Hello.

No really, if you are an agency principal or strategist you’ll want to read this, all the way to the end. Some things we write create a huge amount of buzz – they always will. Others are intended to strictly inform, provide perspective or give insight to a current trend. However, in this case, I’m reaching into the ol’ common sense bucket. In fact, if I was to mention I’m writing about social networks or why Groupon is a brand risk everyone in the office would jump in with ideas, opinions and buzz words. But writing about a rather overlooked and somewhat commonsense topic such as innovation within an actual bricks and mortar store, well…radio silence…check for pulse…did someone forget to refuel the DeLorean? But stick with me here, I’ll get to cover new media, don’t worry.

I’m talking about the growing brand experience gap between online retail and conventional in-store retail, you know retail centers, stores, malls, shopping districts with store fronts – actual spaces with real products. Remember those? Well apparently in the rush to build online communities retailers have forgotten them. Sure, to their credit they have made some face lifts, hired extra help, re-merchandised and even had “daily deals”. For the most part it’s minor tweaks. Noticeably, research is showing that in-store shopping is losing its edge to online shopping. A recent DataMonitor study shows that 90% of shoppers say the environment influences their day-to-day purchasing decisions. Moving to the ease of online shopping may seem like a natural retail purchase progression since we are all time starved and the cost of shopping online reduces our time expenditure. However, the real crisis, as I see it, is the online experience is most often not truly reflected in a brand’s in-store shopping experience.

There are many reasons for this, such as back of house logistics issues, front of house help, marketing silos or even lack of appropriately budgeted tactics to each segment of business. Still with me? Well think about your most recent shopping inexperience. If you’re anything like me you’re finding it increasingly difficult to part with your hard earned dollars especially in a tough economy. And you’ve probably used a combination of online and in store tactics. Whichever way shoppers make their shopping plan, there are some key things to be learned which you can share with your clients to close the gap between their online and in store experiences. Here’s how the pro’s are looking at the gap and a few keys to their success at creating a unified brand experience.

Seamless Product Inventory. Interestingly, sales are up again at Nordstrom. Latest figure quotes same store sales up 5.1%. As evidenced from my online/in store seamless shoe buying experience at Nordstrom (I bought Chukkars in case you want to know). They have worked tirelessly and invested heavily on closing the gap between the online experience and the retail store experience. Last September they opened up their inventories to be shared across the company. For example, when the customer is shopping via the website they have access to out of store inventory and vice versa. Simply stated; before when Nordstrom ran out of an item at their fulfillment center the item would automatically unpublish, eliminating that selection online. With shared inventory it stays published because they still own inventory in the stores and the customer can still buy it. One key thing is that the product (wherever it is) ships from the store that has the slowest sell thru on those items. Hence the experience online matches the in-store inventory experience and allows for a natural sell down of items instead of traditional clumps of left over items by region or store location. In the end, the customer doesn’t really know the difference and more product is sold.

This system also allows Nordstrom to drop ship in case the inventory is out at the stores. Again, the product arrives in the same time frame and the customer is unaware of where it was shipped from. From a retailer perspective it also creates less holding of inventory or money spent on dead inventory – always a plus. This inventory management also allows for a customer to use the online “pick up from the store” function and see if it is in stock at their local store. Then mosey on over to their store and check out the product. Pretty sweet way to make my online experience tie into my real world needs of efficiency into a seamless event. Remember, efficiency is important in bridging that gap. It’s making the real world experience efficient just like the online experience. And as we all know, creating loyal customers is more than just offering free parking.

One Multi-Channel Authority. In addition, consolidating the entire merchandising organization across all channels to one multi-channel team allows the team to leverage each business unit’s buying and merchandising power with others, – again, creating more efficiencies. This approach provides the merchandising team the ability to use promotional business drivers across multiple channels. For instance, the use of a GWP (Gift With Purchase) program can happen at the same time in the online and in-store channels and for the same length of time if so desired. In the case of cosmetics department inside a retailer, it allows them the realization of events across both channels. For cosmetics, their business depends a great deal upon that type of in-store activity for survival. Add the extra online support at the same time and you have solid cross channel event.

Beyond the basics of inventory control, a single channel mindset allows for consistency in advertising, marketing and sales. It keeps the hot products hot in all channels. It keeps a consistency from store to store to online. This clever consistency helps each channel support the other. A team spirit if you will.

Pop-Up Store Experiences. I know it seems like a stretch to say pop-up stores in this context. Yes, they to can help close the gap. If you think about the goals and ambitions of a pop-up store they are fairly simple: create buzz, sell product, demonstrate nimbleness and generate brand awareness. Not too far from what an online store tries to do. Still questioning it? Well here are some hard facts to ponder. Last year in the Northwest an independent toy store opened a 3,000 sq ft store space for 30 days, through November and December. Their revenue was about $210,000 for 30 days. I know, you are all saying it has to do with the time of year. And I say exactly right. That’s what you should be recommending to your clients. Like a typical online experience, take advantage of timing and easy deployment to your customer base.

I’m not aware of specific revenue figures for Target’s Bullseye Bodegas in N.Y., Gap/1969 on Robertson Ave in L.A. pop up store or Illy’s Coffee guerrilla store efforts. But, I would say that these formats are working for them on many fronts in helping them close the online and in-store experience gap. They are what you might call “planned spontaneity” – very much a similar freedom which the online channel allows its marketing managers. Many other retailers, including Bloomingdale’s and Nike, are experimenting with smaller stores as well. Think micro-site as a store front. Think of it as “nowism” – instant gratification. Think of how much easier it is to stock, market and run half the current space you have right now if you could. Remember the customer has a short attention span in both the online and in-store experiences. Reward their attention span with easy experiential treats.

Location Integration. Technology allows us to reach people in the physical world as well as the virtual world and in a unique way merge those two. The Gap recently ran a campaign coordinated with Foursquare which allowed customers to receive a discount in-store after check-ins online. The newest evolution is an online another campaign featuring Foursquare. This time the location-aware ads feature holiday fashion deals and appear on several sites including Mashable and Gawker. When the “Add to Foursquare” button is clicked, the wanted item is added to a Gap to-do list and the shopper is entitled to a 30% discount on any regular priced Gap item when they purchase in the store.

OK, that was long and a lot to ponder, but since we all have short attentions spans, here is the gist.

1. Ubiquitous Product. Apply back of house functions to the front of the house.
2. Environment Fluidity. Think of each retail location as temporary.
3. Channel Efficiency. Create efficiencies for each channel through the use of the other channel.
4. Shared Experiences. Allow customers the freedom to create and share their own experiences.
5. One Channel. Drive sales back and forth from in-store to online channels back to in-store.

Some will argue with me that recent trends and research point to the retail store experience going the way of the drive-in movie theater. I have to disagree and say that the data only points to a deficiency in a retailers efforts to make their in-store experience closer to their online experience. If a retailer has a consistent in-store and online experience you will see better results and growth in the brand as well as the bottom line no matter the economic climate. And, according to Nordstrom, the customer has spoken.

Our mortgages are underwater. Our 401(k) now stands for $4.01. Our Toyota’s seem to have a mind of their own. But we now have one less little frustration to deal with – tearing open those damn ketchup packets. Thanks to our friends in ketchup splattered lab coats at Heinz we now have a fast food revolution in condiments. Raise your fries to the new Heinz Dip & Squeeze with it’s breakthrough “dual-function” ketchup package. The ubiquitous package which had been around splattering and frustrating us since 1968 is now going the way of the McPizza.

Read the rest of this entry »