Breaking Barriers: How Brick-and-Mortar Retailers can Deliver Exceptional Customer Experiences

People have been saying “Retail is dead” for several years now.

The problem is it simply isn’t true.

Multinational athletic apparel retailer Lululemon recently announced its net revenue increased 20% (on a constant dollar basis) to $2.2 billion for the second quarter of 2023 compared to the same period the prior year. Comparable store sales increased 9%, and the company’s gross margin increased to 58.8%.

Luxury behemoth LVMH reported organic revenue was up 14% in the first nine months of 2023 versus the same period in 2022; in its Q3 2023 presentation to shareholders, it cites “exceptional performance,” “continued strong global growth” and “record performance” from Sephora as a driving factor behind the performance of its Selective Retailing group, which was up a whopping 26% versus the same period the prior year.

Costco grew revenue by 6.7% and net income by 7.7% in its fiscal year 2023 (ending in September) versus 2022…which may come as no surprise to you at all if you’ve been in a Costco on a Saturday lately.

No, retail isn’t dead. Bad retail is dead.

Consumers today expect a better in-store shopping experience from brick-and-mortar retailers, and retailers that can give it to them will continue to thrive even in the face of ever-increasing convenience from online competitors.

Those that don’t are the ones that need to worry about their futures.

Lululemon, Sephora, and Costco continue to be successful in part because they understand what their customers want and use their physical spaces to over-deliver on their expectations.

And if you’re a brick-and-mortar retailer that wants Sephora-sized success, here are three things you can do to deliver the type of exceptional in-store experiences your customers expect.

Collect and Use Your In-Store Data

Retailers often have access to more information about their stores than they realize. Point-of-sale systems indicate what products are sold, but sophisticated retailers go beyond that surface-level data to better understand their customers and anticipate future needs.

For example, your sales data can tell you what day of the week and time of day stores see the heaviest foot traffic. Smart retailers use that information to ensure their stores are properly staffed during the busiest times so customers get the help they need quickly.

What products are most-often purchased together? Understanding the products shoppers tend to buy in a single basket can lead to co-merchandising opportunities that not only drive incremental sales, but also increase convenience for customers by reminding them of complimentary items they may otherwise forget to buy. Helping customers leave the store with everything they need is a key way to enhance the customer experience.

Most retailers can name their top selling items. But would they know what products could be eliminated from their shelves with a negligible impact on sales if additional space was needed for a new innovation or trending-product? Would they know what areas of the store were the least productive from a sales (or profit) perspective that could be eliminated to make room for a café, seating area or experiential exhibit that would make customers want to visit more often? The retail intelligence solutions to effectively analyze a shelf set and store layout are readily available to retailers that want to make the best use of their space.

Manage your Inventory Exceptionally Well

Online shopping has taught customers to expect near-instant gratification, and not having a product available for customers to buy when they want to buy it is the opposite of that.

Effectively managing inventory has never been an easy task for retailers. Fortunately, technology exists to help smart retailers understand what products they should sell and how much inventory they need to hold to ensure their shelves remain full, so that customers who walk into a store looking to buy something can walk out with a purchase and a smile.

Of course, no inventory management system is immune to unforeseen circumstances; your predictive analytics might indicate you need to stock 15 baby-blue sweaters in various sizes, and that may be perfectly accurate until a popular celebrity is seen wearing that sweater and eager fans rush to your store to buy everything you have in stock. What happens then? Again, technologies exist to help you identify the right products to feature on shelves and displays so you can maximize your sales while you wait for more of those baby-blue sweaters to arrive.

Managing your inventory exceptionally well has one other significant benefit for retailers: it not only helps to increase shopper satisfaction scores, but also increases profitability too. Missed sales due to inventory stockouts are a drain on revenue, unsold merchandise is a drain on cash flow, and carrying too much stock in the backroom is a waste of space that could otherwise be generating sales. Better inventory management means better business operations, period.

Localize Your Stores

Historically, retailers have used the same store layouts, product selections and featured messages throughout all of their stores.

But you wouldn’t expect to see identical menus from an Italian and an Indian restaurant, right?

Of course not; the customers visiting each restaurant would have different wants and needs, so the food available at each restaurant would need to be different to ensure everyone was happy.

Retail stores should operate on the same principle: if an optimal customer experience is your goal, the products you sell and feature in a retail store located in an Italian neighborhood shouldn’t be identical to what’s sold and featured in an Indian community, because having a more localized product selection will result in a better shopping experience for customers.

And localization isn’t just for product selection; it applies to the products you promote too: a bank advertising student loans is likely to be much more successful in branches located near college campuses than those located near retirement communities.

Using the information you have on your customers and on the areas in which your stores are located allows you to personalize the products you carry and feature, not only maximizing your odds of making a sale but also enhancing your customer’s experience.

Granted, managing the logistics of having localized inventories, displays, store layouts and promotions for each retail location in your chain isn’t easy, but it’s definitely possible when the right technology solutions are properly utilized.

Delivering Exceptional Customer Experiences

Collect and use your in-store data. Manage your inventory exceptionally well. And localize your product selection, promotions and store layouts to address your customers’ unique needs.

These may not be the most obvious answers to “How do we provide exceptional customer experiences to our in-store shoppers?,” but the very best brick-and-mortar retailers understand that doing these things well leads to greater customer satisfaction and higher sales.

It seems to be working well for Sephora.

Sam Vise is the Co-founder and CEO of Optimum Retailing, a scalable, cost-effective retail intelligence platform that multi-unit retailers use to gain the actionable insights they need for better per-store performance.