markets, and a town square vibe, otherwise retailers may be missing an opportunity to meet the increasingly high expectations of those shoppers. They may also miss the opportunity to capitalize on new revenue streams.
While shoppers’ expectations throughout all retail channels have soared to new heights, the checkout remains relatively stagnant and is often cited as the most grueling part of the customer journey. Digital shoppers have evolved in how they want to shop and pay, buy on impulse, and connect to brands and stores of their choice. However, too many retailers have failed to contemporize their merchandising, payment processes and overall environment at the front-end.
These shortcomings have resulted in a nearly 10% decrease in front-end dollar sales from a decade ago, GMDC reported. According to Impulse Marketing Company’s Checkout Update, 2007 front-end sales were $6.1 billion, while sales shrank to $5.5 billion by 2016. Based on projected growth rates of typical categories represented in the front-end, a more than $2 billion gap is estimated if this area of the store had kept pace with total store sales trends.
In addition to a call-to-action to evolve with shoppers and end under-performance, the report challenges retailers to think broad, think local, think sightlines, think modular non-foods, think healthful and balanced, and think technology to future-proof their business.
In the report, Greg Parsons, senior director home and product development, Kroger, shared his vision and initiatives for front-end. “The innovation to figure out is for tech-savvy customers to pay differently from seniors who like seeing their favorite cashier every week," he said. "It could mean a non-stop walkthrough with a smartphone, an associate with a tablet on the sales floor, or an exceptional experience for people who go online. People want choices to check out the way they want.”
Also in the report, Larry Wilson, vice president industry affairs, National Confectioners Association, describes the importance of understanding that customers’ need states may vary from moment to moment. “Retailers can be responsive to consumers and demonstrate responsibility by promoting ‘balance and choice’ with a wide range of traditional treats like chocolate, candy and snacks as well as other alternative instant consumable options to meet shopper’s changing need states," he said. "It’s about putting yourself in position to win with your proven stars and then contemporizing assortments with the right blend of foods and non-foods.”
“Digital-savvy shoppers expect prime experiences - in quickness, convenience, solutions and communal feel,” Mark Mechelse, GMDC director of research, industry insights and communications, said. “Mobile is gaining traction year over year, faster than any industry, and will soon top $150 billion in transactions, representing one-third of e-com sales. And while disruption has been occurring at the retail level for many years, the intensity we’ve seen recently is unprecedented and shows no signs of slowing. Front-ends in brick and mortar are at a crucial point of reinvention since they punctuate the store’s devotion to serving customer journeys from start to finish.”
To combat that digital appeal, it's about creating a front-end experience that serves as an engagement center with pop-up shops, food service, spa-like wellness centers, farmers’ markets, and a town square vibe, otherwise retailers may be missing an opportunity to meet the increasingly high expectations of those shoppers. They may also miss the opportunity to capitalize on new revenue streams.
While shoppers’ expectations throughout all retail channels have soared to new heights, the checkout remains relatively stagnant and is often cited as the most grueling part of the customer journey. Digital shoppers have evolved in how they want to shop and pay, buy on impulse, and connect to brands and stores of their choice. However, too many retailers have failed to contemporize their merchandising, payment processes and overall environment at the front-end.
These shortcomings have resulted in a nearly 10% decrease in front-end dollar sales from a decade ago, GMDC reported. According to Impulse Marketing Company’s Checkout Update, 2007 front-end sales were $6.1 billion, while sales shrank to $5.5 billion by 2016. Based on projected growth rates of typical categories represented in the front-end, a more than $2 billion gap is estimated if this area of the store had kept pace with total store sales trends.
In addition to a call-to-action to evolve with shoppers and end under-performance, the report challenges retailers to think broad, think local, think sightlines, think modular non-foods, think healthful and balanced, and think technology to future-proof their business.
In the report, Greg Parsons, senior director home and product development, Kroger, shared his vision and initiatives for front-end. “The innovation to figure out is for tech-savvy customers to pay differently from seniors who like seeing their favorite cashier every week," he said. "It could mean a non-stop walkthrough with a smartphone, an associate with a tablet on the sales floor, or an exceptional experience for people who go online. People want choices to check out the way they want.”
Also in the report, Larry Wilson, vice president industry affairs, National Confectioners Association, describes the importance of understanding that customers’ need states may vary from moment to moment. “Retailers can be responsive to consumers and demonstrate responsibility by promoting ‘balance and choice’ with a wide range of traditional treats like chocolate, candy and snacks as well as other alternative instant consumable options to meet shopper’s changing need states," he said. "It’s about putting yourself in position to win with your proven stars and then contemporizing assortments with the right blend of foods and non-foods.”