Retailing in the Week Ahead, Week 49

I visited more than a dozen big stores last week to see what they have been doing with their spaces. I thought today I could give you my list of “6 Paradoxes in Big Stores” to think about in the week ahead. I do this for three reasons. First, so you can begin to get more out of any investments you make in big stores. Second, so you can begin to make big stores more interesting for shoppers. Third, so you can start thinking about the next generation of big stores. (Please note that the Wall Street Journal has leaked Amazon’s plans for big stores in today’s paper).

Self-checkouts, Scan & Go, Click & Collect... Are these innovations truly reinventing big stores for future consumers? (Source: tesco, Sainsbury's, Harvey Norman)

The 6 Paradoxes

  1. Discounter Fighters:  Many big stores realise that Aldi and/or Lidl sell a lot of frozen food. So when they hear that Aldi and/or Lidl are coming to town, they expand their frozen space, install fancy new freezers costing more than a luxury car and ask frozen manufacturers to provide steep promotions. Meanwhile, all consumer data points to frozen being the category that is shrinking the fastest among purchased categories.
  2. Click & Collect: My favourite interview with a store manager this week began when I went to the click & collect kiosk at the back of the store to find a lady doing nothing. I asked her how does this click & collect work. She says they cancelled their click & collect programme so it has been retired. I asked the store manager why she still sits there and why they still have the kiosk. His answer: “I don’t know, but I’m so happy because we are paying to have people sit around at the back of the store and do nothing in categories where Amazon is so good we don’t have any business competing.”  My response: “So why is there a lady there now?” He answers: “Because we still have shoppers wanting to explore those categories and we need someone there to say that they can’t explore those areas.”  Right. Let’s move on. 
  3. Impulse. Another all-time favourite is the war on sugar. Retailers are now ‘responsible’ since they have removed all sugar from checkout areas. Meanwhile, they have invested heavily in providing sugar-laden products with spaces to put Free Standing Display Units, clipstrips and other impulse merchandising in every section of the store. They have also begun to run ‘seasonal aisles’ for holidays like Valentine’s Day, Halloween and so on.
  4. Services. Nearly every big store is now providing a set of new services, partly aimed at Millennials. My question, how many Millennials do you know that use these services? Shoe repair/shoe shine, key cutting, photo printing, currency exchange, gift cards, lottery tickets, electronics repair…Should I continue?
  5. Grab & Go. Most retailers are also installing ‘Grab & Go’ food sections to make it easier for people to pop in, presumably grab a meal and then get out. Unlike fast food drive-throughs, however, you need to find parking, enter the store and walk approximately 200 yards/metres, bag everything yourself, then go to four possible checkout areas (self-scan for big baskets, self-scan for small baskets, assisted scan, or newsstand scan). Finally, you need to walk 200 metres back to your car, find your way out of the congested parking lot and then back on the road where you will be driving in the opposite direction from where you need to go. And, of course, the food is delicious.
  6. Scan & Go. I first tried scan & go in 2002. Since then I have tried it about once a year to see if it has improved. It has not. The technology, including the hand guns, is the same I tried in 2002. If they have improved, then please email to explain to me how they have improved. From where I sit, Amazon’s trials with Amazon Go and Albert Heijn’s trials with ‘Tap & Go’ are genuine improvements. Everything else appears to be a waste of precious resources.

Implications for the week ahead

Big store retailers need help. Millennial shoppers are now the largest economic force in retail. Millennials are having families and so many of them need big stores. They just don’t need big stores with these paradoxes. Times are tough for big stores, but if CAPEX is going into remodelling let’s put it into investments that make Millennials happy and not Gen X or older happy. No offence to Gen X, but we’re a bit old these days, aren’t we?

We can do three things to help:

  • Invest in store designs that allow for real convenience/speed. The grab & go, scan & go and impulse investments that work well are radically different from traditional rodeo-style floor layouts. Suppliers can bring their knowledge of best-in-class store designs to this conversation. Retailers should be prepared to do more with limited budgets on store redesign.
  • Invest in research to discover what Millennials need/want. If Millennials are moving to “smart” living where their mobile phones are used to lock/unlock doors, then why invest in having a key cutter in a valuable corner of the store? Suppliers should come with ideas on what services go well with their own products and the lifestyles these products represent.
  • Visit these stores often, particularly when new competitors arrive. Most importantly, if we are going to fight against new forms of retail, we need to listen to staff and shoppers about why they still shop big stores when they have new options available and then be prepared to make that the core of the new offer.

Here are links to great pieces of work we published on Retail IQ in Week 47:

When you get a chance, please share your thoughts or questions on ‘The Big Stores Paradox’, or any other topic. Good luck in the week ahead. 

Regards,

Ray Gaul – Ray.Gaul@KantarConsulting.com and @KantarConsulting or @RayGaul on Twitter plus LinkedIn.

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