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How to nail retail localization

illustration of a storefront pointing to a location on a globe

Over the past year, many consumers have taken on a pledge to ‘shop local’ to assist retailers struggling due to the pandemic. But the word ‘local’ has taken on a new meaning as more brands take a curated approach to their merchandise and storefronts. 

Where the same retail concept was once replicated endlessly across store locations, we’re now seeing brands shift towards recognizing how culture and preferences can differ widely between regions – and even different neighborhoods. 

So what exactly is retail localization, and how can retailers use it to build stronger relationships with customers?

What is retail localization?

Localization is a retail strategy where a brand adjusts its offerings, marketing, and/or branding to appeal to different segments of its customer base. A retailer with multiple storefronts may curate a slightly different product selection for each location that’s more in keeping with regional tastes and culture. In doing this, they can capitalize on more niche customer needs that aren’t being met by competitors.

Localization also has a major impact on the post-purchase experience. Putting localization into your fulfillment strategy via ship-from-store or store-based fulfillment strategies, for example, enables customers to build stronger relationships with their local storefront.

Why the ‘chain store’ concept is dying

Chain stores have long been a linchpin in shopping malls and the high street, from department stores spanning multiple categories to fast fashion brands. While the sector has taken a massive hit due to COVID-19, with almost 5000 stores closed so far in 2021, many of its problems predate the pandemic.

By erasing regional variations with homogenous product selections, chain stores often ignore that their customer is not the same in all places – and risk alienating the shoppers they want to walk through their door.

Reason 1: The way that consumers discover products has changed

When chain stores first emerged, they offered an exciting proposition; access to the same selection of goods and services no matter where you lived. Suddenly, people in small towns could dress like people in Los Angeles, or buy the same furniture seen in New York City apartments. 

In a time before the internet and mass media, chain stores offered consumers a valuable window into different lifestyles and trends. But today, this role has been filled by social media and curation sites. Almost 55% of consumers use social media to discover new brands and products. In a dynamic marketplace where new offerings pop up virtually overnight, chain stores simply don’t have the flexibility to keep pace with consumer demand.

Reason 2: The rise of experiential retail

Where retail had once been dominated by standalone storefronts with varying inventory or product quality, chain stores offered certainty and convenience. Knowing you could walk into a Sears or a Macy’s and always find the brand of socks you like, for instance, removed a huge amount of friction from the customer experience.

But being able to buy the same goods everywhere is the opposite of what today’s consumers want. 70% of customers say they would shop elsewhere if a store didn’t have an engaging experience, while 63% say they want the places they shop in to be ‘inspiring’. When Amazon has become an effective replacement for the everything-under-one-roof storefront, consumers are increasingly seeking out unique products and retail experiences they can’t find anywhere else.

Reason 3: The growth of selling direct

In the face of the niche direct-to-consumer brands choosing to cut out retail distribution entirely, chain stores with their inflexible supply chains are often unable to keep up with ever-changing consumer demands. 

D2C brands from Warby Parker to Dollar Shave Club have built massive online followings by reinventing the generic products that populate chain stores. Everything from razors and soap to home fragrances can be rebranded as chic lifestyle offerings – leaving many legacy retailers in the dust.

Moreover, the data that D2C brands accumulate throughout the shopping experience gives them in-depth insights into their target market. By trying to be all things to all shoppers, chain stores have struggled to adapt to growing expectations for personalized offerings.

Target: When retail localization is ignored

Target’s failed expansion into Canada in 2013 provides a cautionary tale of what happens when a retailer doesn’t cater to cultural and geographic differences between markets. After shuttering 133 stores and laying off nearly 20,000 employees, Target Canada called it quits after just two years.

So, what went wrong?

Expanding too far, too fast. Target added 124 store locations in the first year, far too rapid for any kind of audience or market research to figure out how different locations would perform.

Neglecting ecommerce. Despite rapid ecommerce adoption in Canada, Target never bothered creating a localized Canadian store. Canadian shoppers were forced to use the U.S. store and pay for higher duties and shipping.

A lack of cultural understanding. Despite over a fifth of the Canadian population being French-speaking, Target never factored this into their marketing strategy. 

Overstretched supply chains. Canada has a much lower population density than the United States, meaning that transportation and distribution are much more expensive and difficult to centralize. Moreover, differing regulations meant that Target couldn’t serve Canadian stores from its U.S. logistics network. 

No localized marketing. Target never created a localized marketing strategy or social media channels for its Canada operation, resulting in Canadian shoppers feeling neglected and misunderstood by the brand.

In sum, Target tried to take shortcuts in its expansion by duplicating the same marketing, fulfillment, and storefront strategies it used in the United States. The result was that the Target brand simply didn’t translate to a Canadian audience. Shoppers felt let down by unsatisfactory retail experiences that clearly weren’t designed for them. Failing to practice localization led to a permanent loss of credibility that continues to hurt the brand.

How to develop a retail localization strategy

Localization involves multiple elements of your retail operation coming together to present customers with a cohesive shopping experience tailored not only to their needs, but the appropriate cultural and geographic frames of reference to surprise and delight. This boils down to four key areas: 

  • Storefront
  • Website
  • Marketing
  • Fulfillment

Localized storefronts

Contrary to popular belief, brick and mortar is not dead. In fact, store openings in 2021 are set to outpace closures, with brands including Warby Parker, Aerie, and Fabletics launching the expansion strategies previously put on ice due to COVID-19. 

But for many retailers, the rise of ecommerce has ended up cannibalizing rather than complimenting their in-store offerings. The reason is simple: It’s far easier and quicker to browse through an online catalog than a physical store. When online and offline channels carry the same exact offerings, there’s little incentive to shop in person.

A study by Coresight found that “accelerated consumer disinterest in homogeneous physical-retail experiences and driven a renewed appreciation for experiences that are local, distinctive and diverse.” In sum, it’s no longer the size of your store network that matters, but how well it reflects your customer. By making the effort to curate product selections and store concepts, retailers can meet consumer demand much more effectively.

For example, Hollister stores became a popular fixture in the early 2000s by injecting the essence of Southern California beach culture into suburban shopping malls. Their iconic beach shack frontage was an early and successful foray into experiential retail – but one which remained the same no matter which store you visited. Rather than taking inspiration from its surroundings, Hollister stuck to a rigid formula. 

In short, if you’d seen one, you’d seen them all.

entrance to hollister in a shopping center

Cult beauty favorite Glossier has also leveraged foot traffic very effectively with its famously instagrammable stores. But unlike Hollister, Glossier has made a conscious effort to incorporate the personality of the city or neighborhood in its pop-up store strategy. The Seattle store included moss-covered installations and trees that evoke the spirit of the Pacific Northwest, while their London pop-up featured a giant pink rooftop that paid homage to the city skyline:

Glossier storefront in Seattle
Glossier store in London

By making every Glossier store as unique as its setting, they’ve been able to build a buzz much more effectively with locals who may not have encountered the brand before. Taking inspiration from local culture has enabled Glossier to extend an olive branch to new customers and generate a favorable impression – not to mention driving plenty of shareable content. 

Localized website

Website localization is important for practical reasons, such as ensuring that language and currency options are available for customers in other countries. But there’s far more to localization than just accessibility; having an identical website available in multiple languages does nothing to appeal to different cultural sensibilities and traditions.

For example, having a Black Friday sale on your UK website isn’t going to gain the same fraction as in the US, as it’s not an established retail holiday. Likewise, missing out on Single’s Day, the biggest online shopping holiday in China, is literally leaving money on the ground if you have a Chinese customer base. Missing out on leveraging opportunities to maximize growth and revenue will make it difficult to compete with local sellers.

Moreover, this also extends to the products you choose to feature on the front page of your website. Different climates or preferences due to geography will have a large influence on how popular different products are. Depending on the number of digital storefronts you’re responsible for, it can be a full-time job keeping up with your localization efforts.

Localized fulfillment

Fulfillment is rarely highlighted as a part of localized retailing. But in the wake of the pandemic, we’re seeing physical storefronts playing a much larger role in the fulfillment process. 

Traditionally, online orders would be fulfilled from purpose-built facilities designed to maximize efficiency as much as possible. The pandemic has accelerated the shift towards more flexible O2O (online-to-offline) retail strategies including BOPIS, ship-from-store, and curbside pick-up, which is driving increased foot traffic and further cross-selling opportunities. U.S. shoppers spent an estimated $72.46 billion via click-and-collect in 2020, accounting for 9.1% of total online sales, while 49% have made additional purchases while picking up products in-store.

A study found that uninformed inventory decisions, such as over-stocking, misallocation, and stock-outs, cost retailers an estimated $300 billion in revenue in 2018. So, while store-based fulfillment certainly has its challenges for retailers, it also offers an opportunity for better inventory curation. 

O2O retail is all about having the right products in the right place at the right time. The data accumulated from this omnichannel activity is immensely valuable in mapping out the unique preferences of the consumer hub connected to each store, enabling speedier fulfillment and higher customer satisfaction.

Localized marketing

Put simply, localized marketing requires retailers to develop different content streams for regional audiences. While certain content can be repurposed, the essence of localization is recognizing that your customers aren’t going to respond to your marketing efforts in the same way.  

This means that retailers need to be in tune with how their audience is evolving. For example, if you’re an apparel brand from Chicago that’s gained a following in other regions, you need to think about how to make your brand relevant to those outside of your local customer base. This could mean incentivizing user-generated content to showcase how your customers are spread across the country, or using paid ads to target different geographic regions with relevant promotions. 

Streetwear brand Adidas has taken content localization to a new level by not just having separate Instagram accounts for different regions, but for certain cities. This enables them to use familiar locations and local influencers to create highly localized content that resonates with residents:

instagram post from adidasparis account
instagram post from adidasla

3 brands who’ve nailed localized retail

Of all the brands who’ve invested in localized retail strategies, there are a few stand-outs who have really changed the meaning of ‘shop local’:

Nike Live

nike live store interior

Nike has long been a pioneer of digitally-enabled shopping experiences. But they’ve taken it to a whole new level with their small-format store concept Nike Live. The stores are inspired by their host neighborhood and designed to reflect the preferences of the local customer hub. 

In addition to BOPIS and ship-from-store capabilities, Nike Live uses data harvested through the Nike app to identify what products and community events customers are most interested in. This enables the brand to develop an ecosystem of unique storefronts that target customers at the granular level.

Vans

 vans storefront in downtown los angeles

Vans has taken an alternative approach to localization with its new Downtown Los Angeles store. By working directly with local non-profits to hire underprivileged youth as store associates, Vans hopes to have a positive impact on the community and provide fresh opportunities. The 11,500 square-foot store includes a skate shop, art gallery, and venues to host exhibitions and workshops for local talent. These initiatives make Vans more than just a storefront, but a space that promotes community growth.

Target

Tiny Target storefront in a neighborhood

Target may have made a serious misstep with its Canada expansion strategy, but the brand has been quick to learn from its mistakes. The growth of its small-format neighborhood store network is an effort to tap into a more curated inventory strategy. So-called ‘Tiny Targets’ will make up the bulk of their expansion strategy, with 30-40 new stores opening annually. This includes stores on college campuses that cater specifically to the needs of this demographic, in addition to more suburban locations. 

By opting for more locations over large square footage, Target is able to hyper-localize its product selections. Its new ‘sortation’ model enables stores to effectively allocate store-fulfilled orders to different carrier routes for optimized delivery, making storefronts central to last-mile logistics.

The growth of localization has led to an explosion in experiential storefronts and curated offerings by major retailers, all hoping to cash in on consumer desires for more tailored shopping experiences. By tapping into what consumers want in different zip codes, brick and mortar retail can find new relevance in the face of rapid ecommerce growth.

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