If You Can’t Beat ’Em, Adapt With ’Em: Regional, Specialty Retailers Pivot Along With Big-Box Rivals

The full impact of the coronavirus pandemic on retailers might not be known for years, but it is already clear that the industry has been transformed, top to bottom. The very largest players, such as Walmart and Target, have been busy reinventing their e-commerce operations, keeping pace with emerging consumer tech and improving operational efficiencies, among other strategies.

The giants aren't alone. The next few tiers of retailers, including regional and local chains and major specialty retailers, are likewise adapting to the new realities shaped by the pandemic, much as their larger competitors. Pandemic or not, retail has always been a game of adapt or die.

"Our connected commerce strategy is increasingly enabling more consumers to shop with us whenever, however and wherever they want," Signet Jewelers CEO Gina Drosos said during the company's most recent earnings call in early September, referring to the changes it has made to facilitate online sales.

The company began overhauling itself even before the pandemic, a process that involved not only store closures but also a pivot to online sales, which has proved a winning strategy as consumers have become more comfortable with buying jewelry online.

During the second quarter of 2021, total revenue for Signet, whose brands in the United States include Zales, Kay Jewelers and Jared, was nearly $425M higher than the same quarter in 2019, despite the fact that the company trimmed 450 of its stores during that period, a 16% reduction.

"This performance points to the importance of both connected commerce and our store footprint optimization," Drosos said. 

The company has also integrated its physical stores with advanced digital capabilities, such as conversational messaging and virtual try-ons, as well as online ordering and in-store pickup and curbside options. In August, the company launched banter.com, a mobile-first site.

"The target customer is digitally savvy and most likely to shop from their mobile device," Drosos said. "Results of this new site are still very early but encouraging."

Signet's emphasis on online transactions and the integration of physical and digital is similar to the evolving techniques of the largest retailers, such as Walmart. Even before the pandemic, that company built a platform to allow customers to shop on its website, but also via mobile apps as more people carried smartphones.

A different retailer strategy — one that doesn't involve closing stores — is to not let up on growth of physical stores while at the same time expanding digital services. In June, Meijer, most of whose hypermarket stores are in the Great Lakes region, opened two 155K SF stores, one each in Indiana and Ohio.  

"These new stores reinforce our ongoing commitment to serving the needs of communities at a time when everyone is looking for a one-stop shopping experience," Meijer President and CEO Rick Keyes said in a statement.

The new stores feature Shop & Scan, which lets shoppers scan bar codes via a mobile app and thus bag their items as they shop, which is available at some other Meijer locations. Meijer has also ramped up its home delivery and curbside pickup services at its stores — like its larger competitors, beginning the process well before the pandemic.

Bar code scanning by customers is a form of cashierless tech that the giants have been deploying, though so far on a limited basis. At Amazon Go stores, the retail giant uses cameras, sensors and other tech to allow customers to leave the store without waiting in line to pay.

The Grand Rapids, Michigan-based Meijer's pickup service allows customers to order online, keep track of how much they have ordered (exactly like an Amazon basket) and choose between pickup and delivery, including a preferred delivery window. Customers receive a text when they begin creating the order and one when their order is ready to be delivered or picked up. In September, Meijer also rolled out an online custom cake ordering system — a service very similar to one Walmart offers.

Smaller retail chains are also strategizing a post-pandemic future in competition with the larger retailers. One way they are doing so is by letting a third party take over some of their operations. Livoti’s Old World Market, which has four locations in New Jersey, inked a deal with Associated Supermarket Group, which provides various services to independent grocers in the Northeast and mid-Atlantic region, such as distribution, marketing, merchandising and promotional services. Independents thus can take advantage of the economies of scale normally available only to larger supermarket chains.

“ASG will provide Livoti’s the merchandising and product assortment needed to respond to their customers’ needs,” Associated Supermarket Group co-CEO Joe Garcia said.

He said Livoti’s is looking to ASG to help develop its grocery offerings, pursue marketing through traditional and digital channels, and deepen its relationships with direct store-delivery suppliers.

Keeping up with new tech is also important to regional and specialty retailers. In June, Hy-Vee, which operates about 280 grocery stores in Midwestern states, inked a deal with Google Cloud to revamp its Hy-Vee Aisles Online services, as well as to integrate the company's virtual dietitian services and enable customers to schedule vaccinations online, including but not limited to Covid-19 vaccinations. 

"The pandemic accelerated many Hy-Vee digital initiatives as consumers shifted the way they shopped at our stores,” Hy-Vee President, Digital Growth and co-Chief Operating Officer Aaron Wiese said. 

With that in mind, the goal of the partnership with Google Cloud is to make shopping at the grocer as simple as possible, Wiese said, whether that is online or in person. Among other features, Google Cloud will provide customers localized information about stores, which Hy-Vee says will provide customers with more personalized service, easier ordering, and pickup and delivery. For the company, it will provide predictive shopping carts — the data-driven science of forecasting what customers are likely to buy.

Hy-Vee is also undertaking an unusual approach to keeping shoppers in the store a bit longer, one better known in nonfood big-box retailers: stores-within-stores. In September, the company opened the first Johnson Fitness & Wellness showroom as part of the opening of a new 93K SF store in Grimes, Iowa. 

The store-within-a-store represents a partnership between the grocer and Johnson, with other locations in the works, though Hy-Vee didn't specify an exact number. At the showcase, customers can try out treadmills, elliptical machines, exercise bikes and other machines. The products can be ordered online from Johnson via a kiosk and picked up curbside or delivered for an extra fee.

The fitness showroom is only a small part of store-within-a-store concepts launched or planned by the company. Others include The W Nail Bar nail salons, Basin and Beauty boutiques offering bath products and cosmetics, and Designer Shoe Warehouse shops in six Twin Cities stores.

Store-within-a-store isn't a new concept for retailers, though mostly it is found in department stores and the likes of Target, which over the past two years has teamed up with Apple, The Walt Disney Co. and Ulta Beauty to set up miniature stores in Target's big-box stores.

Some tech is more visible to customers than others. Regional grocery chain Schnuck Markets said in September that the company is deploying robots to all of its 111 stores. The robots, called Tally, move up and down store aisles as often as three times each day and autonomously collect on-shelf data, including inventory position, price accuracy and promotional execution. The grocery started testing the tech in 2017 and has expanded its use since then.

The grocery industry is facing a new normal, and the Tally robots have been important in meeting various operational challenges, Schnuck Markets Vice President of IT Infrastructure and Application Development Dave Steck said.

“By deploying Tally to all stores, we're expanding our ability to leverage real-time data to make revenue-impacting decisions," Steck said. "Tally has become an integral component of our stores, streamlining operations and ultimately creating a better store experience.”