Amazon has been occupying the minds of retailers (and especially wireless retailers) lately, with its popular Kindle Fire tablets, its controversial Price Check App (which enables showrooming), and its recent brick-and-mortar ambitions.
The above graph (prepared by Mark Sigal of Unicorn Labs) illustrates why today's retailer needs to reboot: When comparing the profit margins of Walmart, Amazon, Best Buy, Target, Home Depot and Apple over the past decade, they all plateau -- except for Apple.
Visitors to the Bay's flagship Toronto store may be surprised to be greeted not by a salesperson, but by Anna, a life-size virtual greeter projected on a glass panel within the store.
The Basic Areas of the Retail Environment
In this article, we will take a look at the main in-store retail areas where the place qualities and the design principles can be applied.
We've blogged in the past about hiring and training Gen Y employees, who make up a large part of the in-store wireless retail workforce. But a new blog post on MediaPost.com takes a look at the other side of the counter: How to serve Gen Y customers.
QR codes have been in the news for some time and in spite of success stories (like Tesco's Home plus grocery service in South Korea), a study by comScore indicated only 14 million mobile device users in the U.S. scanned a QR code in June 2011.
Two days ago, we blogged about the emergence of the "omnichannel experience" in retail, which (through technology and physical interaction) allows merchants to connect with customers on several channels simultaneously.
In a move analysts are calling inspired by Apple, online retail giant Amazon is opening a physical store in its hometown of Seattle very soon, reported Alistair Barr of Reuters (Feb. 6).
Guiding Principles for Place Design
In this article, we'll examine a few recurring principles of (invented) place design that can easily be applied to the design process of almost any space, including retail ones. After all, if Disney Imagineers use them, why shouldn't we?
"Discovery will no longer be limited to text search," writes the team at Trendwatching.com in their Feburary 2012 Trend Briefing.
"With mobile and social quickly emerging as the new consumer focal points, retailers need to fully understand these channels to develop a cross-channel strategy that maximizes the strengths and potential ROI of both," wrote Hillary Prey of TheMobileRetailBlog.com (Jan. 24).
Qualities of Successful Public Places
How to turn a physical space into a public place that people would love to come back to on regular basis -- a concept also known as the "Third Place"?
What is needed, first and foremost, is a definition of a big idea. A big picture. Sometimes it is a story of a brand; sometimes a clear function of that space; sometimes even just a simple overarching idea.
In the retail world, a big retailer with hundreds of stores might have well developed brand with all the stories and elements defined, where on the other hand a small retailer with 1-2 doors can have a very intimate, friendly story. Both of these scenarios are fine, as long as there's a clarity of function and the consistency in demonstrating that unique character. That is what the branding is really all about: clarity, consistancy and character.
The big idea will define the retail space's purpose, target group, look and feel, customer activities, etc.
Here are four basic qualities of a successful public space. These relate to bigger public spaces, but retailers should learn from them since they relate to a basic human behavior.
Retailers often say there are three rules for a good store: location, location and location. That captures the quality and the importance of it.
Indeed, location has always been crucial in the retail industry (it still is). But nowadays, retailers must ask themselves: Does the place act as a physical extension of our virtual presence (i.e. a web site, mobile app, social media), where a user can continue down to a great in-person experience? In essence, the virtual location can drive traffic to the physical one.
Maybe a customer was intrigued by the experience in the place and now is at a point where he/she is deciding where to buy: Should I buy from an online retailer at a lower price? Or should I pay a bit more from a neighborhood retaler offering more than just the product, such as an experience, advice, and a relationship?
The goal is to make the place a destination, not just a utilitarian space. If that goal is reached, a less than perfect physical location is still acceptable. People won't mind a minor inconvenience, as long as the benefits outweigh the costs.
2. Comfort and Image
A place needs to be clean and well designed in terms of form and function. It should provide a comfortable stay for a defined demographic. In a recent psychological study from Columbia University, Relaxation Increases Monetary Valuations, it was found that when relaxed, people tend to valuate things higher that usual. A recent Wall Street Journal article analyzes how offering a relaxing experience can directly benefit retailers.
Another indicator of this trend comes from McDonald's, a symbol of "get in and out fast," is putting billions of dollars into redesigning its restaurants (in U.S. and Europe). The new design includes comfortable chairs, sofas, fireplaces and free Wi-Fi. The fast-food icon hopes that by offering an extended, pleasant and comfortable stay, customers will come back often -- spending more.
Starbucks paved the way for these experiences a long time ago and has firmly establish itself as the quintessential Third Place.
Recent examples from the wireless retail industry that reflect the same philosophy are O2 stores in the U.K. that offer a comfortable area for browsing the newest apps and for business clients, private workstations with free Wi-Fi.
At the recent iQmetrix Wireless Summit, during a discussion about the new generation of retail spaces, a retailer asked whether they should provide chairs in their stores. Absolutely.
In many shapes and forms, depending on the location within the store, a stool, chair, armchair or sofa would work. Provide a sip of coffee, a snack, and free Wi-Fi -- anything that signals, "Come in and relax. No reason to be uncomfortable."
This is a big one the retailer point of view. Successful places offer a quantity, variety and quality of activities. Of course, activities must be related to the purpose of the place.
Having something to do gives people a reason to come to a place – and return. When there is nothing to do, a space will be empty and that generally means that something is wrong.Project for Public Spaces
What does that mean for a wireless retailer? If your store is empty most of the time, customers are there to make a quick transaction, to get advice or request service or device repairs. Even during their stay, do you provide additional activities that relate to your business, something to reinforce your branding, your industry or your products? Do you offer a sense of community?
Activities in the space must address customer needs. Customers need to be entertained; they need to be inspired; they need to be educated; they need to stay informed. If they are offered all four (within the context of the retail space) they will not turn to other sources (news, social media, online reviews) or worse, leave the store.
Retailer should establish and nurture that relationship with the customer, as it will not only last for the duration of their stay, but much longer -- out of store, online and in all subsequent visits.
Disney stores recently went through a redesign to combine entertainment, education and additional information. Even Disney, famous for creating successful public places like theme parks, resorts and various other attractions, failed with this point in their older stores. Disney describes its new stores as "The best 20 minutes of your child's day," featuring a variety of activities for kids: interactive theater (picture above), magic mirrors, car building stations and more. Even if you are not shopping, Disney still wants your kids to come in and play, each and every day.
This is the hardest quality to achieve and is a sum (or product) of the previous three. If people feel good about a place -- it's easy to get to, comfortable, clean, safe, and offers appropriate activities -- they will enjoy the place, bring their friends and family, and come back on regular basis. Think about a successful cafe, sports venue, local park or a big theme park. Or a city. Or a store. Or your store?
Today, the above paragraph better describes the time people spend on social networks than in physical spaces. The Holy Grail of the new retail experience will be to bring online social networks to physical spaces and merge the two in a single, seamless experience. That blend would benefit both retailers and customers.
Brick-and-mortar retail can win over online shoppers and turn the burden of real estate into a huge competitive advantage by creating social, family experience. Online (shopping) is solitary, so brick-and-mortar stores have an opportunity now to carve out a clear and differentiated shopping experience. Brian Backus, Kidlandia
Think of a place you like to go to and check off the four points described above. You will quickly realize places that are doing well are the ones with strong "big idea" and a careful nurturing of these qualities.
I think we are most interested in the idea of shopping as a new kind of public space. How can we enrich these experiences? Can we bring new content, information, ideas and visual experiences to shopping in a thoughtful and dynamic way?
I believe the above quote, from New York City-based design studio 2x4 Inc., defines the direction in which new types of physical retail locations must go.
The entire retail industry has already experienced a tectonic shift due to e-commerce, mobile apps and social networking. Brick-and-mortar retailers, cognizant of the increased competition from virtual retail, must undergo a similar transformation, but of a different nature.
More and more customers come to stores, check out a product, and then place the order. Unfortunately, the order is often placed via smartphone, with a different online retailer than the store the customer visited, at a lower price (see Amazon Price Check App). How can retailers compete with that? What else can a retailer offer to a customer, that is different from a massive warehouse or an e-commerce site?
The answer is in redefining the purpose and philosophy of a store. At the most recent iQmetrix Wireless Summit, Doug Stephens offered his view of the 21st Century retail location, whose role shifts from being the end of the marketing/distribution channel to becoming the start of the channel.
The days when the physical store was the sole transactional point-of-sale are behind us. Today, the focus is on customer experience: creating excitement and inspiration, invoking social engagement, offering a relaxing experience through the use of design elements in the space, and providing interactive tools, personal communication devices and friendly staff. These spaces not only build a loyal customer base, but loyal and motivated employees as well.
For most stores, moving from a transaction mind-set -- “how do we sell more stuff?” -- to a value-creation mind-set will require a complete overhaul.Ron Johnson, J.C. Penney CEO and former senior VP of retail at Apple
High-tech device manufacturers are indicative of the customer experience trend -- they have increased their physical store presence in spite of having the necessary distribution channels for their products. The Apple Store, ranked #1 in customer service since it opened, leads the way. Microsoft has followed suit (see photo below), and other hardware manufacturers have too, but so have purely online retailers like eBay or Amazon.
Google recently opened its first Chrome Zone store in London and another big Androidland store in Sydney (with carrier Telstra). Online retailers are starting to realize that meeting customers face-to-face -- and offering a unique experience and relationship in addition to effective shopping -- is crucial to developing brand awareness.
The next four articles of this series will examine the underlying principles of creating a successful retail place. This is not referring to aesthetic design, but rather to conceptual, functional and organizational aspects. These articles will focus on physical locations, the in-store part of the retail process. Of course, in-store cannot be analyzed without out-of-store and online parts, so the latter two will be dealt with in the context of a specific topic.
First, we'll take a look at the qualities that turn a physical space into a public place. Next, we'll examine the guiding principles to creating a place, and what are the specifics of a retail place. Last but not least, we will analyze the tools and summarize the checkpoints that can help retailers to create the next generation of retail places.
Once retailers are brave enough to let go of the idea that their stores are solely places of transaction, they can focus on giving customers a rewarding experience. FITCH
Next: Part 2 of 5 - Qualities of Successful Public Places
Part 3 of 5 - Guiding Principles of Place Design
Part 4 of 5 - The Basic Areas of the Retail Environment
Part 5 of 5 - 5 Checkpoints for Next-Gen Wireless Retail Places