Last fall, The Wall Street Journal spoke with two e-Commerce-driven retail brands, Warby Parker and Bonobos, about their expansion into physical locations as showrooms for their products. Both brands see a future that includes more brick-and-mortar locations.
Warby Parker co-founder Neil Blumenthal revealed that he envisions more than 800 physical locations, and Bonobos founder Andy Dunn plans to have at least 100 stores by 2020. Dunn said he expects a “tidal wave” of e-Commerce companies making similar decisions.
But how can you ensure that shifting from online-only to more costly brick-and-mortar storefronts is a strategic move? The best way to answer this question is by linking your marketing customer data with Big Data to design a long-range growth map. A growth map allows you to use data analytics, market intelligence and market scoring methods to find the ideal audience for physical locations.
Determine Effective and Ineffective Locations
The high capital cost of storefronts and staffing is a challenge for nearly every business. It must pay off with new revenues and distinctive brand experiences. By building a long-range strategic growth model, organizations first establish the criteria most important for success. Using sophisticated psychographic targeting of lifestyle segments, companies can uncover unique needs and buying behaviors to tailor profitable products and services, balancing new digital technologies to deliver savvy experiences (like Amazon’s new Go stores, which use remote scanning and sensors instead of a traditional checkout, with plans for 2,000 retail stores).
With clear goals and metrics established, it’s time to gather data from existing customers, analyze the marketplace and psychographics and survey potential customers. Taking the resulting data and scoring it against the criteria your organization has deemed most important will help create a tailored model for your future growth map.
Establish a Five-Year Plan
Great real estate is costly, competitive and dynamic. By building a five-year plan, you can focus on priority expansion, find ways to close or move underperforming locations and redefine future priorities. You can move quickly on securing ideal site locations without thinking about key real estate decisions one at a time.
To effectively use a long-range growth map, use these six keys to get started:
1. Evaluate performance and behavioral trends.
Your customers’ buying preferences, behavioral data and actions should be at the forefront in determining your store or branch locations and investments. To gather that information, you’ll need to mine branch and store trends, analyze a range of existing customer data, and model market analytics and Big Data trends. These will showcase patterns and insights to help you discover ideal store or branch locations and forecast growth and performance.
2. Use target customer lifestyles.
For future branch and site planning, it’s important to identify the target lifestyle segments that are currently most profitable and were most recently activated. Using demographic and psychographic profiles to build segmentation strategies, you can greatly enhance your data decision-making. Segmentation and Big Data have advanced; they can now be geocoded and tied to your customers’ and prospects’ households to provide behavioral data patterns that can focus expansion and future growth.
3. Access generational concerns and channel usage.
Segmentation data allows you to analyze consumer patterns, purchasing, channel usage and behaviors, especially across generations. By establishing your target growth segments, you can utilize data insights to determine the distinct channel preferences of select Millennial or Gen-X targets, such as where they cluster and which channel mix to prioritize for onboarding and deepening relationships.
4. Use algorithms to score and model future location priorities.
Once targets are identified and prioritized, essential scoring criteria can be established to weight and rank markets, including competitor saturation, household incomes, debt and wealth, relevant small businesses and target segment concentrations.
These scoring algorithms and forecast data allow you to tailor a unique approach to market options over the next five years, both at a regional and micro level. Your priorities will identify possible profitable segments, and you can predict target population, job and retail growth for strategic site placement.
5. Focus on future business model design and integrated technologies.
As mobile and online experiences continue to improve and grow, brick-and-mortar delivery must shift to align with richer user experiences. At the right times, advice, expert guidance, problem-solving and peace of mind will remain a part of the experience mix many consumers still prize in physical branch locations and in relationships with your employees.
Designing your organization’s growth map to align with your business goals effectively guides deeper consumer experiences and engagement. Customers need to trust your business, employees and products — not only in person, but also via mobile and online experiences. Integrating new technologies and reworking complex processes to simplify buying for your consumers — like allowing them to schedule appointments via an app or providing them with online chatbots and help — will ultimately enhance satisfaction and engagement.
6. Provide a differentiated brand experience.
Traditional retail practices are giving way to positive brand experiences. It’s vital that your in-store or branch strategy engineers every detail of the customer’s experience from the moment he sets foot in the door. This is less about the furniture and physical space of your store or branch and more about your staff engagement, design staging, product awareness, digital messaging and brand focus.
Your long-range planning must include reimagining and redesigning a totally new experience your targets value. By simplifying cumbersome account opening or onboarding processes, reducing space inefficiencies, incorporating cutting-edge technology improvements and developing new cultural behaviors, everyone wins. Allow your staff and customers to participate in a fresh brand experience that will increase engagement, retention and referrals.
A data-driven growth map, a five-year plan, and the reshaping of your cultural talent and user experience designs are the best tools for determining your future performance. By reimagining your future business model and reinvigorating your experience, culture and growth goals, you’ll find greater success in creating a unique consumer experience and higher brand engagement with your customers.
Original article published October 17, 2017 on Retail Touchpoints.