How retail stores need to change and adapt in 2021 and beyond
The idea that the pandemic has accelerated pre-existing trends is so talked about that it has become a cliché. But it has become a cliché because it is true and for retailers with physical stores it has significant implications. More and more people are now buying products online that they swore they would never buy electronically and it is changing what physical stores have to be. I’ve raised the issue with a number of retail experts and the most important point to remember is: no one knows for sure how stores will adapt. The changes are broader and more complicated than any generalized response and that may mean this time is more crucial for retail than any so far. In many ways, the traditional retail world is on fire and there is a wide range of views on how it will play out.
Herb Kleinberger, a retired PwC partner who now teaches retail at Wharton School, gave the briefest overview. “Retailers will be closing many of their stores so they have fewer and those that remain will be more experiential,” he said. Justin Delaney, CEO of Buff City Soap, which has more than 60 stores, says their stores all create a customer experience, and that experience is directly linked to the products. “We are a bakery for home care products. [In our stores,] soap hardens on shelves and someone’s body butter whips up. We are a mixture of personalization and artisanal production. ”
Is the flagship finished?
Deborah Weinswig, CEO and founder of Coresight Research, who spends a lot of time in China, takes a look at the Chinese market to see what the future might look like in the United States. important issues right now… what we see in other parts of the world ahead of us… is a big move away from the flagships because the rent is too high. Fashion designer Cynthia Rowley told me, ‘These big, lavish flagship stores are no longer relevant. [Retailers need] small, small stores that are … like billboards in high traffic stores [areas], finished, geo-characteristic of the mark. His phrase “geo-characteristic” is so interesting because it refers to how brands should look in each of the different places they are found. Other experts agree that specific locations will determine the type of stores that open. Melissa Gonzalez, CEO of The Lionesque Group, agrees. “The ways you present yourself in … different places are not equal.” Sometimes it’s a flagship product, sometimes it’s a service center. The stores will be more useful, ”she said.
Robin Lewis, CEO of The Robin Report, has a little more hope for flagships, but he agrees there will be less. “You may have a few flagship stores in urban areas where they can perform well, but they will turn into entertainment and experience destinations and shows and events as an attraction. [consumers] come in. ”Sucharita Kodali, Retail Industry Analyst at Forrester
With retail real estate falling rapidly in value, I asked Rowley what she would do if she could get a flagship store for the price of a much smaller specialty store. She said stores would then become “more collaborative, so it’s an experience like sharing. [the store] with a fitness room or a restaurant. She cited her own successful collaboration with a new local restaurant at her Montauk, NY fashion store.
Gonzalez of the Lionesque Group points out that we are already seeing collaborations between retailers to make better use of department stores. She indicates that Sephora is entering Kohl and Ulta stores in Target.
One thing all the experts I’ve spoken to agree with is that retail store labor costs are going to go up. Part of this is increasing wage rates, but that’s only part of the story. In order to serve consumers who know they no longer need to visit stores, it will take more trained staff than they did before the pandemic. Weinswig of Coresight says: “[the] Store Associate [job] takes more and more importance and turns into a career and not just a pocket job. She also points out that the role of the store manager will be redefined. In the past, it was all about sales per square foot. But in the future, managers and associates will need to reduce feedback by making sure customer questions are answered and providing customers with a more localized and memorable experience, but that translates into every individual store.
When the function of a store is to drive mobile / online sales, new ways of measuring and rewarding success must be created. The metrics that retailers have used for decades to determine which stores to keep and which to close are going to change dramatically. Gonzalez of the Lionesque Group believes future metrics are less about sales per square foot than experience per square foot.
If stores are to be successful in any format in the future, they will need new technologies to make them more efficient for retailers and more efficient for consumers. While technology affecting the supply chain, especially returns, is critical to a store’s financial success, the biggest change consumers will see according to the experts I spoke with is personalization. Lewis of The Robin Report says it will make it much more likely for retailers to provide the services that only small town shops have been able to offer so far, by knowing each customer by name, understanding their tastes and making them. suggestions that suit them.
What does the future look like
It was true that every store served the same basic purpose: the material was there and if you wanted to buy, you had to go. But since so much has changed online and has been accelerated by the pandemic, stores need to be different and unique to attract consumers. The Formula Store is what consumers don’t want, they need surprise and discovery to motivate themselves. If one store has what others have, there is no reason for consumers to come. This makes retailing harder and more complicated than ever before and requires more creativity, which inevitably comes with more risk for the business. 2021 calls on retailers to develop and nurture new skills to plan stores that offer consumers what they can’t get anywhere else.