Declining retail traffic is not necessarily bad

February 08, 2018

January 22/29, 2018: Volume 33, Issue 6

By Ken Ryan

 

For all the efforts to increase store traffic through search engine optimization and other lead generation tools, the consensus is that fewer customers are walking into flooring retail stores today than they did five years ago—a trend that is likely to continue, observers say.

This is true across all segments of brick-and-mortar retail. Despite the fact roughly 90% of all retail transactions are still done in physical stores, the growth of e-commerce and the resulting drop in store traffic is undeniable.

While that news sounds troubling, it might not be such a bad thing, observers say. The reason: while fewer people are visiting stores, those who do are more than likely in the market for flooring and have done copious amounts of research online. “I would say I have fewer customers today than I did five years ago,” said Tim Jacobi, owner of Jacobi Carpet One Floor & Home in Hastings, Neb. “But my average ticket price is higher than it was five years ago.”

Most flooring dealers would gladly trade quality for quantity if it results in greater revenue. As Chris Kemp, owner of Kemp’s Dalton West Flooring, Newnan, Ga., put it, “If we can just get them into our showroom they are our customers to win or lose.”

Experts say it is crucial for brick-and-mortar retailers to create a memorable customer experience. That’s what Gerry Holden is trying to achieve in his three-pronged strategy to entice customers to his Flooring America store in London, Ontario, Canada. “First, you can no longer just put in a bunch of different supplier displays and hope mass selection works,” he explained. “You must build a shopping experience for the customer. You display less but you display better with larger samples installed on the floor. This way the customer can see what it will look like and they can’t get this anywhere else.

“Second, you need to offer more things they need for their renovation—non-flooring products like paint, vanities, sinks, kitchens, window coverings,” Holden continued. “Make yourself a one-stop shop as much as possible. Third—and most important—private label everything. Brand names are [detrimental] for a retailer when it comes to the Internet. You have to make it tough for your competitors to figure out what your products are.”

Eric Langan, CEO of the nine-store Carpetland USA in Davenport, Iowa, said declining floor traffic coupled with the changing buying habits of today’s consumer puts flooring retailers in a challenging spot. Despite this he still feels he has leverage. “There is still a need and want for the brick-and-mortar stores and the goods and services they provide. The flooring purchase is a significant one, and there is a lot that goes into making that buying decision as well as the execution of the installation, if needed. I feel some consumers will buy flooring online and not be concerned with the process at all.  However, I believe the majority of consumers still want to see, touch and feel the product prior to purchase and surely want to deal with a person directly in regard to scheduling and performing the installation.”

While technology is being implemented to help drive traffic into stores, it has also allowed consumers to stay at home and research products, in addition to virtually designing their spaces. From the applications of these tools many shoppers know flooring options early in the process, in addition to how selections will look in their homes and the associated costs before they ever enter stores. To be part of the solution, flooring dealers are using new means to be more efficient (i.e., laser measuring/electronic blueprint estimating, mobile credit card readers). “We have to be experts and we have to be ready to assist customers in completing the project because many of them know what they want, how it will look [in their homes] and what it will cost before they arrive in our showroom,” said Carlton Billingsley, owner of Floors and More, Benton, Ark.

Not everyone agrees that store traffic is down or that it even matters. Although consumers today gather information and determine their options online before they ever venture into stores, at the end of the day they still trust a more personable interaction when purchasing large-ticket items. That’s according to Bobby Merideth, president of Flooring America OKC in Oklahoma City, who said Apple and Microsoft can serve as perfect examples. “Both corporations sell devices that are poster-child products for being sold online, and yet both corporations are building retail stores to allow the end user to experience their respective technologies. We, as flooring retailers, need to move away from simply displaying flooring options and allow the consumer to experience flooring in her home. Adopting technologies such as virtual reality may be one way of creating such an experience.”

Better-trained RSAs
Declining store traffic usually portends a drop in revenue for stores; however, those sales associates who are able to convert customers and upsell them will become the retail rock stars going forward. The Vertical Connection Carpet One in Columbia, Md., is one such dealer placing greater emphasis on training. “In the short term, we’re focused on increasing close rates and order size,” said Adam Joss, co-owner. “This allows us to grow in the face of less walk-in traffic. Additionally, we look to take advantage of every opportunity, whether that’s meeting someone outside of the store, a phone call coming in or any other type of interaction. Long term, it’s no secret that e-commerce will be a common way to shop.”

The way Josh Elder of Gainesville CarpetsPlus Color Tile in Florida sees it, while online shoppers are impacting the flooring business like never before, they still need to touch and feel the samples. And, ultimately, they will require professional installation for their carpet or vinyl. To that end, his salespeople work to bridge the gap between online and physical retail. “My RSAs do a great job of contacting those online customers and offering free in-home estimates. They will take the sample selected online along with some other options to the homeowner when we go there to measure. What I find interesting is more than 50% of the time the homeowner selects something different than the one she chose online. The majority of the time [the customer] will also make a trip to my showroom, which I update quarterly, to look at more options after meeting with my RSA. I think as technology continues to improve it will be harder for my RSAs. I am looking into and working on changing my e-commerce business to make us more prepared [for the future].”

Lighter store traffic in an omni-channel retail world has flooring retailers like Kevin Rose also wondering how to effectively allocate marketing dollars. As the owner of Carpetland USA, Rockford, Ill., he knows traditional methods no longer apply.

“The most successful retail companies spend 8%- 10% of their gross sales on marketing to bring that client in the front door; therefore, fewer customers is always a concern. Having said that, the retail landscape is changing at a dramatic rate and we must change with it—or we perish.”

 

Busting brick-mortar vs. online myth
For all the talk about staggering declines in foot traffic at physical retail stores in the face of sharp increases in online shopping, hard evidence suggests there’s no cause for alarm. According to a recent business.com article, 94% of all retail sales in the U.S. still take place in a physical store. Another sobering statistic: 1.1 million brick-and-mortar retail locations in the U.S. generate a whopping $3.9 trillion in annual sales.

By that same token, a growing legion of online shoppers prefers the flexibility of being able to shop anytime or anywhere thanks to the bevy of mobile devices available today. Stats provided by business.com show online shoppers generate $294 billion in annual sales. (Online shopping this past holiday season alone grew 17% over last year, research shows.)

The good news for retailers of big-ticket home furnishing items (i.e., furniture, appliances, cabinetry and, yes, flooring) is the online platform doesn’t always lend itself to these categories. For some items, it seems, consumers still prefer the tactile experience.

If there’s one area where brick-and-mortar stores need to improve, research shows, it’s customer service. Studies across various channels and end markets continue to show consumers value the total retail “experience” over price and even product quality, in some cases. In other words, it’s how the retailer makes Mrs. Consumer feel. At the same time, physical retailers are integrating their online marketing strategies with in-store merchandising and educational initiatives. Bottom line: Both physical and online can co-exist.

 

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