On Wednesday, two major department chains announced plans to shutter a large number of stores; Sears Holdings will close nearly 150 Kmart and Sears outlets, while Macy’s plans to shut 68 stores by the middle of 2017.
To panelists discussing the future of retail at CES in Las Vegas on Thursday, the news was hardly surprising. Even when it comes to everyday items like groceries, e-commerce sites like Amazon are attracting more people than brick-and-mortars. But, advertising execs in retail are far from rejecting digital technology. In fact, brands like Clorox say they are expanding their digital footprints to better reach consumers where they shop and, as numbers show, that is not in stores.
"Ultimately, we don’t care how or where consumers get our products," said Sarah Ortman, national associate director at Clorox, at OMD’s annual Oasis conference at the tech showcase. "We just want to be where they are."
The sorry state of the retail industry and how marketers can leverage nontraditional channels in the age of digital commerce was debated on a panel called "From the Flagship Store to the Future of Retail—the Right Technology for the Right Context," where Ortman was joined by Alastair Cotterill, global head of creative and brand strategy at Pinterest; Doug Zarkin, CMO of Pearle Vision; Brian Sugar, founder and CEO of Popsugar; Adam Kmiec, senior director of mobile, social, content and performance marketing at Walgreens; and Joe Scartz, managing director of digital commerce and integration at TPN. The panel was moderated by OMD managing director Julie Fleischer.
"The downfall of retail is because it has become commoditized," said Scartz. "Why a location goes out of business, whether it is big or small, is because people in the community fail to see a reason for it to be." "Ultimately, what has happened to print, is what is happening in retail," added Sugar.
For the first time, consumers said they made more purchases online last year than in stores. According to a June 2016 ComScore survey, shoppers made 51 percent of their purchases on the web in 2016, up from 48 percent in 2015.
Pearle Vision’s Zarkin said brands are taking notice. They are starting to "realize that a store is a 3D representation of brand products and if you cannot deliver it, don’t open it," he said. "This infusion of technology is forcing us to be very introspective and think about where our investments should be."
Clorox, for instance, is expanding its digital reach. While most of the company’s products are still sold through traditional retailers like Walgreens or Walmart, according to Ortman, it is also investing in e-commerce sites. For instance, instead of placing a small brand of Asian marinades and sauces, Soy Vay, in retail stores, the company decided to partner with a meal delivery service called Chef’d. "If that’s the first time you try Soy Vay and you love it, we’re so happy. You didn’t have to go through a traditional channel," said Ortman. It’s an approach that the company will nurture in 2017, she added. "There’s so many disrupters out there, one of our biggest challenges this year is how do we place our bets and organize our marketing around this?"
Still, advertisers continue to miss a large opportunity online, said Pinterest’s Alastair. The social network has been experimenting with buy buttons on posts since 2015. A number of other social networks—like Instagram—have also added more shopping capabilities.
"What we are trying to build is a catalog of these ideas that help people go from inspiration to action, which includes clicking through and buying online," said Alastair, of the beta program. "There’s an opportunity for any brand to inspire people to do something with their brand. Whether people choose to go to a transaction store or online it’s really up to them."
As Zarkin said, "It’s incredibly arrogant to sit back and think they are going to come to you and you don’t have to come to them."