1) The Improving Economy
Since January, we have seen a steady increase in consumer confidence, job growth, and low unemployment. Consumer confidence is now the highest it has been in almost 17 years, and unemployment is the lowest it has been in sixteen years. Moreover, we have just had two consecutive quarters of 3% GDP growth something again we have not seen in many years.
To date, retail has seen a 4.4% increase in sales since September 2016. In fact, there are retail chains that are posting comp store sale increases. Here are just a few that posted a second-quarter comp store sales increase:
Ace Hardware: 3.2%
Ross Stores: 4%
Home Depot: 6.3%
American Eagle: 2%
The point is, if these retail chains can see increases in sales, so can others. As the economy continues to get stronger, these numbers will continue to rise with more retail chains in the plus column and not the minus one.
2) The Internet is Not Where Everyone Shops
If we only shopped online then why do we continue to see customers shopping in stores and malls? The traffic is not what it once was, and part of that is due to the internet. But there’s a lot to be said about that. Over the last several years, we had a weak economy that was impacting all retail shopping. Moreover, we have had the most significant amount of competition with more and more retailers getting into each other’s space. All of these factors combined have given retailers less store traffic. It is not just the Internet’s fault. Yet brick & mortar still manages to get the lion’s share of business far beyond the Internet. Internet sales have increased and will continue to rise, but the actual amount of online dollar purchases versus in-store sales isn’t even close. To date, all US online sales totalled $294 billion with anticipated 2018 sales equaling $414 billion. Brick and mortar? $3.9 trillion or about 94% of all retail sales. And for those who do shop online, 55% of those shoppers would prefer to buy from a merchant with a physical store presence over an online-only retailer. Brick & mortar is here to stay.
3) Millennials Do Shop In Stores
While the economy was struggling during the last decade or so, we were led to believe that millennials don’t shop in stores. Well according to a CNBC article, the Northeast region of the U.S. has seen the highest "behavioral shift" between where the young and the old look for deals. In that region, 25% more millennials than baby boomers are visiting multiple stores when out shopping. 71% of millennials are visiting various stores in search of bargains, compared with 57% of baby boomers. And 67% of Generation Z shop in brick & mortar stores most of the time.
And now for the first time, millennials are buying houses. That means they’ll need items for those homes which means they’ll be visiting more stores and making more purchases. As millennials get older and have children, they will need to buy clothes and other items for those children. Sure, they’ll make some of those purchases online, but they will also visit stores to see, touch, and feel--many of the things they need to do before purchasing something, which means brick and mortar will have an opportunity to make more sales.
4) The Opportunities
Let’s take a good look at what is also keeping customers away from purchasing items. Here are some impressive statistics. 65% of consumers when shopping brick & mortar complain that physical stores didn’t personalize their discounts or promotions. That means there’s an opportunity to do more business with an easy fix. And 65% of customers shopping in-store stated that they were annoyed they couldn’t find the product or products they wanted. Lastly, almost as many as 60% of brick & mortar shoppers didn’t appreciate the lack of in-store help from associates.
So, retailers, wake up. Look at these three major problems preventing customers from spending money in your stores. Why drive them away? Just fix the problem, and you’ll be dancing all the way to the bank.
5) You Can Do It
The customers are out there, and they have interest in shopping your stores. Don’t let your competitors get the jump on you and don’t lose out on the opportunities you have. Take a good hard look at your in-store shopping experience. Make sure you have enough staff and focus on giving them the right training they need to do their jobs efficiently. Listen to your employees and let them tell you what your customers want, not the other way around. Most importantly, do everything you can do to truly wow your customers by providing the best customer experience possible. Every customer that comes into your store is an opportunity to make a sale. Never lose sight of that.
It’s true that today the retailer has to work for the sale, unlike the days that merchandise just sold itself. Today, the consumer can check out prices and promotions at competitor choices while shopping your store. Don’t let that happen. See a customer in your store and treat them like they’re the most important person in the world. Don’t pressure them but make them feel wanted and valuable. Soon you’ll be generating more sales than you’ll be able to handle. The opportunity is there, so grab it.
Do everything right, and yes, you will be celebrating! Comp-store sales will be that good!
CEO, The TSi Company