What Will Actually Cause Retailers To Remodel Stores
There are things that you can predict about omnichannel’s impact on stores, and things you kind of have to live through in order to realize the impact. Storage for cross-channel orders – whether click & collect or ship from store – is one of the latter. Especially when you’re talking about big-box retailers or retailers in strip malls rather than indoor malls, the click & collect business is only growing. Unsurprisingly, this holiday season is expected to be the highest volume click & collect ever. And next year probably will be too.
But what’s happening in stores is systems that were designed as temporary stop-gap fixes to enable click & collect (a term, by the way, that I vastly prefer over “BOPIS”) are becoming so overwhelmed by the order volume that they’re not working any longer. Orders have to be stored in the back room because there’s no room to store them near the front of the store. Orders are getting dropped or lost or pickup counters go unstaffed because labor has not been realigned for the new reality. Customers are waiting and unhappy, or employees are running all over the place in highly inefficient processes that save the sale, but bleed profits.
Ironically, I think this means that attention is finally focusing on two major investments for stores: remodels, and employee technology. Retailers have only been talking about it forever, because they’ve known since the first consumer mobile phone entered the store that employees were going to end up on the losing side of that proposition. But the investments have lagged, because of capital requirements, because of business cases that weren’t strong enough – employee productivity, customer engagement, these are all well and good, but no one wants to invest to stave off eroding revenue.
But a click and collect sale is a real sale. And retailers seem to be running into real upper limits on what kind of volume a store can do without breaking. So, even though retailers have been saying a lot of stuff about bringing digital into stores, have been saying a lot of stuff about giving more technology to employees, the reality is, it’s the prospect of losing a click & collect order that is actually getting them to move.
Personally, I’m all right with that. It’s not the reason I want retailers to be looking to when making investments, but that’s okay. If click and collect capacity and profitability become the foundation for remodeling stores, then more power to them. But only so long as they remodel effectively: rethinking cash wraps and how many retailers really need. Rethinking storing and retrieving click and collect purchases, and how to work in a lot more digital for customers while you’re at it.
And if retailers invest in employee technology, because they want to make sure they can scan and confirm order picks for click and collect, or quickly identify when an order is about to go wrong, then again, more power to them. But only so long as those investments are made with the intent of building a platform for all kinds of employee engagement through technology. Employee handhelds have long suffered from needing a killer business case to pay for the whole thing, so that other projects can then come in on top of that one killer business case. If click & collect is the killer business case, great. Just don’t forget all those other business cases waiting in line behind it, which didn’t have enough power on their own to compel the investment.
We’re getting more glimpses of the store of the future. I saw one just the other day when I went into a Best Buy. The entire front quarter of the store, normally reserved for cash registers, was closed. All purchase traffic was being routed to the online pickup desk, even cash & carry sales. In the meantime, the storage room for online orders was stuffed to the gills. It tells me that stores aren’t just too large – their space is allocated all wrong.
That’s going to have to change. Retailers aren’t going to be able to put those changes off for too much longer, either.