By Alen Puaca, creative director, iQmetrix
The retail industry is in flux. Buffeted on all sides by the winds of change, retailers of all stripes are struggling to react to the challenges posed by online commerce, social review sites and “showrooming” customers.
It is this last issue that has many retailers really worried.
With the proliferation of smartphones among a wide segment of the population, retailers are observing a growing tendency of customers to visit their stores, pick up and examine a particular product, use their smartphones to look up reviews, competing prices and other information about the item online, then exit the store without purchasing the item, effectively making the store a “showroom” for an online retailer with a lower price. (see Amazon Price Check App).
To compete with the twin threats of online retail and showrooming, retailers with brick-and-mortar stores must think about how they can transform their differentiators (a physical location) into advantages.
In short, to be competitive in today’s new environment, retailers must do nothing short of redefining the mission of a store.
Transforming the In-Store Customer Experience
The era when the store environment was the only place to make a sale is long gone. Today, retailers focus on customer experience through developing excitement and inspiration, encouraging social engagement, relaxing the customer through design elements, and offering interactive tools and a friendly sales team. When done successfully, these spaces not only build a loyal customer base, but loyal and motivated workers as well.
One example where this approach is paying off is in high-tech device manufacturing. These companies have increased the number of their physical stores in spite of already having the necessary distribution channels for their products. The obvious example is the Apple Store, which has ranked first in customer service since it launched. Apple has been followed down the retail store path by other hardware manufacturers like Microsoft and purely online retailers like eBay or Amazon.
Online retailers are beginning to realize that offering customers a unique experience and relationship in person alongside a good shopping tool is critical to developing brand awareness. To wit, Google opened its first Chrome Zone store in London in 2011 and also launched a big Androidland store in Sydney with carrier Telstra.
What Makes a Public Space Successful?
Howard Schulz, pioneering CEO of Starbucks, popularized the concept of a “third place” in America when he introduced the now-ubiquitous coffeehouse as a spot where people could gather and relax in between their two main “places” of home and work.
For many retailers, the challenge is making their physical space into a public space that potential customers enjoy returning to, time and again… in short, a third place.
The first step is to define that store’s “big idea.” What is the purpose of the store, its mission beyond profits and inventory? Is it a mission statement? For many retailers, it can be as simple as a story, the tale of why the store came into being.
Of course, a multinational retailer with hundreds of stores across the world probably already has a well-developed brand, and a small retailer with maybe one or two shops can have a very intimate, friendly story to tell. Both of these scenarios work fine, just so long as the story shows the three C’s: clarity, consistency and character.
Once the big idea or story is defined, it can be used to develop the retail space’s purpose, target group, look and feel and customer activities.
Below, we cover the four essential qualities of a successful public space, each of which relates to a basic human behavior.
Just like in real estate, the three most important qualities of a retail store are location, location and location.
While location is as important as ever, it’s not the full story. Retailers must also ask themselves whether their in-store environment acts as a physical extension of their virtual presence, such as their website, social media presence and mobile apps. Would a visitor be able to have a unified experience across all outlets of a retailer’s presence? If so, the virtual location can drive traffic to the physical one.
The goal is to develop a cross-platform relationship with a potential customer to the point where, intrigued by the experience in the space itself and now at the point where she is deciding where to buy, the customer decides to buy from a neighborhood retailer on the strength of the store environment, culture and resources.
A retailer’s goal should be to make their store a destination, not just a no-frills space. If it can attain that goal, people won’t mind a minor inconvenience in location, as long as the benefits outweigh the costs.
2. Relaxation and Appearance
To provide a comfortable experience for its demographic, a retail place needs to be clean and well-designed. A recent psychological study from Columbia University, Relaxation Increases Monetary Valuations, found that relaxed people tend to valuate objects and products higher than they would if they were stressed. In practical terms, a recent Wall Street Journal article analyzes how offering a relaxing experience can directly benefit retailers.
To see how this trend is playing out at the mega level, observe the latest moves from McDonald’s. The fast food giant is investing billions of dollars into redesigning its restaurants (both in the U.S. and in Europe). Their new restaurant designs include overstuffed chairs, sofas, fireplaces and even free Wi-Fi. The fast-food icon hopes that by offering an extended, enjoyable and relaxing stay, customers will come back and spend their time and money there more often.
Retailers are following suit. For example, O2 stores in the U.K. offer customers a comfortable area for browsing the newest apps, and make private workstations with free Wi-Fi available for business clients.
Stores should strive to make their visitors as relaxed and happy as possible, even to the point of providing chairs, sofas, some coffee or snacks and free Wi-Fi -- anything that says, “Come in and relax. No reason to be uncomfortable.”
3. Events and Things to Do
Offering events is a big thing to consider from the retailer’s point of view. The successful place offers a wide variety of quality activities for customers to choose from, each of which ideally is related to the purpose of the place.
Participating in a fun activity gives people a reason to visit a place – and return. On the other hand, if a store offers nothing to do, it will be empty and that means that something is wrong. Specifically, if a store is empty most of the time, then its customers are simply there to make a quick transaction. Probing deeper, we can begin to understand why this may be so: while the customer is present, does the retailer provide additional activities that relate to its business, something to reinforce its branding, industry or products? Does the retailer offer a sense of community?
Any activities a retailer offers in its space must address customer needs. Shoppers need to be entertained, inspired, educated and informed, ideally all at once. If a visitor is presented with all four kinds of activities within the context of the retail space, they will not turn to other (read: online) sources or worse, leave the store.
Retailer should establish and nurture a relationship with the customer, because the relationship will last far longer than the duration of their stay: the relationship will persist after the customer leaves the store, when he or she goes to the store’s website and throughout all subsequent visits.
Disney stores provide a great example of in-store retail activities. Disney retail locations were recently redesigned to combine entertainment and education within the retail environment. It’s remarkable to note that even Disney, deservedly famous for creating successful public places like theme parks, resorts and various other attractions, had failed to successfully implement this approach in its older stores. Disney markets its new stores as “the best twenty minutes of your child’s day,” offering a spectrum of fun activities for kids, including interactive theater, magic mirrors and car building stations. The idea is clear: even if a parent isn’t planning on making a purchase that day, Disney still wants them to bring their kids to come in and play, time and again.
Sociability is the hardest quality to achieve. Ultimately, it’s a product of the previous three qualities we discussed above. If people feel good about a place – it offers fun things to do, is comfortable, clean, safe, and easy to get to -- they will visit often, bringing their friends and family. Think about a successful cafe, sports venue, local park or a big theme park. Or a city. Or a store. Is it your store?
The next, most important step of the new retail experience will be to bring online social networks to physical stores and merge the two into a unified, seamless experience. Bringing this combination to the store environment would ultimately serve to benefit both retailers and customers.
To learn more, join Alen Puaca for an exciting, informative webinar on August 8th. For more information, click here.