The Halo Effect: How Bricks impact Clicks - Val Richardson Vice President - Real Estate The Container Store 2018-2019 ICSC Chairman - CREW Houston
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The Halo Effect: How Bricks impact Clicks Val Richardson Vice President – Real Estate The Container Store 2018-2019 ICSC Chairman
Today’s Retail Industry
Apocalypse or Renaissance?
In Ancient Greek, an apocalypse literally meant "an
uncovering" or a disclosure of knowledge; a revelation.
In French, renaissance means "rebirth."
A (very) brief history of Retail 3500 Today B.C.
Major global trends impacting our industry Technology Omnichannel E-Commerce Customer Engagement Demographics Baby Boomers Millennials Urban Density Consumer Personalization Experience Value
Most significant Retail Industry Influences
Rise of online Impact of retail
retail sales square footage oversupply
Consequences of Shifting demographics affect
high debt levels consumer demand
Current Retail Sales
Total retail (including F&B) sales in the U.S. reached $5.1T in 2019
Pure Play (Web) – 6%
Food & Beverage +/- $700B Bricks & Mortar Online – 4%
Mail Order – 3%
Shipping – 2%
What’s coming Millennial Purchasing Power
Changes in Purchasing Behavior
Changes in Life Stage-related Purchases
Who is shopping where?
Omni-channel Physical Store Online Only
Shoppers Only Shoppers Shoppers
Generations 19%
16% 18%
make up half of
50% 36% 49% omni-channel
28% 37% 27% shoppers.
6% 8% 6%
Household Income
23%
22% 22% More than half of omni-
channel shoppers have an
15% annual income of over
48% 14% 48% 14%
$50,000. Of shoppers with
42% an annual income of at
least $100,000, 89 percent
16% 16% 20% shop in-store only or
omni-channel.Shoppers Utilize All Available Purchasing Channels Source: ICSC Post-Holiday Survey
Visiting Malls/Shopping Centers for Purchases
and Other Activities
Mall/Shopping Center Visitors
All Consumers 70%
Millennials (Ages 20-37) 81%
Gen X (Ages 38-53) 73%
Boomers (Ages 54-72) 58%
16
Source: ICSC Post-Holiday SurveyDigitally Native Brands are getting Physical
• Customers don’t think in “channels”
“This idea of digital first or physical first doesn’t matter. It’s about
what experience you want to offer… We measure by how we
engage the community.” Ethan Song, Co-Founder and CEO of Frank & Oak
• It’s not just analytics
Getting to know your customers better allows better development
of products and services. Relationships matter.
• Profitability
Nearly 75% of multi-channel retailers are more profitable than their
pure-play counterparts.The Halo Effect…how bricks impact clicks ha· lo ef· fect Noun • the tendency for an impression created in one area to influence opinion in another area. • Retail brands have found a significant increase in online sales around where they open new stores. Physical and online retail are converging to create better brand awareness and seamless shopping experiences.
The Halo Effect…how bricks impact clicks
Traffic increases when physical and online retail converge
UNTUCKit Physical Growth
Actual Stores Planned
2016 2017 2022
5 25 100
Source: ICSC Report “The Halo Effect: How Bricks Impact Clicks”The Halo Effect…how bricks impact clicks
Out of sight…out of mind
The share of web
traffic within the
market goes down
when a retailer
closes a store
The greater the proportion of stores closed in a
market, the greater the decline in the share of
web traffic in the markets where the retailer
operates stores.The Halo Effect…how bricks impact clicks
Follow the money…..
Stated Purpose for Most Recent VC Funding Round
Survey of 13 VC-backed “evolved pureplay” retailers
31%
Used for Store Expansion
69% Used for Other Expenses
Source: ICSC Report “The Halo Effect: How Bricks Impact Clicks”The Halo Effect…how bricks impact clicks
The merging of physical and digital
Source: L2: Death of Pureplay RetailFive “must-do’s” for Retail in All Channels
1. Experience and engagement 1
Retailers must compete for consumers’
attention. Most enhance the in-store
experience to compel consumers and 2. Personalization
increase dwell time. 2
Retailers are capturing individual shoppers’
preferences across multiple points of sale to
target consumers’ desire for customization
3. Best-in-class curation 3 and to maximize providing what is relevant
Customers value a convenient shopping without the noise.
experience with curated and thoughtful
product assortments, in an engaging 4. Seamless shopping
4
cultural and experiential environment. The ultimate goal for retailers is to provide a
customer journey across all channels in which
5. Culture of service there are no barriers between consumers and
The engagements should become 5 products promoting both offline and online
solutions-oriented interactions where shopping.
salespeople, with the assistance of in-store
technological innovations, are able to
provide better service and communication.The Halo Effect…how it impacts your life ha· lo ef· fect Noun • the tendency for an impression created in one area to influence opinion in another area. • how do you influence others?
Questions?
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