I remember feeling a twinge of nostalgic sadness with the passing of Toys ‘R’ Us last year. It wasn’t much of a shock to hear about the closure; after all, Toys ‘R’ Us had struggled for years at that point against big box competitors like Walmart and the online juggernaut, Amazon. Still, it was an iconic brand of which I—and millions of other people—have fond childhood memories.
Naturally, it was a pleasant surprise to see the iconic retailer announce their triumphant return last month. Executives behind the move plan to open at least two new Toys ‘R’ Us stores in time for the 2019 holiday season, with more on the way in 2020. They’re not simply going back to the same model that led to liquidation the first time, though. Instead, the revived Toys ‘R’ Us is embracing a new retail strategy.
No more massive storefronts jampacked with every toy imaginable. Instead, the new Toys ‘R’ Us will be smaller, sleeker, and fully-IoT enabled. The company seeks to create more experience-oriented stores with this approach. They want children and parents to interact with products, rather than simply browse and buy.
Reviving the brand with this new store paradigm is risky. If we look at the current situation in the market, though…it may prove to be a very wise move.
Traditional Commerce Can’t Cut It Anymore
We’ve heard about the “retailpocalypse” for years now. Beginning with the mid-2000s, news stories about shuttering malls and retail storefronts became a regular fixture, a dime-a-dozen piece of content. Reports of the retail industry’s death, however, are an exaggeration.
eCommerce retail is doing just fine, as are sellers who managed to adapt to the new digital-enabled economy. Walmart, for example, is not only surviving but thriving in the online market. So, retail’s not in trouble; rather, it’s the brick-and-mortar sellers who failed to adapt that face problems.
It’s true that brick-and-mortar can’t easily compete with online retail on price. Those primarily reliant on brick-and-mortar operations must overcome higher overhead and tighter margins than online competitors. Then there’s the convenience factor; consumers don’t have to leave their couch to make a purchase, and big names like Amazon and Walmart are gravitating toward one-day shipping options, thereby boosting their extant advantage.
It’s getting harder for physical retailers to make the case that they’re a more convenient option. Storefront-centric operations must chart a different course forward if they hope to thrive in the market.
I believe, as the new Toys ‘R’ Us strategy demonstrates, that the path forward leads through the one area in which brick-and-mortar can still dominate: experience.
The Rise of Experiential Commerce
Experiential commerce is the best hope for brick-and-mortar retail. This new approach to business involves drawing consumers not necessarily with products, but with concepts that allow people to interact and have a unique in-store experience.
Experiential commerce can take the form of anything from streetwear brands setting up VR-enabled popups to Samsung’s combination tech demo/art installation/music festival. It doesn’t have to be this elaborate, though. In its most basic form, experiential commerce involves reimagining the storefront as less of a shop and more of a showroom…in other words, essentially what Toys ‘R’ Us is planning to do.
There’s a clear logic to the strategy these and other retailers are pursuing. The practice of “showrooming,” or browsing in-store to research and plan online sales, is a well-established trend. 44% of British consumers say they browse online while shopping in-store to look for the best deal, and the figures are likely similar in other markets, too.
This sounds like a raw deal for brick-and-mortar merchants. But, by getting ahead of consumers, anticipating and embracing the showrooming effect, sellers can actually turn consumer behavior into an opportunity.
Consumers Demand Experiences
Consumers—especially those in the 40 and under age set—value experiences. Experiential commerce is how retailers can respond to and leverage this desire.
Retailers can integrate their online and in-store platforms as part of a broader, IoT-enabled strategy. For example, sellers can keep common, popular items in stock as usual. For larger, more elaborate items, though, they can allow shoppers to interact with items in store, exploring products in greater depth than with traditional retail. The merchant can then make it possible for buyers to simply scan their phones on the item using a QR code or other mechanism to purchase and arrange delivery in a matter of minutes.
If consumers treat stores like a showroom, retailers would do well to act accordingly. Individual stores can become like small-scale tradeshows, allowing manufacturers to showcase the best of their new goods.
This makes it possible for retailers to meet consumers where they’re at, while simultaneously generating incredibly-detailed data about customer behavior and preferences.
If you’ve been to a Best Buy in recent years, you may notice devoted pavilions for Apple, Samsung, Google, and other tech firms. These in-store pavilions allow customers to play with devices and compare their capabilities. This is part of the strategy that allowed the company to not only recover ground, but actually grow in the last several years. A store like Toys ‘R’ Us, for instance, could partner with brands like Lego or Nintendo to bring unique in-store experiences in the same way.
Consumers want interactive elements in-store. They view eCommerce and brick-and-mortar as extensions of the same sales channel. Experiential commerce, in turn, is how retailers can respond to meet that sensibility.