In today’s economy, it is imperative that a business stay nimble and grounded. The most successful business will display the ability to plan for the future while not losing sight of lessons from the past. As the online store front becomes a staple for many businesses, the role of traditional brick and mortar stores are undergoing a significant change.
Here are a few ways the retail space is changing and a few advantages and disadvantages of each.
1) The Showroom – This is no longer just for furniture and cars. If your business sells things, people want to see them, touch them and typically try them out. Think Apple Stores and anywhere that offers samples.
Advantages of the showroom: People can touch and use the items prior to purchase. This also allows you to be more hands-on with a customer and create a personal bond with them. Business to person is taking place of business to consumer.
Disadvantages of a showroom: If you are not the only retailer of the product they may test it at your store and then buy it from somewhere else. This can be avoided by price matching and other incentives for in-store purchase.
2) Sub-leasing space – This is when you can take part of your space and add a business within your business. Think franchised coffee shop inside a grocery store.
Advantages of sub-leasing space: Income that doesn’t depend on customer purchases. The sub-tenant will be responsible for paying their rent no matter if they get one or 100 customers per day.
Disadvantages of sub-leasing space: The space is lost for the term of the lease. If your inventory expands you cannot recapture that space that is being rented.
3) Break out into smaller pieces – Set up small, nimble stores and hubs that will allow you to move a large amount of inventory in a very specific part of your business. Think Toys R’ US breakout stores in years’ past.
Advantages of break out stores: Allows you to promote small, highly profitable sectors of your business at convenient locations for specified times.
Disadvantages of break out stores: Pulls people away from your main location where impulse buys may add to total bill with full inventory available.
4) Make your inventory unique and allow for online shopping at your retail location – Companies that have a unique item assortment can leverage an online presence within their brick and mortar stores. (Think Best Buy.)
Advantages of unique inventory: In the store the customer can see and try out the product while having additional options via the online store. For example, a customer can enter an electronics store and test a new camera and then decide if they want to purchase the store inventory (typically a best-selling color of the product) or if they would like to order from the online inventory (sometimes the manufacturer will allow certain businesses to offer a customized color or package only available via the online store).
Disadvantages of unique inventory: Fairly minimal although you can run into many of the same issues as the showroom store with testing at your store and then purchasing from a different retailer if the items are not truly unique. If there are other comparable items in the market the customer may test at your store and decide on a different non-store specific model.
Once again, these are just a few newer and developing changes in the retail market and some general advantages and disadvantages of each.