Brick & Mortar 2.0
Brick & Mortar 2.0

How physical retail can be reinvented to save itself.

We’ve all seen the empty mall parking lots, witnessed the shuttering of stores that once seemed like permanent fixtures in our lives, and read the news heralding the retail apocalypse. We loved some of these places, though we admit we hadn’t been to them in awhile.

Checkout lines are miserable. Dealing with strangers is miserable. Walking up and down endless racks and rows is depressing and time-consuming. And that throw pillow that looked super cute online is dusty and dirty because 800 people have touched it before you [might have] stuck it in your cart.

And yet.

Amazon, the great online retail disruptor, harbinger of brick and mortar doom, sees value in a physical presence. They must because they’ve been opening more and more stores. Why?

Because Physical Retail Isn’t Dying, It Just Needs a Reboot

Maybe you’ve heard this one: Millennials and Gen Zers love experiences – and that seems at odds with these predictions that the future of shopping is online.

Because it is. As this article from AdWeek points out, we still can and will shop in physical stores for the foreseeable future:

The industry conflict is too often framed as physical retail versus online retail. Statistical analyses of the growth of ecommerce almost always get coupled with a story surrounding the decline of physical retail, with a heavy focus on the closure of malls. These two things are undoubtedly linked, but experts often communicate this as a zero-sum game. This ignores a fundamental human truth: People now and into the future will continue to leave the house and shop in physical retail. In fact, over 75-80 percent of purchases made today are still through physical retail channels.

But what about the empty parking lots? The shutters? The impending doom? Well, the old model of retail definitely wasn’t hacking it. According to this article about Amazon Go, Amazon’s newest physical presence addresses some of the issues that drove us to Amazon.com in the first place:

The stores use hundreds of cameras and sensors to account for what people are buying. People simply need to use their Amazon Go app to enter the store, pick up what they need, and leave. The items get charged to their Amazon account automatically as they’re exiting. The process removes the need for human cashiers and also reduces customer wait time.

 

 

AM’s Henry Martin says the concept is perfect for what it is.

I'm a huge fan of Amazon Go (and Amazon) because I want to see CVS gone and Walgreens gone and all the other under-staffed, 15-minute-wait-at-the-register-when-it's-midnight-and-you're-in-a-new-city-on-a-business-trip-with-a-meeting-in-the-morning-and-just-need-the-toothpaste-you-forgot commodity vendors gone. They can all enjoy their demise.

So should Home Depot aim to be like Amazon Go? And Nike for that matter? Did Amazon solve the retail problem? Cure cancer? End world hunger?

Of course not. The convenience that the Amazon Go stores provide is perfect for the commodities they sell. But while the old model of retail might have meant constructing the same old aisles and racks with different goods in every storefront, the new model isn’t a one-size-fits-all solution. Our people had some thoughts on this.

Alexandra Bohannon explains the distinction between commodities and…everything else.

There is a difference between going shopping (desirable items) versus procuring (necessary items). No one needs to assess the physical nature of K-cups, so why not just ship them in? But jeans? You better believe I'm trying them on first.

Tuck Oden thinks getting commodities out of the way is critical to creating the physical experiences Millennials and Gen Zers long for.

Physical shopping for commodities and practical items can't compete with its easy digital alternative. However, for everything else, there's so much room to add some killer brick-and-mortar-exclusive bonuses to the brick and mortar experience. A denim bar with an actual bar and complimentary drinks. Live music in a liquor store. A personal project advisor at Home Depot... What I'm getting at is this: As the focus of most physical shopping experiences becomes narrowed (no more commodities), it opens up the possibility to really do something special/unique for your customers who are interested in real shopping. And that's kinda neat.

So what should the rest of the reboot look like?

As implied above, we think it should fit the brand and the product, store by store, but we had different ideas about the strategies that should be applied.

Tiffany Eitzmann thinks there’s an advantage to starting online and moving into the physical space.

Warby Parker, Everlane, Boll & Branch and Casper—each one of these companies sells something people desire to feel, try on, or test out and they are all online-first companies who are establishing or expanding their brick and mortar presence. They are digitally native and vertically integrated. They sell their own good and already understand their supply chain. This gives them a pre-existing advantage when moving into the physical space. When it makes sense, brick and mortar is also an opportunity to gain more exposure, new customers and new insights into shopping behavior.

Ryan Winkler Herr wants to retrofit existing physical stores to complement online spaces.

When we talk about shifting physical retail to complement the online presence, I guess I want brick and mortars to evolve into something more akin to galleries. Something like a Target with lots of displays and variety without take-as-you-go inventory cluttering the space.

You walk through, you try on, you taste, you scan all the things you like as you go on your phone (something retailers might like as it keeps impulse-buying behavior alive), and then it all gets delivered to you (hopefully more quickly than 1-2-day shipping in the long run). Or maybe all these places would have an Ikea-style warehouse attached or nearby sharing with other retailers, someone retrieves everything you scanned, and then you return to pick up.

Meg McElhaney thinks there are some tech savvy ways to give brick and mortars a leg up.

Stores and brands that have traditionally only been in physical locations leaning into technology get a leg up on the competition and can compete with online-only retailers. Target is a great example. Their app is location-specific and can tell you the aisle number for an item in your store. You can build a shopping list, pay for it and pick up your items in as little as an hour. You can also order from their online store through the app. They will suggest items and specific sales based on your purchase history, too. It's a seamless transition from the virtual world to the real one.

Nicole Capossela thinks the physical retail should be an experience.

I would much rather purchase something on the internet then go to a store. I like the convenience of clicking a button and having an item the next day. I am more than willing to delay satisfaction for the convenience of not needing to leave my home. With that said, there are a few brick and mortar shopping experiences that I do enjoy, but I enjoy it for just that – the experience.

Henry Martin says stores should play up their local presence, as some have already done.

One on the local scene that I'm interested in is Neighborhood Goods. In addition to an interesting concept of rotating displays featuring goods from local vendors (keeping it interesting for repeat visitors by making sure the shop looks and feels different every time), there's a stage in the middle of the store. That's right, a stage. They're just as interested in being event space as they are being a retail outlet.

And this brings me to another emerging opportunity for retail outlets: a stronger role in local information sharing. That Neighborhood Goods stage, for example, could become the place where local residents hold events to discuss the city's plan to build an ugly apartment building down the street. Or, Neighborhood Goods-type stores could decide that if no one else is going to cover the goings-on of their immediate, hyper-local area, perhaps they could.

Ashley Hackler thinks there is value in the human side of brick and mortars and the customer service experience should be rebooted as well.

I think there is value that comes with interacting with another person face-to-face, which typically happens in a brick-and-mortar setting. Mainly when dealing with personal/sensitive matters such as healthcare or financial institutions that handle your money (opening a new account with a person at a bank branch, seeking financial guidance and recommendations with your banker or advisor, etc.) all while still being able to manage accounts online.

USAA recently launched a new design studio in Austin training people across the organization in human-centered design and design thinking techniques, using empathy to understand their customer’s needs and then work from there to design a seamless experience across every USAA touchpoint. It's all about making the experience for the customer invaluable. Some of the industries this applies to are seeing that a human connection will have a significant impact on customer experience.

Tim Herr wants stores to strive to be inclusive.

Tech-oriented establishments (let's say any place where you need a smartphone and a proprietary app to do business) are never going to be successful in courting the poor, the elderly, the visually impaired and so on. For the most part they're not going to switch to buying commodities online either. I worry that, while Walgreens and CVS will stick around, they'll increasingly be catering only to low-income and otherwise marginal customers and so will lower their standards. It will be kind of like how we used to shop in more or less the same grocery stores (at least in my memory), and now retailers have to decide whether the center of gravity they're being pulled towards is Whole Foods or Dollar General. Is it possible to create a no-hassle retail experience that is inclusive at the same time?

Summarily, we think a 2.0 physical retail presence should do several key things:

  • Brick and mortars complement online stores.
    In the old model, there is almost a competition between the two spaces. But shopping in these two spaces happens for different reasons. One is about convenience and one is about immediacy and experience. Moreover, the two should interplay seamlessly between the technology and the physical.

  • The physical experience should be streamlined.
    If customers are going to a physical store, it is because they want to experience or sample what they are buying before making their purchases, they want to speak to a human about their purchase, and/or they want to walk out with their purchases immediately. Brands should focus on creating an inspiring, uncluttered and interesting display, intuitive customer service and convenient ways of delivering stock – if at all possible, get rid of checkout lines.

  • The product should be considered when designing the space.
    Creating an experience means breaking free of traditional racks and aisles to consider how a product can be best viewed, sampled and interacted with in a physical space.

  • The location should be purposeful and convenient to the consumer base.
    This is where stores that begin exclusively online have an advantage – they are better able to assess where their customers are and which products they are most interested in prior to building a storefront. But even established chains should prioritize and be sure every location is mindful of where it is situated.

  • Retail spaces should establish themselves in the local community at every opportunity.
    An online store cannot be part of a community in a meaningful way. If you are going to bother having a physical space in a particular place, reaching out to causes the community cares about can only help your brand feel more human to your consumers.
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