The Store is Dead. Long Live the Store!
Store – ‘Place where goods are kept for sale’.
This is a definition of the word store recorded in 1721, and this is still the general idea of what a store is. The old retail success metric of ‘sales per square metre’ is also still prevalent. But with the advent of ecommerce and smartphones, we need to rethink the definition of a store and what the metrics should be.
We are fast moving to a retail world where products can and are being bought from multiple channels beyond stores and the online shops; for example, Instagram recently expanded the global reach of its shoppable posts. And the Chinese have been buying stuff directly via WeChat for some time already – both in-chat, online and in-store. So what role should a store play in a world of see-tap-buy?
In some parts of the world, the cost of retail space has dropped such that the use of physical stores can be justified as part of the customer acquisition strategy – after all, acquiring customers online is not without significant competition and costs. And compared to often vague social media metrics (e.g. counting an impression of a video even if the sound was down and they were not really paying attention), a person browsing a physical store could not be more concrete – so to say.
Warby Parker, a direct to consumer eyeglasses company, is one of the best examples of how physical stores can drive overall sales. They started selling glasses directly online but created a store due to customer demands to test the glasses for real. Their physical store became a popular touchpoint for the brand and to date they have opened a hundred more. In areas where they opened a store, they found that local internet traffic went up by as much as four times.
Even in places like central Helsinki and New York, where retail rents remain high, some vertically-integrated brands are already allocating some of the rental costs in light of overall sales benefits that include online channels. In contrast, some brands still have their stores competing with their online teams. By having a centralised physical touchpoint, vertically-integrated brands can also attract new customers who might not be exposed to the brand online, e.g. foreign tourists.
Even in the world of video streaming, there is both monetary and awareness value in releasing films in cinemas. When people see a film showing in the cinemas, it creates a sense of prestige that can affect later online viewing choices, i.e. if one sees a film is in the cinemas there is an implicit assumption it must be of a certain quality. The same can be said for fashion brands appearing in malls and high-street stores – so not having a physical presence clearly has significant strategic drawbacks.
The need for having brand touchpoints is emphasised by a new breed of stores that are essentially renting out floor space and services. These are stores that remove cashiers altogether and manage sales online. One of the most renowned of these is The Conservatory that is part of the high profile Hudson Yards development in New York. Here they promise that anything you try on is available to order online and staff roam ready to serve with iPads in hand.
The idea of a growing split between convenience (getting everyday items online) and physical experience (for upmarket brands) is now firmly established; however, effortless convenience is not something that is separate from a great in-store customer experience. Why make customers wait even an extra minute if they wish to instantly get product information, make a payment, or reserve an item on their smartphones.
Whether to make technology visible or not inside a store is a branding decision. There are growing options to facilitate shopping experiences invisibly just via smartphones. The service we are developing at PriceTap makes use of existing barcodes as a way to connect items to shoppers so that the can see extra info (washing, materials, etc.), claim an in-store reward/offer, add to a wish list, and in the near future also pay in-app.
So while the last few years have seen the closing of tens of thousands of stores in developed markets, we will see the emergence of experiential brand touchpoint stores coming to take their place.
A new definition for a store of the future could be: ‘A place where goods are displayed for people to experience.’
The store is dead. Long live the store!