In the Digital Age, What Does It Mean to be a Merchant?
By Gina Joseph
Most of us can agree that the retail industry is in the middle of a huge transformation: Stores are
changing their footprints, consolidating, and scrambling to figure out how to keep up with the needs
and wants of the modern shopper. They’re looking for ways to seamlessly marry e-commerce with
in-store shopping to create a cohesive experience. They’re seeking the latest technologies that will help them stay ahead of trends.
But what changes will make a difference when it comes down to what’s important – sales? From a grocery point of view, consolidations in the form of mergers and acquisitions seem to be a temporary fix for a bigger issue, according to Bob Mariano, founder and former CEO of Mariano’s, a Chicago-area grocery chain known for its neighborhood shopping environment and unique customer experience.
“If we go back twenty years, there were a whole lot more CPG [companies],” he says. “Today, there’s consolidation so they can make more money and take expenses out. But nowhere is there the notion of ‘how are we going to sell more to the customer’ or ‘how are we going to leverage the intellectual property and knowledge this company has’ in order to sell more? Bolting onto other types of retail sounds good, but making it work, the devils in the details.”
The “details” come down to learning what is important to customers. In grocery, digital still has a way to go. Amazon is in the process of acquiring Whole Foods, which will help distribution for the company’s Amazon Fresh offering, among other strategic benefits. But does it mean the e-commerce powerhouse is looking to move into the brick-and-mortar space? Time will tell. Instacart, Peapod, and delivery subscriptions like Blue Apron are moving up in popularity. But most grocery shopping – especially when it comes to produce and fresh options – is still done in the store. Retailers have to figure out what changes they can make to improve customer experience before they lose ground to these online competitors.
“For most organizations, brick-and-mortar and digital are different,” says Mariano. “But it’s one customer. So, if you’re a retailer and you’re not looking at that one customer and how that customer is going to behave, you’re going to miss where you need to invest.”
That’s where merchandising meets technology. Those tasked with selling goods have to decide exactly how a store should look and feel if they want to get items off the shelves and into shopping carts. According to Mariano, who serves on the board for InContext Solutions, understanding what causes shoppers to buy more can be enhanced by innovations such as virtual reality (VR). Building out in-store concepts in VR allows retailers to immerse themselves within the space and see new concepts before they’ve been implemented. They can see how the fish, or the deli, or the meat case looks, run a test to learn how shoppers react, and then make changes on the fly based on that data.
“Imagine all those end caps and all that merchandising,” Mariano says. “If a manager can go into his or her office, throw on a set of [VR] goggles, and know the performance of each of those end caps and displays, and make a change right then and there that will benefit the customer – that will sell.”
In today’s ultra-competitive landscape – and in the age of social media – merchandising is an art form. Millennial shoppers want Instagram-ready visuals, whether it’s in a fashion retailer or wherever they buy their food. If they’re coming into a store, they want experiences that are aesthetically pleasing, and that give them an opportunity to share that experience with their friends and families. As Jim Joseph, Worldwide President of global communications firm, Cohn & Wolfe, recently told Forbes: “Millennials don’t necessarily want to go shopping in the traditional sense of browsing through stores. They don’t want to use their time that way anymore. They’d rather participate in an experience that’s adding more value to their lives.”
Whether it’s simplifying an overly-complicated display, or removing SKUs to create a more cohesive look and feel, today’s merchants need current data to back up their concepts. Making decisions based on historical data and gut-instinct aren’t going to move products and increase sales. Merchandising needs to speak to the 21st century shopper.
“You can sell cola, and stack it high and all that, but you don’t have to be a merchant to do that stuff,” Mariano says. “You want to make a bakery sweets case jump, you want the fresh fruits and vegetables to stop the customer in their tracks? Then you’ve got to be a merchant.
“I’ve learned over the years that lighting, color, feel, all matter to the customer. VR provides the opportunity to see it in a way that lets you respond to it and evaluate it. If you don’t think there’s a particular way the flow goes, there is. But is it based in fact, or fiction?”
VR gives merchants the confidence they need to make those changes based on data – quickly, and without risk, Mariano says. VR ultimately puts the customer at the center of decisions.
“The Millennials shop differently, and value things in a very different way,” he says. “I’m not sure that major retailers have gotten that yet. It will be an evolving process to make those decisions intelligently instead of emotionally. VR produces information so people can make better decisions consistently, and evaluate the value of those decisions and the quality of those decisions faster than any way I know of.”