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Retailers need to retool in-store product mix

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As online shopping becomes more frictionless and ubiquitous, retailers with brick-and-mortar outlets need to pay more attention to the kinds of products they put in them. What do people still want to buy in a store these days?

Two recent studies suggest some answers. One of these is the latest Global Market Development Center (GMDC)|Retail Tomorrow study, done with A.T. Kearney, which found that mass retailers are losing general merchandise sales to online competitors, with GM sales in physical stores falling 3.9% in unit terms in 2018.

The study found that “chore” categories, including household products and office supplies, are seeing a faster shift to online sales. Because these are products consumers buy regularly but are not emotionally connected to, convenience and cost are paramount. The report suggests that physical retailers reduce their in-store assortment of these products.

But “shop” categories — including pet, baby and home — have seen less sales erosion. Within these categories, shoppers care about brands, value the shopping experience and hold an emotional connection to the products. The report suggests that brick-and-mortar retailers devote more space to these categories, expand assortments and deliver “out of the box” experiences (like a pet play area) for their customers.

“General merchandise isn’t dead, it’s changing,” said A.T. ­Kearney manager Jason ­Maehara. “Customers are going to different places to find GM, and retailers are adapting their approach based on customer preferences.”

A study by the NPD Group, meanwhile, looked at apparel and found that 55% of consumers say they shop in stores rather than online because they prefer to see, touch and try on clothing before they buy it. When shopping for clothing in-store, 79% of adult consumers try on the items before buying at least some of the time.

Retailers that can offer a hybrid experience, letting shoppers buy items online but pick them up, even try them on, in a store may have an even bigger advantage.

“The ability for consumers to see, touch, and try on apparel appears to be an advantage for brick-and-mortar retailers,” said NPD apparel analyst Maria Rugolo. “Now coupled with more convenient ways to shop online and pick up, consumers may be more inclined than ever to make the physical trip.”


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