Enticing Customers Back into Stores

The customer-retailer relationship is a tale as old as time. But as consumer preferences evolve, so too must the in-store experience. So, how are brick-and-mortar retailers responding to changing consumer preferences and the emphasis on all things digital?

Leveraging emerging trends and technology

Department stores are rethinking their traditional business models and revamping in new and exciting ways to keep up with emerging trends. Tesla, for example, a brand known for innovation in the auto industry is bringing that innovation to the Nordstrom’s men’s department in Los Angeles. The auto brand opened a 400 square foot mini store staffed with Tesla employees, which will feature the Model X SUV electric vehicle – the latest example of brick-and-mortar stores partnering with outside brands to attract new customers.

Many stores are also turning to tech to bolster customer experience. At Sephora, gone are the days of being overwhelmed by a multitude of fragrance choices; simply answer a series of questions and their “Fragrance IQ” station can help guide your decision. Saks Fifth Avenue, on the other hand, unveiled a promotion that allows shoppers to take a 360-degree view of new outfits by modeling in front of a large mirror-screen, which in turn sends a short video of the user to an on-site iPad that captures the user’s personal information as they sign up. The user can then send the video via mobile to their friends to get real-time feedback on their potential purchase. This approach simultaneously captures valuable customer data while also catering to evolving consumer preferences.

Building anew

For those retailers that choose to rebuild or remodel, it is not enough to do so for the sake of a shiny new location. Businesses should have a plan in place and an overall strategy that leverages the remodel with the goal of receiving a return on investment. In addition, some companies choose to reserve funds annually for remodeling to ensure all necessary renovations can be completed in a timely manner. Fortunately, the IRS is helping retailers pay for these remodels under Rev. Proc. 2015-56, which was introduced approximately six months ago.

Under the new procedure, qualifying remodel costs will receive an immediate deduction of 75 percent. The new procedure stipulates certain projects, buildings and costs that qualify for the deduction. For example, the remodel must be on a retail or restaurant facility; a headquarters renovation does not qualify. Activities such as painting, replacing floors and ceilings and moving walls can qualify, but property depreciated over five-years is an excluded cost.

Rev. Proc. 2015-56 is effective immediately for tax years beginning in 2014. This new procedure is financially favorable for retailers, and many have elected to take advantage of it on their 2015 tax returns by making a change in accounting method, though the procedure can also be elected later.

Times are changing

Whether a retailer is taking advantage of new tax incentives by remodeling, partnering with outside brands to bring an exciting change or creating innovative customer experiences with new technologies, brick-and-mortar stores must evolve with the times to keep up with emerging consumer trends and preferences.