Emotional, Experiential Ties Drive Brick-and-Mortar GM Sales: Study

Even as online retailers seize a bigger share of many general merchandise (GM) categories, brick-and-mortar stores can stay competitive by evaluating their GM strategies on a category-by-category, platform-by-platform and customer-segmentation basis so as to fine-tune their offerings, according to the “2019 GMDC|Retail Tomorrow General Merchandise Benchmarking Study,” an annual industry report from Global Market Development Center (GMDC)|Retail Tomorrow in partnership with global management consulting firm A.T. Kearney.

The study, which surveyed 100-plus GM retailers, was released at the recent GMDC|Retail Tomorrow 2019 General Merchandise Conference.

GM sales at physical retailers continued to face challenges in 2018, with unit sales falling 3.9 percent and average prices rising 2.4 percent, the research found. Grocers slowed their decline in GM sales from the previous year, while drug stores remained the fastest-declining retailers.

The report identified key opportunities for physical retailers to leverage GM in the categories that grew in 2018. Automotive, pet and hardware categories all increased sales over two consecutive years, while apparel, baby, toys and electrical appliances actually reversed the downward trend.

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

The research uncovered areas of growth relating to several trends currently affecting GM. In general, retailers are seeing a division in the way consumers buy GM products based on the items’ emotional and experiential relevance. Based on this finding, the study separates GM sales into two categories, urging physical retailers to better understand their customers so as to better meet their needs:

• “Chore” categories: These categories, including household products and office supplies, are rapidly migrating online, as they’re recurring purchases and customers have few emotional ties to them, being instead driven by convenience and competitive cost. To better perform in these categories, the report shows physical retailers should reduce in-store assortment to feature products targeting each store’s distinct shoppers, provide customer-driven pricing and promotions, and reorient plans for display.
• “Shop” categories: These categories, among them pet, baby and home, have experienced less erosion. Shoppers place great emphasis on brands, value the shopping experience and hold an emotional connection to these categories’ products. To make the most of these growth opportunities, brick-and-mortar retailers can generate additional space devoted to such categories, expand assortment and deliver “out-of-the-box” experiences for customers, like a pet play area.

“At GMDC|Retail Tomorrow, we pride ourselves in giving retailers access to fact-based, consumer-focused insights that help them to make informed decisions, leading to sustainable and profitable growth,” said Patrick Spear, president and CEO of Colorado Springs, Colo.-based GMDC|Retail Tomorrow. “We help our members focus on the three building blocks of experiential retail: curated offering, emotional connection and engagement.”