The E-Motional Economy
September 20, 2016
Kidpreneurs
September 20, 2016

Photo: iStock/nd3000

The future of physical shopping is about creating a compelling destination and a location-specific brand experience. Department stores and malls are drawing on their best asset—space—to re-enchant consumers. Retailers are restructuring stores and changing how success is measured. No longer solely focused on the transaction, brands are creating inspiring, interactive, immersive environments. These spaces engage the senses and give consumers a reason to linger

Photo: iStock/danielvfung

Photo: iStock/danielvfung

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In 2015, 20% of U.S. malls had vacancy rates between 10% and 40%, according to CoStart Group. To get consumers away from their screens, malls are tapping into trends that make their spaces destinations rather than one-stop shops. While foot traffic has been falling, conversions and ticket sizes are increasing. According to a recent survey by GfK, 40% of Millennials prefer to experience products before they buy them.

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DRIVERS
Photo: iStock/nd3000

Photo: iStock/nd3000

  • Experience economy. Customer services need to be intuitive and highly personalized. Harris research for Eventbrite found that 78% of Millennials would spend money on an experience or event before buying something desirable.
  • Conviviality culture. Consumers are looking for new spaces in which to socialize, share, engage, and learn. Brands can extend the reach of their relationships by becoming the heart of the community, converting online followers into physical footfall. More than a quarter (26%) of British consumers now follow retailers on social media channels, while 44% follow brands, according to a study by research firm Future Thinking.

Instant gratification. The Internet has created a sense of immediacy. By making everything available at the click of a button, it has redefined expectations for immediate gratification. So brick-and-mortar retailers must work hard to match the convenience of online shopping: click and collect, search, and price comparison.
“Click and collect is 2016’s big convenience driver,” says Natalie Berg, retail insights director at Planet Retail. “With around half of global shoppers looking for convenient pickup points, click-and-collect is no longer a nice-to-have; it’s now a prerequisite.” To enhance convenience, retailers are collaborating with like-minded but non-competing brands to improve the overall customer experience. Examples include eBay working with Argos and ASOS working with Boots.

IMPACTS
  • Community Commerce. Retail brands can reconnect with consumers by combining engaging in-store experiences with one-stop social activities and events in surrounding neighborhoods. The latest concept store inNike’s Community Store program in the U.S. is committed to hiring at least 80% of its staff from within a five-mile radius of its location in Brooklyn, N.Y. Starbucks’ latest outpost in Queens, N.Y., offers educational opportunities and on-site training to young adults from the area.
    The local community was involved in the construction of Café/Day in Shizuoka, Japan. Samsung’s new flagship in New York’s Meatpacking district features a triple-story cinema screen and will host concerts, live streams of major events, and keynotes from company spokespeople at CES. The London flagship of beauty specialist Lush features three floors of live demonstrations, a spa, a henna hair-dye station, workshops for expert panel discussions, and a multisensory cinema.
  • Incubator Retail. Big brands are increasingly acting like small start-ups, creating loyalty by nurturing consumers with sponsorship packages for innovative new services and providing space and support for entrepreneurs. Tesco and Walmart have launched retail laboratories to generate insights on cutting-edge technology trends to inform their future strategy.In the U.K., John Lewis runs JLAB, a 12-week accelerator program designed to attract start-up innovators. And inside San Francisco’s Westfield complex, Bespoke is home to a variety of retail technology start-ups.
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  • Wellness Hubs. One-stop health and wellness destinations are epitomized by yoga and clean-eating hangoutThe Springs in Los Angeles. Also in Los Angeles, The Point features 115,000 sq. ft. of stores and outdoor eateries geared toward wellness. Selfridges recently opened a 37,000-sq.-ft. Body Studio in London with fitness, clean eating, body image, lingerie, nightwear, and active wear departments.
    Retailers are curating in-store activities around wellness and introducing concierge services for nutritional advice and training support. LuluLemon’s Hub Seventeen flagship store in New York offers yoga and fitness workshops, a dinner service, monthly rooftop film screenings, and music gigs. Adidas recently launched a wellness concept with an active food kitchen, personalized training schedules, urban running routes, and in-house classes.
  • District Rebranding. Department stores are undergoing radical transformations. New shopping districts with a strong sense of place, culture, and history, are being rebranded as hangout areas driven by lifestyle demographics rather than merchandise categories. New York’s Meatpacking Districthas newfound upmarket appeal and a fresh visual identity with a website and on-street fascias referencing its contrasting history of gritty commerce and chic high culture. Covent Garden in London has effectively become a dispersed outdoor department store with areas dedicated to beauty, menswear, and luxury. In Berlin, department store KaDaWe plans to transform the space into four retail quadrants targeting different demographics with architectural and commercial themes.
  • Food Temples. Taking inspiration from street markets, food halls are serving best-in-class global dishes and local favorites, curated and repackaged for cosmopolitan cities. Chef Anthony Bourdain plans to open a large food marketplace on Pier 57 in New York in 2017. And following the success of its Mercado da Ribeira project in Lisbon, publisher Time Out is set to open a food market in London in 2017 and another in New York in 2018.
CAPTURING THE MARKET
In Montreal, apparel store Lolë offers free yoga classes daily on its mezzanine level. Photo: Stephane Brugger

In Montreal, apparel store Lolë offers free yoga classes daily on its mezzanine level. Photo: Stephane Brugger

It is time to turn brick-and-mortar stores into destination centers and community hubs where consumers enjoy events and experiences. To do so, consider the following strategies:

  1. Create unique, experience-driven concepts that will inspire consumers to choose physical over digital.
  2. Your brand needs to support entrepreneurs and start-up culture, be it through a co-working space, lab, or incubator.
  3. Focus on fitness and health. The values and activities that wellness fanatics hold dear are now reaching the mass market.
  4. Re-energize urban districts and channel multi-category lifestyle hubs that offer curated expertise on tap.
  5. Diversify your retail mix with popups, experiential and convenience formats.
  6. Support and learn from your local community. Create attractions that tie into new social pastimes.
  7. Encourage consumers to spend longer with you and like-minded brands to co-create experiences.

Make food halls a centerpiece of your retail destination. Today’s consumers enjoy the social experience of street food.

 

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