RETAIL’S FANTASTICAL TRANSFORMATION
Everywhere you turn, commentators are talking about the Retail Apocalypse. Store closures, malls shutting down, another retail business filing for Chapter 11 protection. It seems bleak, but it is no apocalypse. It makes for good headlines, good debate. Who doesn’t like a good dose of doom and gloom? But retail is not dead or dying, it is just undergoing a Fantastical Transformation.
It is all about relevance. If what you sell, or more recently, how and where you sell it, fades in relevance, then customers vote with their wallet and feet. You become Toys R Us, left holding the giraffe as the metaphorical tumbleweed rolls past in the car park. If you don’t keep pace with transformation, you get left behind. But again, that is nothing new. It happened to the railways when the automobile came along. It happened to radio when TV took over, it happened to the travel agency business. But travel didn’t die. In fact, there are more people travelling than ever before because of the new travel apps, brands and channels. Transformation brings Opportunity.
Why Do You Exist?
This particular transformation forces retail to ask the big philosophical question, one that sometimes retailers never asked themselves. Why do I exist? The great philosophers of our time have grappled with this for centuries, but it’s kind of new to the high street and malls.
What is the purpose of our stores? Why are we here? In a world where one-click or swipe can show you thousands of product options, same or next day delivery has become a norm and free returns are easy and convenient, what additional value does a store propose? It really is a great question.
Perhaps a store needs to show its shoppers that it is Real? What’s not to love about the REI stores (Denver pictured below). If you want to show how serious you are about the gear you sell, then build towering climbing walls in your store so shoppers can see and test the gear. When you are being fitted for your hiking boots in an REI store you get to try them by walking over real boulders, not walking up and down a timber or carpeted floor.
Or maybe it is about Community, like the New York Running Company / Jack Rabbit. On a recent store visit off Central Park, I was amazed at how much community involvement emerged from the store, with daily running meets and training sessions converging on and emitting from the store. It was more of a track meet location that happened to sell running gear!
Or perhaps it is about Shareability, creating a space people want to visit and share their experience. The 29 Rooms Art Experience from content brand Refinery29 for New York Fashion Week is a good example, brands and retailers sponsoring rooms bringing their brand values to life in a unique fun way. It is not a store but it is a destination. Create something unique, experiential and shareable and consumers will still form a long line outside to get in.
Or maybe it is just about Convenience. Maybe as a store it just needs to be there when you need it, like Bingo Box in China. While in the West we were all excited by the Amazon Go store, they had already 300+ unmanned stores using intelligent cash out systems, facial recognition and automation.
So, what value the store brings to the consumer has to be questioned. Simply existing to ‘warehouse products for sale’ is simply not a strategy that guarantees survival anymore.
I Am the One in Ten (UB40)
However, in this digital omni-channel world, there is still a statistic worth revisiting. The numbers may vary depending on how they are calculated of course, and for what segment they account for, or consumer demographic. But overall eCommerce accounts for slightly over 10% of US retail. That is not to say digital doesn’t punch above its weight, with Forrester outlining over 50% of all sales are digitally ‘influenced’. In Europe the figures are much the same, larger for countries like the UK and Germany, less for say Poland or Spain. For some categories the share is obviously higher (clothing, books) and for some lower (DIY, Baby Products). So, stores still have a function, but don’t get too complacent.
Sometimes figures like this mask what is really going on. Irrelevance can sweep in like a spring tide. You think you have time but before you know it you are trapped on a sandbar. So, let’s return to the fantastical transformation question. What has changed?
Well, why don’t I give you a one-word answer, the Consumer. The millennial consumer certainly caused retail a few headaches. But trust me, they were just the warm-up act. The GEN Z consumer is the main event. Remember millennials started off their own lives and retail experiences in the analog world, changing over to digital as things developed. But this omnichannel reality is the only world Gen Z has ever known. They are the step-change.
Every generation of consumers value different things. Gen X were different to the Baby Boomers, just as Gen Z raise the game beyond the bar Millennials set. Understanding what the latest generation of consumers value is key to surviving this fantastical transformation.
Develop Stores That Matter
So, what should the store of the future be? Well understand the new values of the next generation of consumers, and you will be a giant leap closer to the answer. Deliver store propositions that are engaging and experiential, shareable and authentic, convenient and customer centred, stores that have purpose, personality and authenticity. Stores that matter.
On the 10thand 11thof April 2019, some of the sharpest minds of retail will come together in Barcelona for the International Council of Shopping Centres (ICSC) European congress. This is one of few events that brings together all the parties of retail, from the property investors and landlords to the retailer, brands and agencies. The conversations and debate around about the future of the retail space will be both electric and informative.
I have the great honour of both hosting and keynoting this 2-day event and look forward to sharing exactly what those GEN Z consumers values are, and how we can best equip the industry to power through this fantastical transformation.
Ken Hughes is one of the worlds leading Shopper and Consumer Behaviouralists and Customer Experience Strategist, blending his vast expertise in consumer psychology, social & digital anthropology, behavioural economics and neuromarketing to answer the question to which he has dedicated most of his career: Why do shoppers buy and how can we make them buy more?
More detail on Ken’s keynote ‘Gen Z: Your Future Shopper’ can be found here
Header Photo: Rose Bainbridge
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