Beat Amazon or Die. A World of Tiny Stores.

December 21, 2017

Slimming down in size is a trend that is accelerating among retailers recently. Shopping is no longer about looking at racks and racks of inventory and selecting items.  It is about an experience where you consult with a expert to pick out your items all while drinking your favorite juice, latte or wine, or even getting a manicure.

Nordstrom Local, for example, will have many dressing rooms where shoppers may try on clothes, but stores won't actually keep inventory for purchase in stock. Instead, Nordstrom will be pulling merchandise from other mall-anchored stores and from its website or distribution centers.  The stores will be 3,000 square feet, instead of a typical Nordstrom box size of 140,000 square feet. 

Traditional e-retailers like Bonobos and Warby Parker have started opening up physical "showrooms" for shoppers to try on products, but not at the same expense as competitors who have to hold excessive inventory in stores. 

For example, SuiteRetail customer Ball and Branch started life as online only. Now, they are opening up several small stores to facilitate brand awareness and enhance the customer experience.

David Reid, SVP of Finance for Ball and Branch articulates this very well, "Despite the continued trend toward eCommerce, brick and mortar retail is important to brands for a number of reasons. Primarily it’s the closest we get to our customers. We get to see firsthand what products and presentations resonate with our customers. This feedback is strategically important and directs our strategies across all channels . Secondly, for us, there’s an experiential factor - our guests get to feel just how soft our sheets are."

Sites like Amazon and Walmart are great for ordering standard necessity items you are familiar with. The experience tends to be single dimensional and not too different from big box stores - just more convenient. Retailers that are a destinations and offer an experience or sense of community is the trend du jour. In fact, so much so that they are actually thriving in a world where big box is suffering. 

Today it is all about product configuration and customization while enjoying yourself at the same time. Dylan's Candy Bar, another SuiteRetail customer, is a great example of this. Not only is it boring and scripted to simply order candy online, there is zero desire to do so other than for special gifts or occasions.

Dylan's has a flagship mega store in NYC and smaller satellite stores throughout the USA. Last holiday season, I was in NYC with my family taking in the sights. We decided to pay Dylan's a visit and was met by their CFO who gave us a tour of the store. After the tour I let the kids run amok with one of their helpers, selecting candy and toys they wanted. I did not see them for an hour and in the meantime I enjoyed a some ice cream and a few cocktails upstairs in their bar. 

Out of all the things we did in NYC the kids would not stop talking about Dylan's Candy Bar. In fact, we are going to NYC during this holiday season too - guess where they want to go first?

The point here is that the Amazon's of the world have and will kill the big box and/or single dimensional retailer. But, the smart retailers are thriving and will continue to thrive long into the future because they have become a destination with efficient operations and multiple revenue streams. It is a trend that is gaining momentum and the tiny store concept, with its agility, is driving that charge.

So how do you go about rolling out tiny stores ?

Well, it all sounds great but behind the successful tiny store (logistics and construction aside) has to be a vision that embraces omni-channel retail.  At its core, omni-channel is defined as a multichannel sales approach that provides the customer with an integrated shopping experience. The customer can be shopping online from a desktop or mobile device, or by telephone, or in a brick and mortar store and the experience needs to be the same and seamless.

In order to conquor such a vision you have to adopt a unified system approach to your business. This means that you must use one main cloud platform to perform all the heavy lifting such as customer relationship management, order processing, supply chain, and finance.  Combine this system with a deeply integrated point of sale solution to run at the store and an embedded eCommerce platform to run on the internet and you have one system running your entire business.

Tiny Stores are all about the customer experience, the velocity and the profit per square foot. If you cannot get out of your own way and rely on solution hairballs that have to be manually integrated or cobbled together, then you are in for a very big disappointment.

Learn about SuitePOS and how it integrates to major cloud ERP platforms.

 

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