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Customer Experience

Enhancing Brick-and-Mortar Customer Experience to Compete with E-Commerce Growth

A shopper holds two shopping bags in their hand. Brick-and-mortar customer experience has become the last true differentiator for retailers.

There was a time – not so long ago – when brick-and-mortar customer experience seemed almost like a misnomer from a bygone shopping era.

The Internet was taking over retailing, it seemed, with the convenience of clicking and buying gradually overwhelming the in-store experience. COVID-19, some in the industry suspected, would deliver a potential death blow.

But physical stores have proven resilient post-pandemic and still capture the vast majority of U.S. retail sales. Yet the trend remains stubbornly consistent: e-commerce is growing at a much faster rate, according to a variety of data.

“Each year, fewer and fewer people are shopping in physical stores,” says Forbes Advisor, which tracks e-commerce statistics. “…The increase in digital orders is not just a trend. Shopping online is here to stay.”

The slowly fading fortunes of brick-and-mortar businesses makes it more imperative than ever for them to design memorable customer experiences, if only to slow the decline – and appeal to whatever portion of people will always prefer the feel of in-store shopping.

Brick-And-Mortar Sales Still Lead, But E-Commerce Is Rapidly Catching Up

Raw numbers illustrate the brick-and-mortar customer experience imperative.

After e-commerce sales massively accelerated throughout the pandemic, brick-and-mortar businesses have rebounded.

In the first quarter of 2024, for example, U.S. retail e-commerce sales were 289.2 billion – 16 percent of the 1.82 trillion in total retail sales.

But the trend is all e-commerce, which is expected to reach nine percent compound annual global growth through 2027, more than double projected brick-and-mortar growth, according to Boston Consulting Group research.

By 2027, the research shows, e-commerce will account for 41 percent of global retail sales, up from 18 percent in 2017.

Customer Experience Can Be A Challenge For Small Businesses

In-store experience is especially vital for small businesses. On one hand, they are local – owners and employees are often community members. This can be an advantage, but it also creates higher expectations to know their customers.

Small businesses also may lack the cash to pay expensive rents, manage sizeable inventory, keep prices low, and deal with customer returns. Not to mention focusing on customer experience both in-store and online.

“Our competitors have so much money and manpower to win in this game that (in-store customer experience) is a very daunting task,” said Gina Schaefer, a speaker and author who founded a chain of Ace Hardware stores in the Washington, D.C. area called A Few Cool Hardware Stores.

“The actual biggest challenge is that not enough consumers think of a brick-and-mortar option or small/local option for their purchases – either in store or online,” Schaefer said in an interview with The Experience Maker.

Small Business Brick-And-Mortar Customer Experience Examples

For those who do shop in person, Schaefer identified nailsaloon – a small “nail salon and cocktail parlor” chain in the D.C. area – as an example of memorable customer experience for brick-and-mortar businesses. “Their signage is witty, they serve drinks (with or without alcohol) and provide a very organic product and environment for their clients,” Schaefer said.

She also cited Upstairs on 7th, a Washington, D.C. women’s clothing boutique that supplements its products by hosting a regular sold-out speaker series featuring authors and journalists.

“The impact is felt in the intimate camaraderie that is fostered among the guests,” Schaefer said.  “I have been introduced to judges, attorneys, the woman who ran Bono’s foundation and so many cool people by attending. We all shop during the events but more importantly, we make friends.”

A La Croix sparking water display features boxes stacked into an image of a sun. It's an example of a brick-and-mortar customer experience that stands out from the mundane among grocery stores.

At Wisconsin-based Woodman’s Market grocery store, the La Croix sparkling water display recently stood out for its impeccably organized row upon row of packaged water, accented by a large, sunglass-clad smiley face that store employees had drawn over the display.

It was a great example of an unexpected and fun customer experience, designed mainly to make shoppers smile (and, yes, buy more sparkling water).

Small Business Becomes Big Business

Mattress retailer Casper also started small, as an online startup launched in 2014 to challenge well-known competitors like Mattress Firm and Sleepy’s.

Casper opened its first physical store in 2018, and the venture out of cyberspace proved so successful that the company recently unveiled a redesigned store in California that is a model of in-store experience.

It features a “snooze bar” – where customers can quiz employees about the best mattresses or pillows based on their personal lifestyles – along with a “pillow lab” to test Casper products and a “bunkhouse getaway” for kids.

“We want to be wherever the consumer wants to be able to buy our products,” a Casper executive explained.

Large Brick-and-Mortar Businesses Also Emphasize Customer Experience

Bigger brands are also amping up in-store experience.

With its bright murals, ultra-friendly employees, and unique products, Trader Joe’s remains a haven for “unbeatable” experience. Kids are even treated to a scavenger hunt while their parents shop.

Apple, already considered to boast an “insanely great” in-store experience, is now pushing the concept even further with a new generation of stores rebranded as “town squares.”

The first one, in San Francisco, features a 42-foot-tall sliding glass door at the entrance, a 50-foot video wall inside, and the feel of a community meeting place.

“Today, consumers want more from a location than the simple opportunity to buy something off the shelf. They want experiences,” read one description of the new concept.

LEGO unveiled a new “retailtainment” concept at its New York City flagship store, calling it “the future of experiential retail.” The store includes a Brick Lab, an interactive brick-building experience featuring a virtual world of light, sound, and music. It also boasts a Tree of Discovery made from 880,000 LEGO elements – with a “a magical wonderland hidden inside the tree through windows in its rainbow trunk.”

Activewear brand Fabletics is making smart use of the latest technology to enhance the in-store experience. iPads are placed outside and inside customer fitting rooms, with each item the customer wants to try on scanned and added to the customer’s online profile. Sales associates use an iPad outside the fitting room to communicate with the customer, eliminating the “awkward peaking outside of your change room to find a sales associate to assist you.”

How Will AI Impact Brick-And-Mortar Retailers?

Artificial intelligence, or AI, is rapidly impacting shopping experiences online, which will invariably seep into the in-store experience.

AI can crunch tons of customer data to provide more personalized experiences. Retailers, especially those with loyalty programs, already capture shopping data and can now use it to proactively share new products or offer special discounts to select customers.

“Personalized customer experiences have unequivocally become the basis for competitive advantage,” says the Harvard Business Review. “Personalization now goes far beyond getting customers’ names right in advertising pitches… It is the design target for every physical and virtual touch-point, and it is increasingly powered by AI.”

Expect AI to continue to generate new ideas for customer experience enhancements. In fact, you can test out a beta version of Little CX Ideas™ by The Experience Maker by asking it to give you some ideas for your industry.

It will also play a role in implementing those ideas, both by recommending detailed action items and taking care of mundane tasks to free up employees to spend more face time with customers.

Conclusion

In an environment where competing on price is a losing game, especially for small businesses, customer experience can be the last true differentiator. But it doesn’t have to be expensive, operationally complex, or reliant on technology.

Often, it’s the little things that resonate most with customers (hence, Little CX Ideas™). The quickest way to someone’s heart is through their kids or their pets, so that’s always a good place to start.

Retailers big and small are focusing more on clienteling, the process of building relationships between sales associates and customers through personalized service. Combined with new technology, clienteling allows retailers to better understand their customers’ needs and preferences, create tailored experiences, and strengthen customer loyalty.

Most importantly, today’s customers want an experience while shopping, and will reward retailers who provide it with their long-term loyalty.

Photo by Jacek Dylag on Unsplash (a brand name on the bag has been deleted).

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