The Evolution from Brick and Mortar to Online

Joe Megibow, former President of Joyus, and SVP/Chief Digital Officer at American Eagle Outfitters, and executive level omni-channel retail expert, was a keynote speaker at the Clicktale 2017 kickoff. We’re happy to share some of his insights into the shifts in the retail arena, which we’re sharing in this last of a three-part series of posts.

E-commerce has become such major part of shopping, yet retail remains overall a much more offline business: 75% to 80% of sales are often still in traditional brick and mortar stores. But as e-commerce expands and generates more and more excitement, the retail sector is being challenged to accommodate consumers who use multiple channels and engage in multiple ways.

Your background is in e-commerce and analytics. What were the most important things you needed to learn about how retail is different from businesses that are native online?

Brick and mortar will always have its place in the retail world. Consumers like to touch and feel products, try things on, feel the materials and experience the fit firsthand. This is all much better suited to an in-store experience than an online experience. But stores don’t necessarily have to be focused on inventory depth at the store anymore.

Online is great for other things: product information, comparison, transparency, and consumer information like reviews, not to mention speed, immediacy and easy access. And for buying 24/7 from anywhere.

They each have their place, but it's the convergence of brick-and-mortar and e-retail where things really get interesting. Primarily through mobile, as a customer, I can take the online store and all that knowledge, transparency and insight, into a brick and mortar store, and have the advantages of both at the same time.

What challenges and opportunities come with this convergence?

For retailers, the convergence of online and brick-and-mortar can be a threat if the same products can be purchased somewhere else. Customers can compare prices. But convergence also can be an asset, since they can also get a lot more depth of knowledge and information about the product while I'm in the store.

The opportunity is in recognizing the advantages that having a digital device allows us to offer the consumer. For example, today, we may effectively “tax” the consumer trying to buy online while in a store, by making them pay shipping fees, while the store may be able to waive those fees, but only at the register. Similarly associates may get credit for that store sale, but not for that in-store, but online purchase via mobile. Systems and processes need to be aligned around the customer, so the customer doesn’t waste time or money and the associates are rewarded for the right behaviors.

So, it's a misalignment of incentives. Stores often haven’t set up the incentives to drive the behaviors that make it best for the customer and best for the store. Part of the challenge and opportunity is: figuring out how to align customer convenience and retailer processes and goals.

How do you change from a brick and mortar retail perspective to a multichannel approach?

With many elements of change, the first step is just finding a way to acknowledge there's a problem, and to accept that maybe this isn't working as well as it could.

It takes a very focused customer-centric kind of company to step back and question everything, look at all the points of engagement and ask if it’s really working. Look at the traffic, look at the behaviors, look at how consumers are reacting to what you’re doing, not only in transactional ways but in behavioral ways, and be willing to own up to this.

I find this is one area where the new Clicktale Experience Center capabilities can help. Retailers can expand the opportunity to create value based on real customer behavioral data. There's so much information about customer intent, mindsets and behaviors.

Clicktale really shines on the user experience side, on how to improve product management and optimize the store experience itself, how people engage with the core processes in the site. As you start to bring to light more about these behaviors and more of this data, it creates opportunities not only for the store, the virtual four walls and the virtual experiences that they enable, but a lot of what the day-to-day levers are on how these businesses operate both online and in the physical world.

We’ve spoken about how online retail can threaten or enrich traditional brick-and-mortar retail. What about the other way around? How has brick-and-mortar retail influenced the digital shopping experience?

I find it interesting that a lot of what we do in brick and mortar stores hasn’t shifted into the online world. What has shifted is the product catalog and transactional side. But creating great brand experiences online, driving inspiration and serendipity is still barely in it’s infancy. The same can be said of meaningful personalization. We’ve solved the math problem of product recommendations, e.g. people who buy this, also buy that. But that isn’t humanistic personalization. It’s just presentation optimization. Focusing on content and experiences in a personalized way is still surprisingly absent.

Good digital retailers, and multi-channel retailers, must start to look at the mindsets with which customers approach the site and the way they engage online, and learn to bring the best of the real-world into the online world.

Do you think that e-commerce will eventually succeed to the point that brick-and-mortar retail will disappear?

There have been some provocative statements that it's inevitable that brick and mortar will die, that everything you can do in brick and mortar you can do online. I don't think that's true. There are so many things that are great about brick and mortar: ease of looking at a broad assortment of products, the tactile nature of being able to touch and feel and smell and try things, and the social aspect of shopping.

I believe that physical retail is definitely going to change a lot. As you get into on-demand delivery and same-day delivery, perhaps stores becomes more of a showroom. How the store fulfills and how product s are delivered are then not the most important part of the store. The store gets designed around creating memorable experiences, which may mean smaller stores in terms of square footage, or it may mean different presentation of products.

There will be fundamental shifts in what a store's role is, but I don't see a world where human beings aren't going to want to have that physical ability to see and touch products as they shop.

In an ideal world, what retail experience would you want your customers to have?

The goal is very simple, it's about how I can best service the customer on their terms. Which means getting to know them as much as they're willing to let me know them - their tastes, their likes, what they want.

Consumers just want to be respected, they want to see what’s relevant to them, at the right time, in the right way. If they want a lot of help and a lot of engagement, give it to them. If they want to lead the relationship, then let them lead. It's hard to accomplish this, but that's what every retailer needs to continue to try to achieve, at every touchpoint.

Did you miss our previous posts about Joe Megibow’s insights into the changing world of e-commerce? Discover his 3 essential steps to creating a great retail experience now. And be sure to check out the last post in this series, in which Joe discusses the challenges and opportunities facing retailers in the omnichannel world.

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