Localization is one of the few extremely effective ways for store-based retailers to compete with the rapidly growing e-commerce giants. Retailers like Walgreens, ShopKo, Trader Joes, and Walmart have incorporated a range of very interesting localization strategies into their stores in an attempt to: (1) convey a commitment to local communities, (2) to appear less like national or multi-national corporations, and (3) to prove to their customers that by making the trip to the store they will receive access to an assortment of items that is tailored specifically to their needs.
Chain retailers are all using different mediums to help shoppers come to the realization that a store is “their” store. While there is no overarching strategy for ‘localizing’ a store – other than to tailor the product assortment to the local demand – there are 5 methods that retailers are turning to.
Walgreens’ new flagship store in Chicago includes everything from made-to-order smoothies to sushi and juice bars to a fully stocked humidor. The health & beauty retailer also makes it clear that it can relate with the local market. It uses its most visible wall space in the store (below the escalator) to feature a list of the “50 reasons to love the city of Chicago.”
Walgreens has chosen a localization strategy that requires little capital commitment, but it is also one that resonates deeply with Chicagoans. The wall is a simple reminder of the reasons why local shoppers should: (1) be proud of the city they live in, and (2) realize that they share something in common with the retailer.
Compared to a multi-national, broadline retailer that needs to go through extensive market research to determine what assortment is a best fit for the local culture, Walgreens is able to offer a relatively consistent range of health & beauty items in its stores across the US. Walgreens has too many stores across the country to localize its assortment to each location. Instead, it breaks the stores into clusters by demographic to create a more efficient supply chain, and simply tells its shoppers that it is committed to meeting local demand.
Trader Joes is known for being very good at creating an enjoyable, localized shopping experience. Its store at 497 Bay Street (above) in San Francisco is no exception. The store’s entryway is a passage lined with a ceiling-high model of the famous Golden Gate Bridge. San Franciscans can see that even though there are 375 Trader Joe’s stores across the United States, the retailer becomes the community’s store through visual reminders of local landmarks.
It is one store designed to meet a local community’s needs. It is not 375 stores designed to meet a nation’s needs.
The most important, and the most complex concept to consider in a localization strategy is the product assortment. However, a great localization strategy can be as simple including local sports team memorabilia as is done in ShopKo’s new smaller format store, ShopKo Hometown, in Wisconsin.
With respect to merchandise, a store can become a community store by simply including items like towels and sunscreen in a beach town, or winter hats and gloves in a ski town. Other than differing climates, important points of consideration include cultural diversity, average age, tourism levels, and differing religious beliefs.
Localization, for retailers, is both about reaching the needs of the local community and about bringing the community together around mutual interests. Retailers like Lululemon, Unleashed by Petco, Loblaws, and Whole Foods do a lot to engage the local community. Lululemon holds complimentary yoga classes in its stores on a weekly basis. Unleashed by Petco allows its customers to bring their pets into the store, meet other pet lovers, and learn about the best nutritional items for their beloved companions. Loblaws and Whole Foods offer community cooking schools in-store where their customers are able to come and learn new recipes, and meet new people in the process.
All of these community outreach events are programs that help store-based retailers make a stand against their online competitors like Amazon and eBay. While consumers may be able to find a better price online, they cannot offer the ability to connect with a local community on this level.
Wal-Mart launched “My Local Walmart,” a page that lets the retailer’s roughly nine million Facebook fans follow what is happening at stores in their neighborhoods. The large chain retailers’ promotions and discounts cannot logistically run on a store-by-store basis, retailers like Walmart and Lowes’ “MyLowes“, make their customers feel like they are receiving personalized offers from the retail giants.
Walmart’s use of Facebook to provide ‘personalized’ offers to its customers proves to be a great way to drive consumers into its stores. The facebook campaign allows the retailer to send out targeted discounts and promotions redeemable in-store only, which then translates to an increase in impulse purchases.
What Does it Mean
- Store-based retailers are rolling out localization strategies with the knowledge that these programs can be very effective traffic drivers.
- Localization is also a tool that store-based retailers are using to differentiate themselves from the more convenient shopping options provided by the e-commerce players
- It is essential in appealing to communities’ local tastes.
- Most importantly, it transforms the perception of a store from a cold, money hungry national retailer into a community store.