The retail industry has experienced more disruption than ever over the last few years with advances in technology and the rise of ecommerce. We frequently see headlines about major store closures and the 'retail apocalypse' but as it has been shown, the retail industry is not failing, it's just evolving.
Instead of focusing on closing stores, we'd rather talk about the retailers who are thriving through these industry changes and what you can learn from them.
1. Dollar General
Dollar General has recently announced that they plan on opening 900 new stores in 2018, following the opening of over 1,000 new stores in 2017. Dollar General also plans to remodel or relocate over 1,000 of their existing stores in 2018. The company estimates that by year-end, 75% of the U.S. population will be within 5 miles of a Dollar General store.
By opening more stores and adding more grocery options, Dollar General is positioning themselves as the new convenience store for low- to middle-income families. They are able to make this expansion by keeping yearly operating costs low. Dollar General has also repositioned their business model to fill the gaps in which larger discount stores, such as Walmart, cannot fill in small and rural areas along with offering even lower prices compared to competitors.
Key takeaway: Dollar General has opened more stores in order to monopolize the small grocery/convenience market where larger retailers such as Walmart cannot.
2. TJ Maxx
TJX, the parent company of TJ Maxx, Marshalls, and HomeGoods, specializes in offering designer items at discount prices. It has proven to be popular among millennials due to its wide variety of ever changing items and the price tag that comes along with it. According to USA Today, they are growing their square footage anywhere from 4% to 5% per year, and plan to open 250 stores this year.
This is also a store where consumers can find anything from clothing, to shoes, to furniture, to gourmet snacks, to beauty and bath products, and so much more. It has become a one-stop-shop for many younger generation women.
Key takeaway: TJ Maxx stands out among traditional retailers by offering a unique variety of items at discounted prices, and follow and research customer trends to provide the best items for their customers.
3. Ulta Beauty
Ulta, a beauty chain that is giving their competitor Sephora a run for their money, has opened 100 new stores in the last year. They attribute their success to the variety of low, middle, and high-end beauty products. In addition to selling products for consumers, they also operate as a fully functional salon.
The beauty store also reports that their loyalty program has attributed to 90% of their sales with over 26 million members, helping Ulta to grow their sales, square footages, and customer-base. The "Ultamate" loyalty program offers customers 1 point for every dollar spent, allowing customers to redeem points to use towards later purchases, along with many other benefits.
Key takeaway: Ulta is paying attention to what their customers want by offering a wider variety of low-cost to premium items, while also offering a customer-focused loyalty program.
4. Sprouts Farmers Market
Sprouts Farmers Market, a grocery store that emphasizes organic and healthy options, has experienced a 15% sales growth in 2017. The growing grocery store attributes their success to holiday shoppers who are looking for healthy holiday meal options, and the expansion of their private label sales including their "enhanced deli program" and increase in grab-and-go items.
According to Supermarket News, Sprouts also upgraded their in-store technology and employee training to improve daily operations, and in turn, improve the customer experience. This technology has allowed Sprouts to advance their business intelligence work to enhance promotional effectiveness.
Key takeaway: Sprouts Farmers Market is able to compete against other health-food stores such as Whole Foods by advancing their technology to give customers a better shopping experience.
Target has also recently seen an increase in revenue, which is largely due to their digital sales, but with in-store sales acting as more of a contributing factor now compared to previous years. Target attributes this growth to a couple of factors including their push in private-label products, and their investment in improving their stores.
Target has expertly pushed their private label brands for products including groceries, furniture, clothing, and more to provide consumers with an option for quality items at lower cost. They have also put emphasis on providing a more appealing shopping experience for customers by remodeling existing stores, and opening more small-format stores for more specialized shopping.
Key takeaway: Target is following the pattern of successful specialty retailers and SMBs by providing quality products within the average consumer's budget and offering a more curated shopping experience.
While Nordstrom stores have shown similar signs of struggling as Macy's and J.C. Penny, they have been able to remain successful during the reinvention of retail through their off-price stores, Nordstrom Rack. In fact, Nordstrom Rack's sales increased over the last year compared to Nordstrom's traditional department stores. In order to appeal to the consumer's need for high-quality, low-price items, Nordstrom plans on opening even more Nordstrom Rack stores in the upcoming year.
In addition to appealing to the discount shopper, Nordstrom also has plans to roll-out a new line of small-scale stores called Nordstrom Local. These stores will act as showrooms for shoppers to come pick out and try on items, but there will not be any inventory for sale available in the store. However, Nordstrom Local will pull inventory from their online and local full-sized stores to guarantee same day pickup or delivery. As a fun feature, Nordstrom Local stores will also have bars for customers to order drinks while they shop.
Key takeaway: Nordstrom is shifting their strategy to appeal more to the discount shopper through Nordstrom Rack while still maintaining a sustainable business model. They are also taking a note from popular online retailers such as Warby Parker, Rent the Runway, and Bonobos by opening smaller showroom stores to provide a more intimate shopping experience.
Hygienic POS systems and limiting shared touchpoints will be paramount wherever we go now.
Performance, reliability, agility, customer experience and native ERP integration top the list!
A better approach is to use a single app that has the ability to ring up sales and that also supports important clienteling and endless aisle functions.