The Great Store Redo
Stores are now having their day in the spotlight as retailers embrace multichannel services and consumers look for shopping and last-mile delivery options.
The COVID-19 pandemic accelerated many retailers’ e-commerce strategies as stores battled temporary closures and consumers who were hesitant to shop in person once stores reopened.
Retailers with stores invested in curbside pickups, online fulfillment in stores and partnered with crowdsourced platforms such as Instacart and DoorDash to perform same-day last-mile deliveries from stores to consumers.
As more consumers return to stores, retailers are remodeling stores to fit their new multichannel strategy. These remodeled stores vary from one retailer to the next, but many are smaller in terms of square footage.
Many retailers are testing new concepts while others are adding ‘experiences’ to existing stores.
“The various tests and pilots are intended to identify how our store portfolio should evolve from the role they serve to their look and feel. As we learn from these tests, we will develop plans that likely include a rollout of investments in more stores and markets.” Best Buy CEO, Corie Barry told analysts on Aug. 24.
Best Buy Store Concepts
What it describes as a “new holistic market approach” which leverages its assets in a portfolio strategy across stores, fulfillment, services, outlet, lockers, its digital app, and in-store -Best Buy is testing different sized stores,15,000, 25,000, 35,000, and a new smaller 5,000 square foot stores.
Best Buy is transitioning one of its stores into a new type of outlet that will include open box products and serve as the hub in a new services repair hub and spoke model it is testing, as well as an auto tech mega-hub for its car tech installation.
In four of its Minneapolis test stores, Best Buy reduced the shoppable square footage to 15,000 square feet to provide more space for fulfillment.
While all stores ships online orders, Best Buy is consolidating ship-from-store units in a limited number of stores across the country to drive efficiency and effectiveness. It is remodeling 13 stores to deliver an even greater portion of the volume, reducing the sales floor square footage, and installing warehouse-grade packaging station equipment and supplies. These locations should be rolled out by holiday and will take on about 25% of the national ship-from-store volume.
A virtual store (for more on this topic, see Adding live shopping to the retail mix ) that will launch just before the holiday season - A physical store is being built in one of its distribution centers that will have merchandising and products and will be staffed by associates and vendor-provided expert labor, but it will have no physical customers. Instead, customers can interact with its experts via chat, audio, video, and screen sharing depending on their preference and be able to see live demos, displays, and physical products.
Dick’s Sporting Goods Store Concepts
According to the online news outlet, RetailDive, Dick’s Sporting Goods is testing out five store concepts:
Dick's first House of Sport location opened in April, with experiential features like a turf field, a rock climbing wall, and a batting cage.
Its’ Public Lands concept recently opened and is considered “a real opportunity to reinvent the outdoor marketplace” and will feature specialized shops dedicated to different activities such as camping, biking, and hiking.
Overtime offers up to 75% off apparel, footwear, and equipment from Nike, Adidas, Under Armour, and other brands.
Warehouse locations feature up to 90% off of "customer-favorite footwear and apparel brands.
Going, Going, Gone offers "surprising deals on unique finds in footwear and apparel from the brands customers have enjoyed shopping" at Dick's over the years, according to press releases at the time of their debuts.
Express Store Concept
Experimenting with a reduced square footage concept. First implemented at its King of Prussia store, it is a 45% reduction in square footage. Second-quarter sales at this store were 12% higher than in 2019.
Express is also expanding beyond the mall with smaller footprint Express Edit concept stores that offer “tightly curated and localized assortments”. There are currently five Express Edit concept stores, all under 4,500 square feet. New customers represented nearly 50% of total customers during the second quarter.
Experiences
Dick’s Sporting Goods is implementing TrackMan technology to enhance the fitting and lesson experience in over 80% of its Golf Galaxy stores. “We've also invested in talent and elevated the in-store service model to become trusted advisors for golf enthusiasts of all levels. Furthermore, we completely redesigned nearly 20 stores,” Dick Sporting Goods executives told analysts during its Aug. 25 earnings call.
In addition, some of the elements of Dick’s Sporting Goods’ House of Sport concept could potentially be implemented at Dick’s. One of them is the fitting experience and including stylists.
“More experience [such as adding rock climbing walls to some stores] seems to be working really well,” Dick’s Sporting Goods executive said in its recent earnings call.
In retailer Express’ King of Prussia store there are larger fitting rooms, call buttons for associates when customers need help from a fitting room, lounge areas outside the fitting rooms, tables, and chairs with outlets, so people can relax.
“Even though it's a smaller experience, it's a much better shopping experience,” Express executives told analysts during its Aug 25 earnings call.
Supply Chain Implications
Smaller stores typically mean less inventory. However, in a multichannel strategy, it may also mean even more frequent inventory replenishment to stores from warehouses or perhaps utilizing a DC-bypass strategy that retailer Big Lots, for example, is doing the last half of this year to expedite shipments to its stores. The key here is fast.
As many of these stores are also serving as online fulfillment locations, positioning the right inventory at the right store will be important. Hence, investing and utilizing a good inventory management system will be critical. The key here is fast.
Investments in transportation management systems will also be important as stores become not only fulfillment locations but also last-mile delivery hubs - curbside pickup, pick up in-store, same-day delivery, parcel lockers, traditional delivery to consumers’ front doors, or elsewhere. The key here is fast.
Stores will need to be proactive in their supply chain capabilities, taking advantage of data from technology systems, analyzing it to understand customers’ wants and needs. Because most customers want…..fast.
However, while store redos have been needed even before pre-pandemic days, retailers need to be mindful that their supply chains are not linear, but instead, are circular, keeping in mind sustainability practices, managing reverse logistics programs effectively and fast.
So, in closing, just in case you haven’t caught on yet, the goal for many retailers’ multichannel strategies is fast. The store redo that can reach this goal will win.
- Cathy
That’s about it for now. Thanks for reading. While I aim for a weekly story, sometimes life gets in the way, so think about subscribing (free) so that you don’t miss anything.
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Conferences:
I’ll be moderating a couple of sessions at Home Delivery World this week. Later in September, I’ll be speaking on the importance of linking middle and last miles for efficient and faster last-mile service at Parcel Forum and I’ll be speaking (virtually, but live) at LabelMaster’s Dangerous Goods Symposium on the impact of e-commerce on dangerous goods.