A few days ago, my family and I were shopping at a well-known brick and mortar chain, looking for a phone holder for our car, since ours had recently broken. When we got to the aisle where we had previously found it, we discovered that it was out-of-stock. We were disappointed, but not necessarily discouraged. We actually were not that surprised to find that the store didn’t have the inventory to serve us.
And so, instead of asking an employee for help, the first, and only, words that passed between me and my husband were, “Amazon?” . . . “Yeah, Amazon.”
This says something important about how much our shopping habits have changed; after finding an out-of stock item we now immediately go to an online marketplace rather than seek out an employee for assistance.
Out of Stock? Out of Luck.
Interestingly, our response to out-of-stock items is now standard across America. According to a recent consumer research study by IHL (Out of Stock, Out of Luck), a customer will only ask a store associate for help finding an item 17% of the time. That means that 83% of the time they leave unsatisfied. Additionally, like my husband and I, 29% of Amazon Prime Members and 17% of nonmembers will simply buy a product online when they can’t find it in a store. The fact that it is often easier for a consumer to obtain a product through an online market rather than the store they are standing in presents a significant challenge for brick and mortar supply chains.
These types of out-of-stock issues are a huge reason that business is booming for ecommerce marketplaces. Again, according to IHL, “upwards of 24% of Amazon’s current retail revenue comes from customers who first tried to buy [a] product in-store.” I.e, close to a quarter of their revenue comes from supply chain fails in brick and mortar stores.
We’d Love to Help But . . .
Consumers are not the only ones frustrated with issues arising from out of date brick and mortar supply chains–store employees are often frustrated as well.
A few years ago, I worked at a chain of stores in the Midwest. There were many customer situations I couldn’t fix simply because we didn’t have the technology to help. The Point of Sales system (POS) we worked with was so old it could do nothing but ring up purchases. We could not view inventory nor apply discounts easily. On top of that, the only inventory we had was on the floor. The inventory in the back consisted of items we couldn’t sell, but couldn’t leave on the shelves. So, they sat in the back like an island of misfit toys.
The inventory on the floor was, therefore, all we had access to. That meant for each style of clothing we had only one XL, one L, one M, one S, and one XS–if any one of these was sold out, our POS was supposed to detect it and tell the supplier we needed another. That’s what it was supposed to do. However, our POS was–as a different reading of the acronym itself suggests–less than desirable to work with.
Once something was sold, we could only wait for a replacement–we couldn’t make requests. If a customer asked about obtaining the right size/style of clothing, we could check to see if another store had it by calling them, but we could not view their inventory ourselves. If an item was found in another store, it could be placed on hold for the customer to go pick up. But, like my husband and I, most customers were more inclined to use Amazon to satisfy their needs.
We could direct customers to the online store, but the online store and the physical store were completely separate, meaning we couldn’t order or check stock for a customer. And many customers, if told to go online by themselves, would rather check out an online marketplace they know will have their product (ahem, Amazon) rather than search a site that may have their product.
This inability to ‘save the sale’ is a major issue for brick and mortar stores and shows itself in both revenue statistics as well as bad customer and employee experiences like the ones I’ve related.
Great Supply Chains Support Great Customer Experiences
Not all businesses are suffering, however. Some brick and mortar stores have managed to renovate their supply chains to keep, and even grow their profits. One such business is Nordstrom, a store that my mother-in-law is devoted to for good reason.
My mother-in-law is an avid shopper both online and in person. She lives in the middle of nowhere and therefore has accounts with countless online marketplaces to avoid hours of driving for physical shopping. She could easily do all of her shopping from the comfort of her home, but, there are a few places she prefers to visit in person because they have satisfied her in a way an online marketplace can’t–hence her love of Nordstrom.
She, like many people, has trouble finding clothes that fit her body shape. But, by being a physical customer and Nordstrom member, Nordstrom offers free alterations, meaning they tailor her clothes for free and ship her items straight to her door.
She gets exactly what she wants when she goes into one of their stores and when she can’t take something home immediately (tailoring or out-of-stock issues) she gets her items delivered directly to her, even in the middle of nowhere. No amount of online convenience can replace the kind of satisfaction and service she gets by being a live customer at Nordstrom.
That’s exactly the type of experience that needs to be repeated everywhere if brick and mortar stores want to succeed. Such customer service successes show how it is possible for traditional retail chains to retain customers and thrive in an ecommerce dominated future. It’s all about (1) getting your supply chain up to speed and (2) offering a unique selling proposition that would make customers want to come to a physical store and shop.
Nordstrom and other large chains such as Best Buy have been able to do so and this trend of modernizing supply chains to create great in-store experiences will be the saving grace of physical retail. That’s a lesson that even ecommerce giants such as Amazon and Wayfair are beginning to understand and it’s leading them to open their own brick and mortar stores.
Some experiences just can’t be virtualized.