We’ve all heard it in the news: Brick and mortar retail is dead and e-commerce is king. Despite the growing popularity and prevalence of e-commerce, brick and mortar is not dead and far from it.
If you want proof, look no further than Amazon, the king of ecommerce, spending $13 billion to acquire 470 brick and mortar locations in their acquisition of Whole Foods.
Today’s retail shift is driven primarily by the consumer. Their expectations are changing; they want a personalized experience paired with immediate access to buy the products that they need.
Ecommerce isn’t killing stores. Instead, a store’s inability to adapt to rising consumer expectations leads to failure. Even Amazon recognizes the importance of brick and mortar when it pertains to the customer experience.
So, how can you respond to this shift? I’m going to give an example.
Ann Arbor Running Co. Leads by Example
On August 4, 2014 Ian Forsyth and Nicholas Stanko opened an independent running store in the heart of Ann Arbor, Michigan.
Both owners have been part of the Michigan running community since the mid-90s and wanted their business to give back to the sport they love.
After 3 years, facing competition from ecommerce and an oversaturated market, they defied the odds by opening their second location.
Ann Arbor Running Co. is expanding despite the record number of store closures. They are fighting back by focusing on data-driven retail and applying the data in a way that creates a great experience for their customers.
So, how can you take similar action? What data should you be applying?
Simply put: It costs 6-7 times as much to acquire new customers as it does to maintain your current customer base.
If you focus on growing your sales revenue through your current customers, you will see a direct impact on your profitability. When aiming to grow your store, evaluate these three key indicators:
- Items per transaction
- Dollars per transaction
- Customer purchase frequency
An increase in any of these measurables will show you how well you are using your customer purchase history and sales data to merchandise your store with the product your customer wants and having it available when they want it. They can also tell you how effective your sales staff is at engaging your customers and creating a unique a personalized experience that separates you in the marketplace.
Using Data is Ann Arbor Running’s Weapon of Choice
Ann Arbor’s ability to examine their inventory performance metrics and apply it to their buying strategy has been key to their success. By using data to justify their business decisions and engage with their customers, they’ve seen the following results:
TOTAL PROFIT INCREASE $119,934
19% ROI Increase
Increase Inventory Turn From 3.2 to 3.5
“My business partner and I weren’t huge number guys. But as we started to use RICS, they helped us digest our data and make sense of it,” Nicholas Stanko, Co-Owner of Ann Arbor Running Co., said. “We were able to open a second location because of the demand that we saw.”
Our recent webinar, Make More Money: How To Turn Your Buyer Into An Investor, focused on Ann Arbor’s process to establish a best practice buying strategy. To learn their process, watch the webinar below.
So, you know data is important but how can you gain access to the right data? A POS and inventory management system will help you gain “an immediate, accurate assessment of your inventory.”
According to Intuit market research, by using an affordable, integrated POS system, an independent retailer with revenue of $300,000 can cut costs nearly 10 percent. That’s a substantial return on an investment.