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Developing a DTC Retail Strategy: Q&A With Carrie Barclay
Developing a DTC Retail Strategy: Q&A With Carrie Barclay 1440 428 ASG

The advantage to DTC brands opening physical locations is clear, but if you’re a digital-only DTC considering opening your first location, how do you know where to go? What kind of strategy should you use?

Having worked with notable DTC brands like Warby Parker, Tonal, Purple, and Lovesac, we asked ASG President Carrie Barclay to share some insight on what works and where to start.

Q: It seems a bit daunting to transform from digital-only to incorporating physical locations. How do you advise DTCs just getting started?

Carrie: Initially, it’s important to keep an eye on your investment. This means choosing locations beyond New York City, where the costs are more manageable and data is more relevant. A clustered or regional approach to launching physical stores can be smart. Rather than spread across the country, many DTCs may opt to open a location or several near where they are headquartered. They can physically check in on the stores; see what’s happening; gauge client response and make adjustments to their physical store strategy before expanding further.

Q: What do DTCs have to consider in order to expand?

Carrie: It will really depend on the brand’s ability to scale. They have to think about logistics and distribution. A great example of how to do this well is Primark, a European company that opened a distribution center in Pennsylvania in order to support the stores they are opening in the northeast.

DTC Apparel Store

Q: You’re a fan of pop-up stores. Why?

The pop-up is the equivalent of a fancy customer intercept survey. You can gather a lot of customer data with very little investment to determine whether or not it’s a good location, what kind of traffic you can expect, and what your product mix should look like. Pop-ups have increasingly become an effective way to test a market and make sure it’s a good fit for your brand before getting too heavily invested in the location.

Q: How do you determine which path to take when opening physical stores?

Carrie: You need to use the data to make strategic decisions about your brand. Data will help you answer the questions you need to think about as you go physical. Do you build out your own retail shops across the country or test pop-ups in certain high-traffic areas? Do you sever ties with the retailers who carry your brands or focus on a hybrid solution that allows your brand to partner with retailers even as you build your own branded stores? The answers to these questions will differ for each brand, but the data is always there. The important element is being able to analyze and overlay market insights and match them with business goals.

Q: Why do you think DTCs need physical stores?

Carrie: We know customer acquisition costs are not sustainable with digital-only, so that’s a big reason behind the push we see among DTCs to open physical locations. But at the end of the day, it’s not about having a physical store or a website or an app or two-day delivery or a great return policy. It’s about being where your customers need you, when they need you, how they need you. It’s about being the brand they trust – because you meet your sustainability promises, you are accessible when they’re ready to shop, and you’re convenient. Physical stores increase trust in your brand, can put you in your customers’ neighborhoods and can give your brand enormous growth opportunity when done right.

Want to learn more about implementing a data-driven DTC location strategy? Explore our proprietary platform, ASGedge, where we combine tailored real estate data with industry expertise to inform confident retail decisions.

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Popular Retail Storefronts for Location Strategy

What’s Driving Today’s DTC Location Strategy?
What’s Driving Today’s DTC Location Strategy? 1440 428 ASG

Capitalizing on physical locations is a huge opportunity for DTC brands, but you can’t just throw a dart at a map and expect results. As DTCs open physical locations around the country, they can ensure a bigger likelihood of both pulling in existing online customers and attracting new customers with a comprehensive location strategy – and that strategy must adapt to the changing retail consumer, who shops closer to home and expects more from brands to earn loyalty.


The Cost of Credibility

DTCs were leaning into the retail landscape before the pandemic. Not only is the cost of customer acquisition too high to be sustainable for a digital-only brand, but the ability to build trust and customer loyalty to retain customers is challenging.

“Roughly one-third (34%) of US consumers surveyed stated they don’t trust retailers with just an online presence.” – Morning Consult

“Consumers inherently trust brands that have a physical presence over those based solely online. In a recent report by global data intelligence company Morning Consult, roughly one-third (34%) of US consumers surveyed stated they don’t trust retailers with just an online presence. Meanwhile, 68% trusted retailers with just a physical store, and 73% trusted retailers with both a physical and online store.” – Chute Gerdeman


A Location Strategy Shift

According to data from Yelp, new business openings increased 14% in year two of the pandemic. However, where those businesses are opening is changing. “Boston, Seattle, Los Angeles, and New York City saw the largest decreases in new business openings during Delta and Omicron variant waves. Meanwhile, Atlanta, Dallas, and Detroit bucked the trend with an increase in the number of new business openings during the arrival of the Delta and Omicron variants.”

Successful DTCs are shifting away from large hubs like New York City. DTCs are choosing locations where the cost of doing business is more manageable – locations like Florida, Texas, and Tennessee. They’re also following their customers. According to Modern Retail, the pandemic-motivated exodus from big cities has spurred DTCs to follow them to mid-sized cities like Austin and Dallas. Even DTCs locating in large cities like New York City are straying away from 5th Avenue and instead opening shops in places like Dumbo (Brooklyn) and the Upper East Side.

Popular Mall Storefront for Location Strategy

Today’s digitally native brands don’t mind a little competition, so don’t be surprised when you see several DTC brands clustered in the same location. High traffic and concentration outweigh any negative. The key is really positioning yourself where the consumer can do more than one thing – where they can cross-shop. That’s why top retail destinations like Easton are appealing.


The Devil Is In the Details

It’s critical to start with customer data when developing a location strategy. Luckily, DTC brands often have a more intimate understanding of their digital customer, and that insight can provide a lot to leverage. However, what’s important to remember is that the online customer isn’t always an exact match to the physical customer. Having a physical space creates new awareness, so being able to understand, recognize, and accept there might be a shift is an important consideration.

Popular Retail Storefronts for Location Strategy

Using data to identify key retail location opportunities, DTC stores need to go where their customers are. Brands tend to think of New York first, but it really limits your capability to test, measure, and learn. With a high tourist and commuter mix, the metropolis is atypical to other major markets, limiting planning for stores two, three, and four.

Combine all that with its lack of affordability–even with the lowered rents and flexible leases we’re seeing–you’re paying a lot for a location, which means potentially less investment available for design. That’s why we’re seeing more DTCs focus on launching their first brick and mortar in places like Nashville and Austin- they’re more affordable, have a better customer mix to help predict and inform future stores, and give you more to invest in design so that you can get it right.

Want to learn more about implementing a data-driven location strategy? Explore our proprietary platform, ASGedge, where we combine tailored real estate data with industry expertise to inform confident retail decisions.

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DTC Brands Lean Into The Retail Landscape
DTC Brands Lean Into The Retail Landscape 1440 428 ASG

Given the cost of customer acquisition and the increase in competition, DTC brands have shifted their strategy, focusing on experiences where the brand story and consumer connection matter more than just building mailing lists and driving people to buy online. The pandemic helped accelerate that shift – as consumers spent more time at home, DTC brands have had the chance to tap into social conversations and fulfill many emotional and essential needs.


From Ecommerce to Experience

DTCs are using their digital native savviness to put themselves where their customers are – not on a website, but in social media (think: DTC brands like Dr. Squatch on TikTok) and in video games (think: Marc Jacobs in Animal Crossing). More than anything, however, DTCs are beginning to focus on opening physical locations – either standalone or in collaboration with existing stores (think: Bark’s partnership with Walmart).


In-Store Shopping Demand Drives DTC

People are ready to shop again in-store, and DTCs are responding. According to Shopify’s recent Future of Commerce report, 32% of brands said they’d be establishing or expanding their use of pop-up and in-person experiences, 31% plan on establishing or expanding their physical retail footprint, and 40% of brands said offering experiential retail will be a top priority in the next year.

“Increased retail vacancies have created an opportunity for a new wave of digitally native brands to experiment with physical retail. The surge of brands into offline channels means retailers must focus on creating engaging and memorable experiences to win foot traffic.” – Shopify


Standing Out to Stand Alone

On a recent trip to Austin, TX, we visited the premier, open-air retail development, Domain Northside, which has one of the largest DTC physical presences in the US. We visited every single store in the shopping district – legacy retailers’ side-by-side emerging DTC brands. Cover the signage though and we couldn’t have told you who was who or what made them unique. A surprisingly cookie-cutter DTC experience for brands that have notably played hard to cut through the noise online.

“Brand building is helping attract and retain customers. Businesses are overcoming the competition by investing in brand building, which increases customer lifetime value, boosts conversion rates in the short term, and attracts out-of-market buyers in the long term.” – Shopify


The Experience Factor

A physical presence means more than four walls. From the right location to on-brand execution and a memorable experience, the equation takes as much consideration and strategic planning as the day the DTC was born. Missing the mark moving from digital into physical could lead to two unfortunate outcomes:

  1. DTC brands misreading the brick and mortar performance based on a failed execution (proper development of the branding, etc.), and
  2. Developers undervalue the DTC’s capabilities in a physical environment and begin to discount them or pass them over for new opportunities (i.e., they will be left on the bench).

Digitally-native brands making their first foray into physical retail have an opportunity to leverage the customers they’ve nurtured and developed online, and expand their brand awareness to new customers. It’s an exciting time to think about getting physical if you’re a DTC brand.

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What the Great Wealth Transfer Means for Retail
What the Great Wealth Transfer Means for Retail 1440 428 ASG

The great wealth transfer is underway. It’s a monumental shift of financial power from the Boomer generation, who, by 2030, will all be over the age of 65, to their children and grandchildren (Millennials and Gen Z). Investopedia estimates the great wealth transfer will result in $59 trillion moving to younger generations. Others estimate that number to be more than $70 trillion. With that, it’s considered the “largest redistribution of wealth in human history.” But it’s not just about the money; it’s the combination of money and the power shift (political, social, and economic) that will follow.


Influential Events

Millennials (born 1981-1995) and Gen Z (born 1996-2009) children lived their youth and early adult lives through tumultuous times. From growing up in wartime to living through economic distress to literally coming of age in the midst of a pandemic, the experiences of these generations are significantly different from the Boomers before them. Gen X, born 1966-1980, while older, still experienced some of the same circumstances as Millennials – crushing student debt, housing inaccessibility, etc. Because these generations have not followed the typical Boomer path of going to college, getting a job, buying a house, and having a family at the same ages and stages, their role as consumers have been different from the start. With their expected inherited wealth, we need to begin mapping their trajectory as consumers to be able to meet their needs.


Frugal and Conscientious

When considering how these consumers came to age, brands will need a different approach from what they used with Boomers or Gen X. Younger generations hold a different position on money, which has changed the dynamics within Millennials and Gen Z. In both cases, they’re more frugal, more cautious with their spending, and more intentional about where and with whom they spend their money.


Millennials as Consumers

Millennials are about to have the most money they’ve ever had, but they grew up in the worst economic conditions since the Great Depression. Most Millennials don’t currently own a home, and 18% believe they will always rent. According to Investopedia, despite being the largest generation by population, only 17% of total homeowners are Millennials, and only 42% of Millennials were homeowners at age 30, compared to 48% of Gen X and 51% of Baby Boomers at the same age. This is a notable shift as brands look to consider redefined needs to support the home environments of these consumers.


Reaching the Millennial Consumer

Because of their life experiences, Millennials make spending choices that feel can feel unpredictable at times to retailers. The generation is also quite diverse – a quarter of Millennials speak a language other than English as their primary language, and more than a third are non-white. The same marketing that was so effective on Boomers will not resonate with Millennials. So how do you reach them?

Deliver a Consistent Experience. If there was ever a time to ensure a consistent brand experience between mobile and in-store, this is the generation that demands it. More than 90% of Millennials own and use smartphones; this is the OG digital native generation. They expect instant information, easy access, and consistency across channels. They value trust indicators and appreciate access to real humans. Personality, transparency, and responsiveness are key.

Engage Authentically. Whether you’re writing content for a blog, posting on social media, or advertising, be authentic. As a whole, this generation wants to know you get them, understand their needs, and contribute to improving their lives and life experiences.

Be Where They Are. The greatest opportunity for brand awareness lies within where Millennials spend their time. From binging Netflix to watching YouTube and scrolling social media the online world is a direct avenue to connect with this audience. 

Tap the Influencers. Virtually all Millennials – 97% – read reviews before making a purchasing decision. They’re more likely to trust a brand that has been recommended by another consumer – even a stranger – over trusting the brand itself. Make sure you make your reviews and recommendations are easy to find online. Even when they shop in your stores, which they love to do, they’ll look first online to see what others say about you.

Focus on Lifestyle Choices. Millennials are not moving through stages of life the same way previous generations. Attract Millennials not by focusing on where they are in life, but instead by how they identify socially or through the causes with which they identify.

Be Transparent. Millennials are paying attention, and looking for brands that show – through action – that they care about the same things they do – and they’ll pay more for it. They want to know if you support important causes, make ethical business decisions, and how you incorporate sustainable practices. 


Reaching the Gen Z Consumer

Gen Z was born into a never-ending war that turned into a never-ending pandemic. The youngest Gen Z consumers, who are now in middle school, to the oldest, who are early-career professionals, have shouldered the worst of the education experience and most of the job loss during the pandemic. Reaching them is a complex and difficult mission, as they’d rather save money than spend it. So how do you connect your brand to Gen Z?

Have Purpose Beyond Profit. CSR might be a nice-to-have with older generations; with Gen Z, it’s your lead. Your purpose needs to be something more than profit. Maybe it’s revolutionizing the way you manufacture something so that it protects the planet, or maybe you donate a portion of what you make to a worthy cause, but it’s the “why,” not the “what,” that will turn Gen Z into loyal consumers.

Foster the Entrepreneurial Spirit. Gen Z has no interest in the typical corporate structure, and they don’t believe in the kind of job security they’ve never seen. That may explain why 72% of teens want to start their own businesses. Showcase your own entrepreneurial spirit and innovation to attract them – and demonstrate your care for your employees.

Engage Authentically. Like Millennials, Gen Z has no time for canned responses or generic marketing. They want authentic engagement and interaction that feels personal. These are purposeful consumers, not accumulators.

Don’t Waste Time. Gen Z is the TikTok generation. They want small, consumable pieces of content, and that translates to marketing, too. What can you do to get their attention in 8 seconds or less? Because that’s all the time you have. According to Kantar, 83% of consumers browsing TikTok say seeing trending content has inspired them to make a purchase.

Be a Brand They Can Believe In. For Gen Z, consumption for consumption’s sake is offensive. Conservation, sustainability, and respecting privacy are extremely important. “When I think “cool” I imagine companies that do great things for customers/employees or beautiful/unusual products.” – Female, 17, UT, Urban

Emphasize Experience. Gen Z seek out meaningful and memorable experiences, not just products. They have a “you only live once” attitude in which they will prioritize fun over sacrifice.

Be Impeccable with Your Brand. Gen Z has a high standard for what they want their personal future to hold. Brands with purpose win in the long run, and we’ve seen the power of consumer resiliency.

Most brands are accustomed to equating spending to the Boomers, who currently control over 60% of the money in this country. As the great wealth transfer begins in earnest, the entire shift and mentality of the receivers will be unlike anything we are familiar with. This shift represents invaluable opportunities for companies to listen and pay attention.

Eager for more insights about retail? Check out how some retailers are Minding the Retail Gap between pandemic and high performance.

Redefining Flagship Retail
Redefining Flagship Retail 1440 428 ASG

Flagship retail stores have historically been the beacon of a brand—an iconic entity with grandiose energy. But as we continue to rethink retail in today’s ever-changing and quickly evolving environment, it presents the opportunity to reevaluate the flagship experience and our approach to store design.

If you think about the essence of a flagship store, it has meant something larger-than-life, experiential, immersive, or even exclusive. Often, we relate this to store sizes like Krispy Kreme in Times Square, Hermès in Paris, Nike in New York, or the glass cube at Apple Fifth Avenue. When you strip away the square footage, it really implies a “special experience,” either with an exclusive, localized product (The Big Apple Doughnut), personalized service, or unique offerings associated with geography. So, if we can let go of this perception of flagship relating primarily to size and connect it more to the unique experience – then we get to the heart of what flagship retail means.


From High Streets to Side Streets

Retail succeeds when it responds to consumer needs, and today’s consumers want to stay closer to home when they shop. They want to be catered to and want anything but homogeny. Gone are the days of being inside any mall in America and finding the same set of stores. Consumers want something that reflects the energy of their neighborhood.

“Consumers want and crave variety, diversity, and choice. You can maintain a national footprint and effectively leverage regional and localized design. Bringing these strategies to scale can be a differentiator for retailers who want to thrive, not just survive.”
– Carrie Barclay, President, ASG

The importance of diverging from homogenized retail is one of the key factors in retail design success today. Consumers have gained a new appreciation of home since the start of the pandemic. Similarly, when retailers begin to understand their own unique importance in the local community, they then become part of the social fabric of the community.


Embracing the Flagship Experience at Scale

Now is the time to refocus the meaning of flagship retail to symbolize a unique and localized experience for the consumer. In other words, we believe that the flagship experience shouldn’t be limited to just the launch of a design as it appears in Times Square, but it can also be a thoughtful, customized, and unique design in every neighborhood.

Your brick-and-mortar locations are not just transactional. They are valuable opportunities to connect with your customers and showcase your brand, values, and commitment. Every store design is an opportunity to provide local customers with an integrated, immersive, and unique experience with your brand.

Eager for more insights about the retail experience? Check out how some retailers are Minding the Retail Gap between pandemic and high performance.

ASG Welcomes Paul Hiers as New CFO
ASG Welcomes Paul Hiers as New CFO 1440 428 ASG

ASG Welcomes Paul Hiers as New CFO

Asset Strategies Group (ASG) is pleased to announce Paul Hiers has rejoined ASG as its Chief Financial Officer. Paul is no stranger to ASG, having co-founded the company more than 25 years ago with Steve Morris. He helped develop the financial and business processes for ASG’s services and was integral to the startup and growth of our industry-leading outsourced lease management service.

“I am delighted that Paul has returned to the ASG family as our CFO,” said Carrie Barclay, ASG’s President. “His desire to re-join us and develop the business is a huge compliment to what we are building.”

Prior to co-founding ASG, Paul was VP/Controller for Limited Inc.’s Real Estate and Store Planning divisions, where he oversaw $300 million in annual store capital expenditures and over $1 billion in occupancy expenses. He also worked for four years at KPMG’s Cleveland office providing independent insight and investigative research to a variety of clients. Paul has a BBA in Accounting from Kent State University.

“Paul is a good friend. I’m thrilled to have him re-join the team and value the leadership he has always demonstrated,” said Steve Morris, co-founder and CEO of ASG. “His dedication and commitment will be instrumental in helping us achieve our vision for ASG’s future.”

Over the years, Paul has stayed actively involved with ASG as an advisory board member and contributed to various financial projects, including our conversion to an ESOP in 2019 and the acquisition of Chute Gerdeman in 2020.

ASG is thrilled to welcome Paul Hiers.

ASG Rebrands as a Commitment to Business Transformation
ASG Rebrands as a Commitment to Business Transformation 1440 428 ASG

Retail can serve a higher need, a greater purpose. At Asset Strategies Group (ASG) we believe connection is that purpose. It’s why we’re here. We are rebranding to show our strength in the power of connection, rebranding to show that connection can lead to purpose, rebranding to find true meaning. We believe a more connected world empowers change across clients, consumers, and communities. We embrace a bold curiosity and willingness to explore new ideas and pathways and a comfort for pushing boundaries as a catalyst for progress.

“The retail industry is changing so rapidly, and it was important for us to not only to embrace the change but demonstrate an evolved approach to creating a foundational future for retailers. We built this company from the inside out based on our love for retail. The rebrand provides us an opportunity to accurately represent our vision and mission through a cross-discipline ecosystem of expertise.” – Carrie Barclay, President


Logo Design

The infinity mark represents the connections at the heart of ASG. It is a symbol of weaving together. It is a symbol that reflects a number greater than the whole. It is continuously moving, as it is dynamic, relational, and boundless. It is always changing but in balance, stable.


Website

Our new website works to expand on the new identity and better highlight the people, processes, and impact around our work. We use bold color highlights as vibrant counterbalance to the clean, simple structure of the site.


Brand Palatte

Steel gray pays homage to the brand’s stability as an industry leader for over 25 years, while a vivid reflex blue evokes the energy and optimism of a future-forward outlook. Together, the two primary colors represent a harmony of real-world practicality and possibility. Secondary brand colors, including magenta and red, support a vibrant visual energy and creative passion that drives the brand’s momentum.

“Our new branding reflects our connected services and represents our next stage of growth: delivering holistic real estate and design solutions for our retail customers.”- Steve Morris, Founder & CEO

Thank you to the team at Sketch Blue for their work helping us create this new identity.

Livestream Retail for the Win
Livestream Retail for the Win 1440 428 ASG

Bloomingdale’s hosted livestream retail events throughout the pandemic, inviting customers to join them on Zoom calls and learn about the latest footwear and fashion trends. Customers were treated to special opportunities to buy merchandise and were incentivized to do so. Post-pandemic, livestream is becoming a more viable option for brands to reach their customers – not to replace the brick-and-mortar experience but to have yet another way to connect. 

At the end of the day, your retail success relies on your ability to connect with your customers. Every channel through which you can connect to your customers is part of your overall retail footprint. Not only is livestream retail a data-rich environment that can help you learn more about your customers, but it is an opportunity to create a unique experience that will keep them connected to your brand. 


SG Deals with Physical Retail Locations – Why Talk Livestream?

ASG does bring location and design expertise to retail. But part of understanding where and how to design and locate stores means understanding all of the paths through which a brand attracts and retains customers, and how virtual experiences impact the in-store experience. So, looking at ecommerce, in-app, and livestream retail is part of having a comprehensive understanding of the entire retail footprint for a brand. As retailers redefine their relationships with their consumers, brick and mortar becomes only one piece of a larger puzzle. 

“Each brand has their interpretation of ‘community’ and what it means to them, which is why we’re seeing new ways to approach community focused experiences. Whether it’s global, digital, or hyper-local, there’s a place for everyone to feel special.” – Chute Gerdeman


What’s the Difference Between Livestream Shopping and QVC?

QVC and other TV shopping channels were precursors to livestream retail. Livestream is much more powerful, in that individual brands and retailers can directly connect with customers on a more personal level – and your customers don’t need to be in front of a TV. They can be watching videos on TikTok or scrolling through Twitter or Facebook. Purchases can be made on the spot, to be delivered or picked up. Walmart recently partnered with TikTok; Facebook and Instagram have both begun rolling out live shopping. 


How to Break into Livestream Retail

Digiday suggests beginning by connecting to influencers and micro-influencers: “To engage with audiences that want livestream shopping and social commerce as part of their consumer journey, brands are building out strategies and partnering with influencers that already have the audiences in order to widen their reach.”

Make sure you can be found by your customers where, how, and when they want to shop. Livestream is just another way to do that. Retail is going to continue changing; to connect with customers at every point on their journeys, traditional brands and retailers will need to remain flexible and willing to meet customers where they are.

Creating Memorable Customer Experiences
Creating Memorable Customer Experiences 1440 428 ASG

Everything about retail has changed, but that’s not a bad thing. The needs and wants of customers have changed dramatically since the onset of the pandemic, and that brings opportunity for retailers. Social media, SMS, chat: all of these communication tools have changed how we interact with customers and how truly connected to them we can be. However, authentic, emotional connections with your brand can only happen when you’re willing to be what you promise your brand is. How do you create a memorable customer experience, and where does ASG and Chute Gerdeman fit into the new retail paradigm?


Connecting with Customer on an Emotional Level

To connect more fully with your customer, you need to know who they are now – because they’re not the same customers you knew before the pandemic. Think about all that your customers have been through – about the life-changing times we’re living in and how your customers have re-evaluated what’s important in their lives. From leaving unfulfilling jobs to recognizing the need for repairing family connections, your customers (like the rest of us) are redefining life on their terms. You have to find a way to be a part of their story going forward, and in order to do that, you need to talk about your brand in ways that connect. 


Quit Trying to be Your Competitor

“Imitation is the sincerest form of flattery,” and while I agree that you should not reinvent the wheel when it comes to retail strategy, you do need to stay true to your brand and your brand’s mission and core beliefs. It is the only way your customers will trust you and continue to remain loyal to you. This often requires getting personal. From showcasing local artisans to seamlessly combining in-store and online experiences, you can personalize the experience for your customers. 


Redefine the Role of the Store

Consumers are buying more online, partly due to the pandemic and partly due to convenience. The pandemic accelerated the adoption of ecommerce, but we were already headed that way (read my articles from 2016-2019). We’ve now reached the point of integrated retail, where – from the customer’s point of view – there is no difference between shopping online, in the store, through social media platforms, or by clicking a button during a TV show. It’s all the same to them, so you have to meet them where they are, meet their needs, and never make it difficult for them to switch from one access point to another. 


So Where Do ASG and Chute Gerdeman Fit In?

Everything about your approach to retail is in need of analysis. You’ll be changing where you locate your stores and how you design them. You’ll need to understand and measure the impact of your ecommerce and social media sales and how that impacts where you’ll locate stores, which ones you’ll close, and which ones you’ll invest in. Most retailers will need to deliver 20-30% improvement in store productivity to compensate for channel shift. Working with ASG and Chute Gerdeman can help you make the most informed strategic decisions.  

Minding the Retail Gap
Minding the Retail Gap 1440 428 ASG

We have been talking about redefining retail for a long time, but some retailers are falling behind. In fact, the retail gap between outperformers and the rest of retail is becoming wider, according to McKinsey, and “those that wish to keep up need to speed up.” The report offers great insight into the state of the post-pandemic retail industry, including the fact that pure grocery retailers were not ready and were outpaced by Walmart, Costco, and others. What did these top 25 retailers do that we need to understand and emulate?


Cater to Consumer Needs

Some retail categories struggled, especially those selling business apparel and cosmetics, as more people worked from home and barely bothered to get dressed, let alone put on a suit. Regardless of type, retailers that achieved the most success were those that had some infrastructure already in place before the pandemic hit and were capable of shifting to meet changes in consumer demand. 

Home improvement, as a category, was dominant. But some retailers seemed prescient in their pre-pandemic strategies and had infrastructure in place that let them quickly shift to meet changing consumer needs as the pandemic wreaked havoc. Walmart, for example, had already launched their curbside pickup service and had a sophisticated ecommerce platform in place. Costco had already established both ecommerce services and two-day deliver for food in many areas. McKinsey identified 25 forward-thinking companies that accounted for 90% of retail gains. What set these retailers apart? They were able to quickly shift more of their services online without having to build the infrastructure in order to do so. 


Deliver Value

The consumer perspective was forever shifted due to the pandemic, and the retailers that thrived were those that could offer consumers value. Value, of course, means different things to different consumers, but the three shifts I’ve observed are: cost, sustainability, and social. Consumers were laid off and losing income. Consequently, they wanted to know they were getting the biggest bang for each buck. At the same time, consumers began to evaluate purpose and meaning on a more existential level, and there was a seismic shift toward sustainability. And of course, in the midst of the pandemic, we had social justice issues playing out before our eyes that caused a measurable consumer shift in choosing retailers whose values aligned with their own. 


Leverage Technology to Meet Consumers Where They Are

One of the most interesting statistics to come from the McKinsey report had to do with grocery retailers. As an industry, grocery lost one percent of their revenues, which is obscene given the fact that grocers were one of the essential industries that never had to close. During the pandemic, many people began cooking at home more and even embraced cooking as a way to pass the time. So how did grocers not explode during the pandemic?

According to McKinsey:

The shift from in-store shopping to grocery delivery – combined with consumers’ increased price-consciousness, substantially higher store-operating costs due to COVID-19 protocols, and investments to support online fulfillment – created significant pressure on margins. Uncertain longer-term growth prospects, due to meal-delivery companies eating into grocers’ revenues and platform players using food as a source of consumer engagement rather than profit, have also likely played a role in the sector’s mediocre performance.

In other words, because grocers were slow to recognize the need to invest in technology before the pandemic, they were caught facing costly infrastructure investments during the pandemic – all while other retailers were able to use food as an experience.


How to Close the Gap

Whether you’re a grocer or any other retailer who does not want to be left behind in the new retail, closing the gap will require a number of changes in strategy, not the least of which is flexibility.


Be clear in your definition of what and who you are.

Are your operational, organizational, and communication strategies aligned with your mission? Do you know what your brand stands for? Do your consumers? 


Technology

The retail environment is not done changing. And if you’re not keenly aware of the power technology plays to keep you in the game, it’s time for a very rapid education – and a significant financial investment. Everywhere your brand lives – social media, ecommerce, brick and mortar – needs to be treated as one, integrated unit. Believe me, your consumers don’t see these as separate entities.


Consumer-Centric Focus

Walmart and Amazon will not stop investing in technology and infrastructure and they will continue their attempts to peel away consumers by focusing on convenience and price. But consumers are starving for personal touches; so, find where you can make consumers feel good and be there. We know consumers will pay more for experience. Deliver it.


Re-evaluate Everything

From location strategy to brand partnerships, from the retail space you need to the neighborhoods in which you locate your stores, now is the time to re-evaluate everything. If you are struggling, get tough with your business. Where do you cut? Where do you invest? What kind of mission do you have? How are you engaging with consumers and cultivating consumer loyalty? What can you change to better meet your consumers where they need you to be?

As McKinsey suggests, “Those that act boldly to stage a strong exit from this economic crisis can maintain their edge for a decade or more.”

What are you doing to be bold?

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