Jay Townley: Specialty retailing is evolving at warp-speed, here’s how to stay on top

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By Jay Townley  of the Gluskin Townley Group   Jay Townley

Two calls I received the past week started me thinking about the situation most American bike shops find themselves struggling with in the market as we near the end of the summer, and the 2016 season. For many bike shops and the supply side this has been a disappointing and frustrating year – because the consumer is continuously changing the retail business, and accordingly…bike shop retailing.

Both calls reminded me that everything is changing at a faster and faster pace, and bike shops haven’t received the information they need to understand and to sort out so they can adapt to the trends.

To help bike shop owners and managers keep up I have searched my files and gathered some of what I think are the most important up-coming retail trends from several articles and recent retail studies that are referenced at the end of this article so readers can search for more information.

Let’s start with an upcoming trend that has been reported by many retail forecasters and trend analysts starting in 2015 and continuing to the present. 

  • Retail pure-plays will disappear!

What this means is – stand-alone online retailers, referred to as “pure-plays” are evolving…even Amazon, and the merged Wiggle are migrating toward some form of Omni-Channel, or retail business model that embraces online and some type of commerce enabled website, social media and a brick-n-mortar store location, or locations.

Consider this: A study by MasterCard found that eight out of 10 consumers now use a computer, smartphone, tablet, or in-store technology while shopping. Forrester research also predicts that cross-channel retail sales with reach $1.8 trillion in the US by 2017.

Omnichannel is showing no signs of slowing down, and in order to keep up, retailers – whether they’ve started in brick & mortar or ecommerce – will need to merge their physical and digital systems to serve what Rieva Lesonsky writing for Small Business Trends calls – omnishoppers.

The bicycle business trade press has continually reported stories about brands large and small initiating Omni-Channel strategies – but a brand or supplier selling online to consumers isn’t exactly the same as a retail Omni-Channel strategy. Consider the refined Omni-Channel business models of REI and Performance Bicycle – both retailers having employed and continually refined their business models over several decades.

REI is widely recognized of introducing the “buy-online…pick-up in store” tactic of its Omni-Channel strategy that has been adapted by a long list of specialty retailers, including bike shops.

I know…there are bike shop owners who will reject out-of-hand anything associated with REI, and cheer the news that “pure-plays are dead” without understanding that what this means is online retailers are going to acquire or open their own version of brick-n-mortar physical stores…because this is what the American consumer is demanding!

The bottom line for American bike shops is a strategy shift that we have advocated for some-time before Trek made its announcement back in August of 2015 – bike shops need to adapt some form of Omni-Channel strategy that incorporates social media and a commerce-enabled website.

·     Rent, Don’t Buy hire

This retail trend is also from Rieva Lesonsky and her article for Business Trends. She writes that retailers need to take: “…a cue from the sharing economy and businesses such as Uber and Airbnb, 15 percent of U.S. consumers are interested in renting products from stores. The most popular products people wanted to rent are exercise equipment (17 percent), consumer electronics (15 percent) and furniture (11 percent).”

The general idea that Lesonsky writes about is a subscription program that lets customers rent the items in question – which could be a bicycle or exerciser equipment.

Demographics are important and 35 percent of millennial consumers aged 25 to 34 are the most interested in this rent, don’t buy concept. Here is a great idea for bike shops this season…if you have bicycles or merchandise that’s going out of season, try renting it instead of putting it on clearance at discounted prices.

·     Consumers want to buy an experience

This is a retail trend that some of America’s most successful specialty retailers have been taking advantage of for several decades. Cabela and REI have watched as nearly one-third (32 percent) of consumers recently questioned said they are interested in going to classes or lessons at retail stores.

Rieva Lesonsky writes that: “U.S. shoppers recently said they are most interested in health or fitness classes (29 percent), cooking classes (27 percent) and learning from experts (20 percent). In addition, 17 percent are interested in clubs that meet at retail stores.” 29 percent of shoppers are interested in health or fitness classes – what about this opportunity is hard for a bike shop to understand?  Latch on to it and run with it!

Bike shops are challenged to attract more shoppers! Figures out if you want to teach a class yourself, or have a qualified employee who can teach a class, or if there are local experts you can recruit. This presents a great way to attract new customers.

Lesonsky suggests you: “Offer some type of discount for purchases made the day of the class to boost your sales. Or start a VIP club of your best customers and have monthly special events just for them. For instance, a clothing store could set aside one evening a month for its VIPs to come in and check out the new shipments.”  What are you waiting for?

  • Old school loyalty programs are on their way out 

I found this trend in a January 27, 2016 article titled Retail trends & predictions 2016 by Vend University.  It predicts that: “Modern consumers still value rewards and promotions, but they don’t matter as much anymore. According to a study by MasterCard, only 18% of respondents considered promotions as important. The study also found that ‘in choosing a retailer, omnishoppers prioritize value, track record and convenience, over loyalty rewards.’

“This isn’t to say that loyalty programs won’t be successful in 2016. But it’s important to note that simply implementing rewards won’t be enough to stay competitive. In the coming months and years, the retailers that will win are those that offer personalized rewards, coupled with great products and convenient buying experiences.”

If you don’t already have a loyalty program, this trend will help you craft one that will be more productive for your bike shop going forward. If you don’t have some type of loyalty program, be aware that Vend University predicts that traditional loyalty programs are being replaced by mobile-based versions that make enhance the consumer experience by making it much easier to redeem program rewards.

This next retail trend also provides insight into a whole new approach to loyalty programs!

·     Loyalty Awards for making good life decisions are on there way in

According to Rieva Lesonsky, a recent survey of consumers shows they are interested in loyalty programs that reward them for making good life decisions. 23 percent of those questioned would like to get rewards for recycling, 23 percent would like to be rewarded for exercising and 11 percent would like to be rewarded for volunteering for charity.

This is another great opportunity! By implement this type of loyalty program in your bike shop you build customer loyalty and create a word of mouth buzz to bring more shoppers into your shop!

For example, armed with this information your shop could sponsor a variety of bicycle riding groups, communities or clubs and giving customers rewards for every mile they ride with their group.

  • Stocking up on more merchandise won’t cut it anymore.

This retail trend comes from the January 27 Vend University article and offers the opinion that: “An increasing number of retailers are learning that having more products won’t necessarily win over customers. Shoppers these days are already overwhelmed with too many choices, so widening your range can sometimes do more harm than good.”

This, the article states, “could be one of the reasons why we’ve seen a rise in subscription services that curate products for customers. Such services make it easier for customers to discover and select products, thus saving them time and preventing decision fatigue.”

Going forward, we expect more retailers to follow a similar path. Merchants will learn that they need to thoughtfully curate items, rather than simply stock more merchandise.

They’ll win over customers not because they have the widest selection, but because they have the best and most relevant assortments for their target market, and they’re able to deliver those products using the preferred retail channel of each customer.

Chris Peterson the CEI if Integrated Marketing Solutions contributed to this article and provide additional insight about this trend.

“One of the things retailers have to understand is that online always wins in terms of the breadth of the store. In the past, a lot of retailers focused on stocking more things in the store. In other words, more is better.

But that’s no longer the case. Now, the retailers that seem to be winning are the ones that curate assortments. What that means is carefully selecting the top styles, showing the top models, or offering a showcase of ‘good, better, best’ instead of trying to stock every color or every single SKU.”

·     Stimulate all five senses whyte

This is from Rieva Lesonsky writing for Small Business Trends and she reports that: “In an increasingly screen-oriented world,” consumers want to stimulate all five senses when they actually go out into a real store.

Vision and touch were rated as the most important senses in the store experience, but smell and sound matter as well.

Lesonsky advises that small retailer differentiate their stores: “…by focusing on appealing merchandising that encourages touching the products and background music that fits your brand.”

·     Make shoppers and customers comfortable and relaxed!

Stressed-out consumers are looking for relaxation wherever they can find it — even in retail stores and bike shops. Think about how you can incorporate simplicity, serenity and calm and places to sit, comfortably into your bike shop’s look, feel and design.

·     Be Authentic

Rieva Lesonsky points out that authenticity, purpose and social consciousness are “…all hot buttons for shoppers right now.”  American consumers want to spend their money with businesses that share their beliefs and passions, so make sure your shops website and marketing outreach clarifies your business mission. Also make sure your employees understand how important it is that they honestly represent your shops business mission.

Make sure your customers know that your business is involved with charitable or other socially responsible organizations in your community and get them involved where appropriate.

And here is what all the sources of retail trends and predictions agree on going forward:

  • Omnichannel will be integrated into every aspect of retail.

The key focus for American retailers in 2016, no matter what industry they are in, or how simple or complicated their operations are…will be omnichannel.  Bringing online and brick-n-mortar together is important in every facet of every retail businesses because this is what the consumer has made it clear they want from the retail experience going forward!

References

Small Business TRENDS

8 Retail Trends to Prepare for This Year, Apr 12, 2016 by Rieva Lesonsky 

Vend University

Retail trends & predictions 2016, January 27, 2016