Avoid the Slump: Retail design strategies for tapping the buying power of Gen X and Gen Y

Retail design strategies for tapping the buying power of Gen X and Gen Y
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Posted July 19, 2010
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Though retailers remain in a tight economic spot, consumer demographics point to the potential of a longer-term financial funk. Gen Y, the largest generation to date at 83 million, is still young and won’t hit peak spending until 2027. Gen X, which accounts for 48 million consumers, is substantially smaller in size and economic influence than both Gen Y and the Boomers, who peaked at 78 million.

Add all this up – the infancy of Gen Y’s spending power ; Gen X’s small size; and Boomers’ waning economic impact – and retailers could be looking at a 17-year spending slump.

To avoid this possibility, retailers and designers need to focus on playing to Gen Y’s current lifestyle so they can evolve with these shoppers as they head toward their peak spending years. They should also work to appeal to Gen X, which despite its small numbers, is nonetheless hitting peak spending potential right now. Using de-branding and soft-branding to create store environments and experiences that appeal to authenticity and a sense of community are two strategies to do that.

De-branding is the new branding

One thing that’s important to Gen Y is (perceived) authenticity and community connection. They’re tired of branded messaging targeting them. De-branding is one way to reach them, although perhaps cynically, it should be acknowledged that de-branding is really a new branding technique.

A good example of this strategy is Starbuck’s new coffee shop, 15th Avenue Coffee & Tea, in Seattle’s urban and trendy Capitol Hill neighborhood. Opened last summer, it’s a Starbucks that’s well camouflaged as a local coffee shop, yet this “secret” Starbucks store has been well publicized by the company. Still, 15th Avenue Coffee & Tea has no typical Starbucks signage, it doesn’t sell Frappuccinos and it has its own website, not just a subpage of starbucks.com. All in all, this new non-Starbucks format hearkens to the brand’s beginning and its original 1971 store in Seattle’s Pike Place Market with a more authentic coffeehouse and community experience.

Another good example of de-branding is Muji, the Japanese brand with the motto “lower priced for a reason.” Muji’s high quality, basic products, from office supplies to socks, offer clean design with minimal packaging. Unlike Starbucks, which started as a hard-striving brand and then de-branded, Muji started as an un-branded concept. Today, it’s an international name that self-consciously touts its “no brand” quality as a premise of authenticity. Its strategy includes funneling money Muji saves from using word of mouth rather than paid advertising into R&D to develop better products.

De-branding’s cousin: Soft-branding

Soft-branding, or community-specific branding, is a phenomenon in which individual locations are given a degree of latitude in interpreting a store brand in their merchandising techniques, usually to reflect local tastes or to leverage the talents of a specific store’s staff.

Anthropologie is one of the great masters of this practice. Each store speaks to the brand’s unique Edwardian-meets-Wes Anderson aesthetic, but interprets it in a slightly different way. Store merchandisers have latitude to create custom displays featured at that location exclusively.

In the grocery sector, Trader Joe’s presents some element of environmental graphics created locally to allude to that store’s specific region. For instance, cash wraps are named according to local streets, with green and white street signs that mimic the look of those created by a city’s department of transportation.

De-branding and soft-branding are two techniques that pique Gen X and Gen Y’s interest in authenticity and community involvement. Considering them as part of your store’s branding strategy can help attract and retain both Gen X and Gen Y as customers.

Next month, in the second article of this four-part series, I’ll explore how store design can create a sense of community among Gen X and Gen Y customers in light of converging channels.

Joel Riehl is a senior associate at MulvannyG2 Architecture (Bellevue, Wash.), where he specializes in the design of retail stores and centers for global clients and brands. He can be contacted at joel.riehl@mulvannyg2.com.

 

The ideas of this series will also be discussed at VMSD's International Retail Design Conference, Oct. 13-15, in Toronto, as part of the breakout session, "The 17-Year Itch: The New Shape of Retailing for Gen X and Y." For more on IRDC, visit www.irdconline.com.

For Part II in this series, click here.