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Profitable Times Newsletter

Industry Trends: The Merchandising and Functionality of Now!

As we head into a new year, is there a common theme among retail industry trends? Well, it isn't part of every trend, but variations on "now" are certainly part of many. The customer, rather than the retailer, is clearly becoming more in charge by buying when they want, any day of the week, and any time of day. Let's look at some examples.

There is already some movement toward more local fulfillment, not just product selection, being a competitive point. During the year-end holidays at the Portland, Oregon, Nordstrom store, approximately 300 square feet was committed to shopping bags full of products ready for free, local, and immediate pick-up by customers who ordered online, through the catalog, or simply over the phone directly to the store.

On January 18, Intel announced that they are going to invest $100M over five years in the Intel Responsive Retail Platform to provide "in-the-moment information about what customers are buying, what they want and how to manage inventory so it arrives just in time for customers to take it home."

So what do these trends mean for museum stores? Facilitating "now" shopping is also becoming more critical because it can actually be executed and some segments of the competition are already incorporating it. Perhaps this will lead to purchase opportunities as visitors move through the museum. For example, they may be able to instantly add items to a virtual shopping cart as they perceive the desire — not just at the end of the visit.

In reality, a form of "now" has been a part of the museum store experience for decades. The nonprofit retail world knows that facilitating a "now" purchase is critical to building incremental sales. Incremental revenue would be diminished if more time elapsed between the enjoyment and stimulation of an exhibition and when that enthusiasm is translated into a purchase. Special exhibitions and exit and pop-up shops can not only feature a compelling, focused product selection, but they can also deliver the selection at the moment the visitor's interest may be keenest.

For museum stores, the timing of this kind of product presentation helps to reduce comparative shopping by encouraging and then facilitating an immediate purchase. Many believe museum store book sales have been hurt less than the category in general because mission and exhibition-related books are available during or immediately after the museum experience.

Still, part of the challenge of the "now" buying experience is that the store's customers are also customers of other retail venues that may be moving toward or facilitating "now" purchases faster and better than nonprofit retail outlets. As the digital buying experience, across multiple platforms, becomes more exciting and accessible, museum stores will have to keep up to be relevant. It may turn out that a brick-and-mortar presence will be the least expensive to maintain (when electronic sales include incremental personnel, free shipping, packing materials, and some extra marketing) just as it becomes the least relevant to the buying public.

At the same time, however, because the museum is delivering customers with a known common interest via exhibitions, special events, classes, and other means into a physical presence that has limited immediate competition, museum stores could flourish so long as they are able to execute the "now" transaction well. With luck, this may also help push integrated point-of-sale software companies to develop better retail components so an extended relationship can be built with the customer.

"Now" is also important from a functional perspective. The use of point-of-sale handheld devices and self checkout can expedite the buying process when the customer is ready. A long held retail adage is "when the customer is ready to go, the customer is ready to go!" The store must facilitate that desire.

Because of the communal relationship between the museum visitor and the store at that point of "now" and as the technology of buying makes shopping easier, museum stores may have more influence on the customer at a critical decision point than other retail venues.

A couple additional trend comments:

  • Branding looks to become more important as a way to bond with the customer. In the nonprofit retail world, making sure the consumer knows the revenue generated through the store directly helps the institution further strengthens the bond.
  • In-store brand concessions are being expanded to help reduce inventories; however, it is a retail trend that can be difficult to execute in museum stores because of the desire and UBIT requirement for mission-driven product selections. A bookseller could take over stocking books, but such an arrangement will be less attractive because of the focus on mission-related titles rather than hard and soft cover, fiction and nonfiction bestsellers. Similarly, a greeting card concession will not be able to stock the cards with the best-selling sentiments for holidays but may, for example, for a botanical garden, only be allowed those with botanical themes. Also, only a relatively small percentage of museum stores are big enough in both physical size and sales to make a partnership profitable.

So what's the takeaway? Will museum stores disappear if they don't keep up? Probably not, but maximizing the retail opportunity will become harder. The overriding question is how can museum stores retain their piece of the retail pie at that critical "now" point?

 
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