Given the rise of online commerce, many experts have predicted dark times ahead for bricks and mortar retail stores. Yet as we head into a new decade, those fears still seem largely unfounded – or certainly exaggerated, at the very least. Despite media focus on the collapse of several high-profile ventures, offline retail is still going strong and, in many cases, evolving, leading to the creation of new niches and hybrid models.
Therefore, if your company has an offline retail business, the time might be right for an upgrade in 2020. There are many options in the realm of digital technology, as well as other offline services and features that are redefining retail stores as we know them.
Here are some innovative retail business models you can consider if you are looking for ways to improve your business and bring in new customers. Some are specific to certain sub-sectors in retail, while others have a universal application.
Consumer "Spaces" and "Experiences"
If your business deals with specialised niches in consumer retail, such as sports and athletic goods, cosmetics, or art supplies, you could benefit from this model. It involves creating areas inside (or next to) your store for your consumers to socialise in, and indulge in fun activities.
In art stores, for instance, you can create spaces where customers can express their creativity. This is not a new model, strictly speaking: many music stores have this kind of focus, providing areas where customers can "jam" and try out instruments.
However, with careful focus on the design and aesthetics of the space, this model can find success in other retail sectors as well. The aim is to provide a memorable experience to customers and even use these spaces to create social events.
Con: Space and budget can be a constraint for many stores, especially those in urban areas. Also, nailing the right mix of design and entertainment quotient for your customers can be challenging.
Click and Collect Models
Adding an eCommerce component to your retail business is nothing new: many organisations have done this in the last decade, with varying levels of ambition and success.
However, click and collect is a novel spin on the tried-and-tested online shopping model. Instead of placing an order online and getting it delivered to their doorstep, customers come to your store to pick up the goods. Many customers like this model because it saves on delivery fees and ensures that they can receive their purchase at a time that is convenient for them.
Amazon is widely credited with pioneering this type of retail business model, but it is not too hard to implement for a small business either, especially if you already have a website in place. This type of model is particularly suited for supermarkets and stores that sell many different kinds of goods.
Pro: It can drastically speed up the sales process, reducing those long checkout queues. You can also serve customers across a wider area by adding collection points away from your main store.
Con: If you haven't already invested in a website, app, or some form of online presence, this will be potentially expensive to implement. It is also not very suitable for smaller speciality stores.
Box Subscription Services
Since consumers have become more accustomed to this approach, there is no reason why it cannot be adapted and applied in a brick and mortar store, as well. You can even provide extra features to customers that an online store cannot – allowing them to create custom subscription boxes by manually picking the products in your store, for instance.
Pro: This is a very flexible model that can work for both niche products such as cosmetics and general-purpose items such as stationery. It can guarantee a steady income with a loyal consumer base, which is invaluable in retail.
Con: In most cases, this model works best with perishable consumer goods that have daily or frequent use. Stores dealing with more durable and expensive luxury goods may not find much mileage with this model.
Sustainable Local Producers and Brands
With the environment weighing heavily on the minds of many consumers – especially millennials and Generation Z – businesses are starting to focus on implementing more sustainable models. This can apply to local retail stores as well.
One way to achieve this would be to pivot away from selling or promoting big brands and focus on off-brand products supplied by local businesses and smaller producers. This does not mean that you cut your ties with established brands completely; just adding a specific section for local produce can make a lot of difference by itself.
You can also create a convergence with the "experience" model, connecting your customers with local producers through special events. This can work particularly well for products such as groceries, arts and crafts, and clothing.
Pro: It can significantly boost your brand and create a lot of goodwill among your customers. If you can add in-house brands, they can be very profitable as well.
Con: Finding good quality products locally can be a challenge. There is no guarantee that you will find sustainable and local sources for products in your niche everywhere.
VR and AR Technology
Artificial intelligence (AI) is a dynamic technology that is already starting to make significant waves in the way businesses operate.
While its uses so far have been primarily confined to finance and healthcare, there are many areas where AI can make a difference in brick and mortar retail, too. For instance, augmented reality (AR) and virtual reality (VR) are two technologies which can really enhance some retail store experiences.
If you sell products that have a substantial bearing on design and customisation, these technologies can make a massive difference to your customers. If you sell furniture, for example, AR can enable buyers to picture their purchase in context and aid their purchasing decision.
Using VR and AR, you can provide a unique experience to buyers, allowing them to visualise how the products look and feel. The great thing about this technology is that you can have it inside your store, and on your online platform.
Pro: It adds to the whole concept of improving the retail shopping experience for customers. Beyond just a novelty, AR can make it easier for buyers to customise products before ordering, especially online.
Con: This type of technology is only worth the time and effort for high-cost items. In addition, the cost of adding these features may be too much if your business does not already have some digital capabilities.
In the meantime, if you are looking for a broader range of potential business models, then take a look at our comprehensive guide.
Was this article helpful? What other retail business models can brick and mortar ventures lean on in 2020? Let us know your thoughts in the comment section below!