Sep 2016, by Lizzy Stallard, Marketing & New Business
Pressures on traditional brick-and-mortar retail are ever increasing and this year alone we’ve seen the likes of BHS, Austin Reed, Ben Sherman, MyLocal (Morrisons) and Brantano all suffer through failing to adapt to the changing market.
The global market is facing similar challenges with Macy’s recently announcing the closure of 100 stores, or 12% of its store base. WalMart, Aeropostale, Kmart/Sears, GAP and Ralph Lauren are just some of the other major brands announcing store closures around the world.
It’s not difficult to see why. We are constant consumers, now accustomed to having what we want, when we want it, regardless of where we are in the world. So the very notion of visiting a physical store with opening and closing hours, no guarantee that they’ll have what we need in stock, in the colour we want or the right size, and at the right price, becomes somewhat redundant. You could argue that the physical store becomes an unnecessary lottery.
It is no surprise that Amazon is growing sales at approximately 20% annually and is now the world’s 8th largest retailer.
Amazon continues to invest heavily in offers such as their Prime Now programme – providing free 2 hour delivery to Prime members and now available to 30% of the UK population. And with the option to receive certain items within 1 hour, Prime Now puts Amazon firmly in play to compete with physical stores for those essential items that really are needed right now.
There’s no denying that the ability to have what you want, when you want it is hugely beneficial, and without it, we’d be lost. But it’s true to say that our constant demand for instant everything, has evolved the process of shopping online to become, in some instances, increasingly bland and devoid of any real memorable experience (albeit stressful and negative memories when things don’t arrive as promised).
When we look at the psychology of consumption, obviously there’s a lot written about how experiences bring more pleasure than possessions, and Professor Thomas Gilovich of Cornell University has specifically focused a great deal around the role of ‘waiting’ and ‘anticipation’ in creating that enhanced happiness. Also, earlier this year, University of British Columbia professors, Aaron C. Weidman and Elizabeth W. Dunn conducted a study that revealed that ‘material’ purchases create more frequent moments of happiness, against ‘experiential’ purchases, which create more intense moments of happiness. These insights point firmly in the direction of the opportunity in creating more experiential material purchases. Again, this isn’t new insight, but does reinforce that this consumer desire is still real and has not evolved. The opportunity still exists for those willing retailers to embrace the creation of a more enriched and memorable shopping experience, thus creating both frequent and intense moments of happiness.
Another factor to consider is the influence of millenials.
Offline, millenials crave group interactions and social situations. According to Boston Consulting Group they are more likely than any other generation to shop, dine or travel with groups. They also prefer an experiential retail environment and take pleasure from being in the physical store. It’s not just about the purchases they make; it’s also down to the experiences they can bring home with them.
So if brick-and-mortar stores, along with the right product, offer entertaining, sociable and enriching experiences, in theory, millenials will come. Couple this with the fact that they are the largest generation in world history, and possess immense spending power; it simply cannot to be ignored. In the US alone it is estimated that millenials will be spending $200 billion annually by 2017 and $10 trillion throughout their lifetimes.
Despite uncertainty and noise surrounding the future of the physical store, many remain positive. Commercial real estate services provider CBRE are confident that online sales will not deter physical store expansion plans. Their 2016 study of “How active are retailers globally”, looked at 150 major international brands and found that 83% of brands suggest that their physical store expansion plans will not be affected by the growth in e-commerce, although they state that this will vary from market to market.
It’s important to note that experience for experience sake is simply not enough.
Many retailers fall at this hurdle and strive to create an experiential physical presence but fail to craft an authentic experience with brand at the heart. The other challenge often overlooked is regardless of how the concept comes to life, the question immediately becomes ‘what’s next’? An on-brand, yet flexible, nimble concept that can morph to retain freshness and excitement is key. Innovating the experience doesn’t mean overhauling or re-designing the store; it’s simply keeping it fresh, creating buzz and always moving.
So what are brands doing to create a more engaging and on-brand in store experience that online retailers may struggle to replicate? We have taken a closer look at several brands we admire for their approaches to creating a compelling in store experience.
Mamas and Papas: Earlier this year, British nursery and baby retailer Mamas and Papas opened a refreshed, digitally integrated store at Westfield White City in London. Tapping into an audience hungry for knowledge, insight, recommendations and reassurance, Mamas and Papas have created a true destination to achieve their mission to ‘demystify the business of parenting’. Aspects such as the digital tool for weighing and measuring children to determine the right car seat, the replica Mini in which to then try car seat options and the pushchair finder touch screen are just some of the in store services that allow hands on, real experiences to facilitate the purchase process and build brand loyalty.
Dyson: This summer Dyson made their first foray into the physical store environment with their ‘Demo’ store now open on Oxford Street in London (http://brandcap.com/closer-look-dysons-first-standalone-high-street-venture/). Technology is at the forefront of the Dyson brand and the ability to experience this in situ with product demonstrations, knowledgeable, on-brand staff and in a physical space that wholeheartedly embraces what the brand is all about is far more powerful, motivating and memorable than a visit to the website or reading a review online through the John Lewis website.
Pirch: California-based luxury retailer, Pirch has eight locations across the U.S., and is looking to reinvent the way consumers shop for home appliances. Their mission to ‘create a shopping experience full of surprise, delight and joy’ seems to be working – the average spend time in store being 2 hours and 11 minutes and some stores posting sales in excess of $3,000 per square foot. The Pirch showrooms have become destinations for sold out weekly cooking classes (using Pirch appliances and equipment, of course) as well as the ability to reserve the “Sanctuary”, where consumers are free to take a shower and try more than a dozen shower heads, a steam room and a sauna. Complimentary freshly cooked food and coffee is a given. Ironically, Pirch have not quite cracked their online ecommerce offer just yet, although apparently this is in progress.
Burberry: Not a particularly new example, but still compelling nonetheless. When Burberry opened their new flagship Regent Street store in 2012 it was to much excitement. A physical space which oozes the story of the brand and where innovative technology successfully blurs the physical and digital worlds, it’s certainly become a destination that immerses the consumer in the Burberry world. Burberry utilizes their physical space in a hosting a number of on-brand events throughout the year, crossing beyond the boundaries of traditional retail. In June of this year, they focused on unique craftsmanship for which the brand is famously known. Customers were offered bespoke personalization services on any of their products. They also opened Thomas’s an all day British Café, serving seasonal British dishes for the month.
Flying Tiger Copenhagen: While it might be a stretch to classify a visit to a Tiger store as enriching, there’s something about the constantly evolving, fresh merchandise on offer combined with the ‘walkway’ layout of the store that makes it feel like a physical visit is necessary over an online one. IKEA falls into this same category (although this may be a personal view). I could rarely guess the contents of my IKEA shopping trolley at check out if I was asked upon entering the store. Tiger is the same. The experience of wandering through the store encourages unplanned selections.
And one that got away:
B&Q: Just last year B&Q axed their You Can Do It initiative, a series of in-store DIY classes offered at 16 locations across their portfolio. The hands on tutorials offered regular people the skills and equipment needed to tackle small DIY jobs at home, and provided B&Q vouchers to use upon completion of the class. They even offered kids classes for 7-11 year olds. They were much loved and well used and yet 5 years after launching, they cancelled the initiative (much to the disappointment of customers who even set up an online petition to try to revert the decision). There was no doubt a strategic decision surrounding why the brand moved away from You Can Do It, but it’s these type of initiatives that truly meet the need of provide a rewarding, on-brand in store experience, and one that builds loyalty and affinity for the brand.
We firmly believe that a physical store presence is and will continue to be critical in retail.
Whether it be innovative technology, expert advice from real people on hand, skills transfer and learning, the ability to physically experience a product, or simply to enjoy the feel good factor shopping trip with friends. Offering an on-brand enriching, informative and memorable experience in store will ensure brick-and-mortar retailers have their foundations firmly rooted in the ground and for many years to come.