Retail is an evolve or die business. The city’s oldest and newest retail shopping destinations are staying competitive in an industry defined by fluctuating market forces, consumer whims and rapid technological advances.
Retailers are cashing in on mobile commerce to lure shoppers with smartphone deals. Explore a few popular apps here.
Retail’s digital advantage
Michael Glimcher at Glimcher's Polaris Fashion Place
For 103 years, the National Retail Federation industry trade group has hosted a national conference focused on industry trends. This year at Retail’s Big Show, Ginni Rometty, chairman, president and CEO of IBM, joined Terry Lundgren, chairman, president and CEO of Macy’s, for a discussion on retail’s “New Era of Value.”
The focus of their presentation was the role of big data analytics in retail distribution, marketing and operations. Since the advent of computerized POS register systems and UPC barcodes in the 1970s, stores have been able to collect data on shoppers and track merchandise; recent advances in cloud computing and social and mobile analytics programs have enabled retailers to use that data to their advantage.
IBM’s digital solutions allow retailers to capitalize on data in three main ways: to personalize shopping by tracking consumers on retail websites, in stores and on social media; to optimize merchandising through real-time pricing and geographic sales analysis; and to improve operations by crunching consumer demand, traffic, weather and even political data.
Big data’s impact on the retail industry is huge, says Kathy Starkoff, CEO of Orange Star consulting, former CIO of the Ohio State University and chief technology officer for L Brands from 2001-07.
“Tracking data both transactional and behavioral gives retailers really good insight into what products they should be offering, how to show their website and how to make necessary changes,” says Starkoff.
Rather than fearing e-commerce, savvy retailers like the Limited were quick to see opportunity in the Internet. “Traditional methods of store and catalogue (sales) played a role in the success of the Internet,” says Starkoff. “The Internet really opened up avenues that would not have been available to many parts of the population via a store.”
Mobile technology has opened up new avenues for retailers. Stores use apps to send coupons to shoppers based on real-time data about their location in a store (see online article “Retail apps”). Stops by the mall Starbucks are even faster as consumers use smartphones to pay for their lattes.
Despite the tempting potential digital data presents, retailers must walk a fine line between being informed and being “creepy” when it comes to direct sales and marketing, Starkoff says. “People are beginning to become more conscious about what is known about them and sensitive to offers that are too personal.”
Data security is equally as vexing for retailers as consumer privacy concerns. Credit-card data theft has plagued retailers in recent years. Breaches at Target and Neiman Marcus in 2013 spurred Congress, credit card companies and national security agencies to consider new means of securing consumer transactions.
“The simple story across all retailers is it’s a little bit of a mess right now,” says Sean Adkins, managing director and leader of West Monroe Partners’ operations excellence practice in Columbus. In the quest to stay competitive, retailers can undermine their goals by jumping blindly on the latest trends.
“You can’t be in a mode where it’s strategy du jour,” says Adkins. Smart retailers will have a strong understanding of their consumers and the market as they evolve big data, e-commerce and in-store strategies, he says.
“Maybe I find ways to generate new revenue or make it more convenient for my customer, but the risk on the backside is all you’re doing is eroding your margins and putting more pressure on the business,” he says.
A read-through of the annual reports of the major retailers on the S&P 500 Consumer Discretionary Index indicates a shift to Internet sales for future growth. L Brands, Macy’s and, of course, Amazon aggressively pursue e-commerce as opposed to brick-and-mortar expansion. As the development of distribution and fulfillment centers increases, traditional shopping mall development has all but stopped. Outlet centers, like those in the pipeline in Delaware County, offer another growth outlet for retailers willing to discount their brand offerings.
“We haven’t built a new regional (enclosed) mall in the United States since 2006. Online sales have become a bigger and bigger part of their business,” says Boring. “If I was looking at real estate, I wouldn’t invest in retail; I’d be looking at distribution.”
Kitty McConnell is assistant editor.