Just a decade ago, local retailers were the biggest influencers of a shopper's path to purchase. But, just like most other industries—from airlines and hotels to restaurants and even schools‑changing consumer behavior has dramatically upended everything we all knew about how products are chosen and eventually purchased.
My name is Mike Massey. I am a local retailer. I run a small chain of outdoor stores based in New Orleans, Massey's Outfitters. I've also served as a board member and chairman of the Grassroots Outdoor Alliance (a network of the outdoor industry's premiere specialty stores), and most recently, one of the founders of Locally. Locally is an online marketing platform that powers the online intersection of shopper, store, and brand.
For a decade, I spent my Grassroots tenure meeting with brands and advocating for specific distribution and marketing policies that would help support stores like Skinny Skis, Ute Mountaineer, Pack Rat, and The Trailhead. When I first started, those discussion were highly fruitful. Things were simple and both sides wanted to work together for the benefit of our mutual business as a whole. Win/Win.
Then, shoppers broke it all.
About 5 to 7 years ago it became crystal clear that consumers were increasingly gravitating to digital solutions for everyday life, from Uber to OpenTable to Expedia. (In hindsight, it was obvious way before then.) It was also obvious that most manufacturers saw a big opportunity to market to and talk to consumers more directly than they had ever been able to previously. We can probably all agree that most local retailers didn't embrace these changes. While a few saw some early opportunities via their own digital marketing efforts, success was mixed. By and large, most retailers began to see the Win/Win relationship of the past turning into a Win/Lose. Guess who was on the losing side?
Given the sea-change of consumer behavior, it was entirely unclear how anyone was going to fit this genie back into the bottle. It was like trying to convince brands that they need to accept some of the losing side of the equation but there wouldn't be anyone on the retailer side winning either. Imagine trying to get travelers to stop booking tickets online and go back to buying their airline tickets in-person at the airport. Anyone devoting resources to making that happen was surely wasting their time.
So what is the path forward? Is there another Win/Win scenario? Or, are brands and retailers now permanently and fatally enemies in the fight for the attention of the shopper?
Suddenly, we realized we were focused on all the wrong things.
The opportunity was never vested in the conversations we were having with brands about their marketing tactics or their go-to-market strategies. The opportunity lied in paying closer attention to potential customers. What was the shopper doing?
In a recent interview about how Uber conquered London, some of the early Uber employees discussed their startup-mode days trying to launch service in London with just two employees sitting in a small office. Their existential fear was that their much, much larger competitor (Hailo) would start paying attention to the way their mutual customer's preferences were evolving and mimic Uber's strategy by providing an easy to use app. Needless to say, they didn't, and Uber raced toward dominance in London.
I think this story has a special lesson for retailers—and brands— and really anyone whose business goes through consumers: Be the best at serving the shopper.
While we knew that we were pursuing the right strategy, the "why" of the formula became remarkably clear to us during a dinner in Albuquerque with Rich Hill (current president of Grassroots) and his then-business-partner Craig Wilson from Compass and Nail.
Craig is an expert on consumer affinity and how shoppers become loyal enough to share their enthusiasm for a brand, a product, or a store. In the very early days of e-commerce, Craig helped Patagonia develop a blended channel strategy that moved the shopper to the middle of every marketing effort and channel. After extensive study, they realized that there really are no shoppers who are loyal to shopping in only one channel. And yet, if a company wants to develop the much-sought-after type of loyalty that turns a casual shopper into an evangelical loyalist, the shopper will need to enjoy many successful purchasing experiences.
Knowing that shoppers aren't channel-loyal and that it takes many touches before they become enthusiasts, it becomes ultra-clear that making sure shopping channels are optimized around the shopper and eliminating channel-conflict is the key to achieving the elusive win/win relationship in a consumer-controlled digital age.
So, let's talk about how everyone wins.
1. Stop giving online shoppers wrong information.
Here's something that I have the benefit of understanding deeply in my role as Locally's president. Thirty percent of visitors to a brand's website clink on the Store Locator button. (Only 1 percent actually buy from the site.) These shoppers are signaling their intent to buy. They are in the "purchase funnel." But, with wrong data being provided to them by the store or brand or rep team, that shopper is probably going to have a broken experience. He may end up being sent to buy men's shoes in a women's boutique. She might drive to a store that has been closed for a few years. Or, that poor hand-off could send a shopper to a store that has none of the products he is looking for from that brand, but plenty from a competing brand.
The Fix? Better hand-offs. Stores and brands need to get serious about these online-to-offline referrals.
2. Blend online and offline shopping options.
Let's all get serious. Two-day delivery is going to be replaced by same day delivery in our lifetimes. Probably during our careers. BUT very few brands and almost no small or medium-sized stores are going to be able to match firms that can burn through the billions of dollars necessary to offer pizza-style gear delivery. This is where brands and stores really need to team up.
DEFINITION of 'Last Mile' A phrase used in the telecommunications and technology industries to describe the technologies and processes used to connect the end customer to a communications network.
Local shops are great at the “last mile” while national brands simply can't and won't ever accomplish it. Handing off a local delivery to a store near the shopper is a great win for the shopper! And, isn't that the focus?
The Fix? Direct integration of nearby inventory into various parts of the shopper’s path to purchase. (Editor’s note: Sign up for Locally!)
3. Sharpen up local marketing with a call to action.
If you're a retailer and don't realize that digital marketing is a mission-critical part of your future, you must be living under a rock. If you're a brand that is satisfied without having a last mile digital marketing strategy, you should probably be looking for a new marketing team. BUT the critical reason why local + digital hasn't worked to its maximum potential in the prior decade is that it lacks the prerequisite call-to-action. Without a way to "close" signaled intent, your marketing has no direction forward. An email or a Facebook post is an unactionable endorsement that will probably make a sale at a competitor.
Online to offline is a phrase (commonly abbreviated to O2O) that is used in digital marketing to describe systems enticing consumers within a digital environment to make purchases of goods or services from physical businesses.
The Fix? Follow the e-com leaders. Smart “o2o” marketing tactics at the local level that ensure product in hand is now possible and soon inevitable. Home Depot now processes nearly half of their online transactions for in-store pickups.
4. Curation is everything.
When I first started working as a retailer (I'm a third generation), big-box just wasn't a thing. Slowly, fax machines and computers sped up how far apart chains could live from their headquarters. The national mass-merchant was born. But, over the last 30 years, the relationship between mass market and specialty has crystallized. Wal-Mart didn't put everyone out of business (as was predicted 20 years ago) and most retailers survived despite losing a few brands to folks who could sell them cheaper or stack them higher. Today, there is little confusion of what the difference is between "mass" and specialty in the brick-and-mortar space, but nearly limitless confusion over what that online means.
The Fix? Stores more carefully curate their product selection and brands more carefully curate distribution channels. Each needs to understand—as it relates to digital—exactly how their curation will affect the shopper's perception. If a store has too much overlap with a mass merchant, it is unlikely a shopper will find anything unique in that shopping experience. On the other hand, if too many of a brand's products are being sold in discount channels, the shopper will no longer identify those products as premium and the specialty network (along with direct sales) will wither and die for that company.
5. Own the last mile.
The most powerful kind of marketing is word of mouth and influencer activation. Getting people to love your products just is never going to happen by running banner ads on news sites. Local events, races, demos, pint nights, etc. are one of the best ways to be an influencer at the local level. Failing to take advantage of the fact that your customer probably wants to feel personally connected to what he or she buys, locals often miss an opportunity to be the leader.
The Fix? Brands and retailers who have an alignment of goals need to find ways to collaborate on both the event itself and create engaging local promotions. If it isn't reaching a person's device, it just doesn't matter.
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6. Work together.
The real key to services like Ticketmaster or Airbnb or Hotels.com isn't just that they have sophisticated marketing teams, it's also that they have been successful in bringing together many naturally competing businesses under one roof. While some retailers might feel they have little benefit in working with competitors, as it turns out, their local peers are really no longer the primary threat. It could even be argued that losing a competitor may accelerate disruption by giving shoppers a less valuable local shopping experience.
The Fix? In every circumstance, there could be different ways to collaborate with peers, but at a minimum, consider becoming part of a trade association that has a bigger voice. Perhaps becoming friendly with other shops and sharing ideas that make both of you stronger like shared events.