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Traditional Retail is Looking into the Abyss

We don't need as many stores, and we need new types of stores. Time to change or die

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There is a topic that has been dominating my conversations more and more as a retail designer these past couple of years: format. Previously, I would think and discuss the type of retail – be it big-box, specialty or luxury – and how to make it feel brand-relevant, as well as finding ways to infuse a cool lifestyle experience into a static box, how to adapt it to local markets or how to blow it out as a category-killer. But now I find myself thinking more about the format; it’s no longer a given that a merchandise category, business or physical format that is based on yesterday’s winning formula will be the correct one for the future.

Physical layout and size, where the store is located, where the stock is located, what types of product, where the product is made, how you pay for it, how much you pay for it, how you receive it, when you can buy it. Is it bespoke or customized, and what services and experiences come with it? How do you qualify to buy it? These questions are all being reconsidered and rethought.

Temporary pop-up or mobile stores used to be seen as marketing vehicles, but as we move to a faster on-demand lifestyle, will these formats become the mainstream? Can retailers really be sure enough of their market and product to commit to a store design and location for 10 years? As we move to “new retail” – the mash-up of physical and digital – can retail really remain as static?

In an online world where nothing is static, newness is a given with personalized tracking algorithms and recommendation engines, and not least of which is the ability to completely change the look and feel of a brand without having to demolish and rebuild 100 stores. Physical stores that create newness are leading the charge in many categories. Even established bricks-and-mortar businesses like Zara are using fast product development cycles as the way to provide newness, whereas others like Pirch, the high-end home goods and appliance store, are creating live in-store events. Others are using technology in the physical space to provide bespoke promotions and recommendations. The goal here is to provide a reason for the shopper to be in the physical space through newness.

We often hear that 85 to 90 percent of retail sales are still happening in the physical stores, but that is not telling the entire story. There are categories in the specialty store world where online growth is moving sales volumes closer and closer to the total bricks-and-mortar sales. I read an article in The Wall Street Journal recently that explained many bricks-and-mortar retailers are finding that they are over-saturated with the number of stores and overall square footage. But not by a small number as in the past. The article said that where once a traditional national specialty store retailer may have needed up to 1000-plus stores or retail outlets to create brand awareness, that number may be as little as a quarter of that number today for some retailers. And even in conservative terms, if a company has converted 20 percent of sales to online, that likely means 20-percent less stores are needed, or stores that are 20-percent smaller. This is part of a huge sea change in the retail landscape.

And size and number is only the tip of the iceberg: Over the past few years, we have started to see location-agnostic retail tests, like the grocery store on the South Korean train platform or the Withme mobile brand/location agnostic pop-up “store of the future.” In a more basic step, “click and collect” (online order, in-store pickup), is de facto for many retailers today, customers expect it. And with Amazon starting to look at physical stores, we are starting to see the concept of stock and browsing being deconstructed. Why is it that a mini-fulfillment warehouse (stockroom) is attached and part of the incredibly expensive retail real estate footprint?

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We’re seeing experiments in shape-shifting and development of multi-categories that we have not seen before. The social media feedback loop is being promoted and amplified through physical stores, like the Magnum experience store in SoHo. We’ve seen clothing and food coming together. And with companies like Lululemon, we have seen design and manufacture come together in one physical space, like in their Lab store on Bond Street.

Even in the past month here in our office, we have been brainstorming format-disrupting projects for our clients, including one that deconstructs the traditional home-store format – part of it would become mobile, another part Genius Bar for the DIYer, and yet another a digital showroom with direct-to-home fulfillment. In another client conversation, we have been looking at a food-and-fashion, social-experience mashup store. The only rule for this one is no branding.

Changing and evolving living, breathing brands is now what is demanded, and the physical experience has to reinforce this. But ultimately, what will this mean for the traditional retailer, and what will the malls and high streets of 2020 become? I think we are only at the beginning of a changing physical retail landscape, and the exciting thing is, as retail designers, we can have a large part in shaping it. Consumers are becoming evermore empowered, so why should a physical location or time of day stop them from shopping?

As a new creative director for retail at dash design, Peter Burgoyne has built a reputation for elevating retail design by combining disparate elements into a cohesive, strategic vision. His passion for technology and drive to make the retail experience powerful, memorable and results-driven has allowed him to work with clients such as Saks Fifth Avenue, Tumi, Kenneth Cole, Lord & Taylor, Duane Reade, Printemps, Shinsegae and Holt Renfrew, to name a few. Peter’s background in industrial design also allows him to take a holistic approach to design and view opportunities through “different lenses.” It also keeps him laser-focused in his journey to answer the question: “Is there a better way of doing this?” Burgoyne is a member of VMSD’s Editorial Advisory Board.

This year, Peter will be a presenting speaker at VMSD's International Retail Design Conference (IRDC), Sept. 13-15, in Montreal. Don't miss his session, “Design Diary: Bringing Kenneth Cole's Brand Message to Life,” Tuesday, Sept. 13, at 2:45 p.m, wherein he will share his firm's design process working with the legendary fashion brand to blur the lines between the sales store and the stock room to create a streamlined omnichannel experience. For more information about his session and others, visit irdconline.com.

 

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