Opinion: Reaching the consumers of tomorrow

Formats of retail need to be re-imagined within new models of retailing, claims Nathan Watts, creative director at FITCH.

Brands and retailers across all categories face an onslaught of disruption. As a result, many of the traditional retail formats fail to meet the needs of customers.

Organisations, as observed with our own clients, are focused on realigning or optimising the mix of touchpoints that consumers experience. As a key part of this focus, there appears a strong desire to reimagine the role of retail formats within future-focused omnichannel strategies.

A universal truth for formats

Our late founder Rodney Fitch once said, ‘No retail format can be successful unless it meets the expectation of the society that it serves’. Pondering on his statement, it strikes me that it could be considered a universal truth for brands and retailers, an idea for any time and place, and a compass by which to remain relevant.

Within the detail of the statement however, much has changed. The measurement of success in a format has traditionally been seen through the lens of square foot sales. New metrics must be added to account for the wider effect of the format across all channels. Then there is the heightened expectation we place on brands at retail. More speed, more personalisation, more social and environmental awareness, more uniqueness.

Format purpose and a role in the whole

Seamlessness is another expectation, and the temptation for brands and retailers is to turn each format into a multifunctional entity, a kind of swiss-army knife experience, where the customer can achieve everything, everywhere. This approach fails to recognise the need for clarity of purpose, so it’s necessary to look at the particular role each will play in the whole.

But what role? As we increasingly purchase more of our goods online, stores need to do something different. And if buying is not the primary reason for visiting a store, then what is the store for?

This shift can be seen in some new emerging formats, where the stores play a different role in the fulfilment chain. With fast home deliveries now expected and commonplace, stock holding at retail is put to question. Nordstrom is experimenting with small local stores that carry no inventory, but provide customers opportunities to try products, then arrange for purchased items to be delivered.

In China, Hema fresh food grocery stores double up as warehouse hubs for online orders. Store pickers collect products from supermarket shelves and send them on automated carousels directly to drivers, enabling them to deliver within 30 minutes to a three mile radius.

In both examples, the physical design of each store has been totally reimagined within a newly connected retail model.

Leveraging format attributes

Reimagining the role of the store around new models of fulfilment is one option, but what are the other considerations for future formats? Brands and retailers need to start by looking at the natural attributes of each retail channel and format. For the physical store, it comes down to three I’s: Instant, immersive and inhabited.

Instant

Still, no other channel is as convenient as the physical store when it comes to immediacy of access. Retailers need to embrace the opportunity by moving closer to their audiences. This might mean downsizing and multiplying or even moving to meet the customer where they spend time. Brands and retailers should be experimenting with mobile formats and vending formats to meet our needs for convenience.

Immersive

The physical realm is a multisensory dimension that puts us in the centre. Theatrical spaces, event driven spaces, spaces that tell stories and involve us in the narrative. For formats that are less about selling and more about experiencing, retailers need to find their immersive angle and run with it.

Inhabited

Real people are the magic and stickiness that can only be fully experienced in the physical space. Staff can be the strongest brand advocates, so retailers need to put their people at the heart, either to guide the experience or to explain a complex product offering or service.

Working around complexity

Transforming a traditional network of formats is a daunting task and will require an experimentational test-and-learn attitude. There is no doubt that retail is currently over indexed on the high street. Closing stores can look like an exercise in managing decline, but with a vision for the future role of physical formats, a positive re-alignment can be established.

The first big step is to establish a belief in the power of physical retail as an antidote to the new online worlds that we spend much of our time. If proof is needed, take a look at the growing list of online retailers who swore never to open physical stores. Amazon, Everlane, Warby Parker and Missguided to name a few, saw the opportunity of physical formats to engage more deeply with consumers.

The failures on our high street have generally been those to act slowest to change. Brands and retailers need to take the steps now by reimagining their formats, to secure their fortunes for the future.

Image: Nordstrom Local, Melrose

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