THE JOURNEY YO REMARKABLE RETAIL
Steve helps organizations understand and respond to retail disruption by creating customer-centric, memorable and profitable growth strategies.
Ulta and Sephora keep defying the ‘retail apocalypse’
It seems like more and more brands didn’t get the ‘retail apocalypse’ memo. As many in the media shout “bring out your dead,” it turns out quite a few major retailers keep cruising along despite being heavily invested in physical stores.
Sephora, which already has more than 1,100 locations (free-standing and within JC Penney stores), recently announced plans to open 35 new stores this year. As part of LVMH, the beauty retailer’s details are not broken out, but its continued strength in both physical and digital channels is often highlighted in its parent company’s reports.
On the heels of Sephora’s news Ulta Beauty’s shares climbed as the retailer beat on earnings and announced stellar same-store sales growth of 9.4%. The company expects to open roughly 75 new stores each of the next three years.
So amidst all the doom and gloom, what exactly is going on here? We know that the pockets of strength in brick-and-mortar dominant retail are not isolated to the beauty category. In fact, the majority of the 2,400 new stores already announced for the United States this year are in other sectors. So at one level many of the doomsayer pundits simply have their facts wrong. Physical retail continues to grow. Malls aren’t all going away. Thousands of brick-and-mortar stores will open for years to come. The real issue is that the difference between the have’s and have not’s is widening, and merely being good enough no longer is.
As we should know by now, talking about averages and making sweeping statements about entire industries is, at best, misleading and often next to useless. While physical retail is growing far more slowly than online shopping, that does not automatically spell doom for brands that are deeply invested in actual stores as Ulta, Sephora and dozens of others continue to prove. So what allows these brands to thrive?
Below I highlight a few areas that map against some of my 8 Essentials of Remarkable Retail.
1. Eschew the boring middle. Most of the retailers that are in trouble are stuck in the middle, neither offering strong value and convenience, nor offering anything unique and truly experiential. Ulta and Sephora knew they could not out Amazon Amazon, so they chose to be more remarkable in other ways.
2. Harmonize shopping. Both brands have embraced the blur between digital and physical channels and have worked hard to root out the friction in the customer journey. More importantly, they “amplify the wow” by providing value-added services, including mobile apps that customers truly love (both brands have 4.9 ratings).
3. Become digitally-enabled and human-centered. Ulta and Sephora are both leaders in using digital marketing channels and leveraging technology to be more effective and efficient. Yet they also know that people buy from people and do a great job of balancing technology and customer service delivered by good old sales associates.
4. Get personal. Increasingly brands that treat different customers differently are standing out. Ulta has begun leveraging its loyalty program data to enhance the relevance of their targeted offerings. Sephora has long been a leader in personalization, particularly with features built in to its industry leading app.
5. Deliver a memorable experience. Both brands do a good job demonstrating that you don’t have to be ultra high-end to be remarkable. But you do have to be intensely customer relevant, offer unique products and services (see Ulta’s Kylie Jenner partnership), provide a distinctive environment and execute flawlessly.
Physical retail isn’t dead. But it certainly is—and will continue to be—very different. For brands that seek to embark on a journey from boring to remarkable there is plenty of nonsense to ignore. But there are also many excellent examples of retailers that could have been crushed by Amazon or the other forces of digital disruption and instead have not only survived, but are doing quite well.
A version of this story appeared at Forbes, where I am a retail contributor. You can check out more of my posts and follow me here.
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