6 key components of the store of the future
From Walmart to DTC upstarts like Burrow, retail executives shared their perspectives on what's essential for the next generation of physical stores.
The future of stores — the ones that will still exist — will be highly experiential. They'll engage the customer's senses, cater to convenience and let customers shop on their own terms. At least that's the message coming out of Future Stores, the Miami-based retail conference that took place last week.
Executives focusing on store design, real estate, technology and employee education programs convened to talk about what the future of stores will mean for them, their employees and, of course, customers. Here are some of the most illuminating quotes from the conference and what you can expect from leaders in brick-and-mortar experiences in the coming year.
Andrew Neelon, head of real estate and strategy, Digital Consumer Brands at Walmart e-Commerce
"The store has shifted its placement in the customer journey into sometimes the beginning, sometimes the middle and sometime the end. So I think what's important to understand is: where is your store in that path before they make a purchase and understanding how to measure the impact of your store beyond just that one final touch attribution metric."
Site selection for stores is far more scientific than it's ever been, according to Neelon, who added that Bonobos has gone as far as to send surveys into a market to ask customers where they'd rather have a store. The customer journey is changing, he said, and retailers have to get used to the fact that oftentimes customers will window shop or go to a showroom before going home to buy online. To Neelon, comp store sales aren't all that meaningful anymore. What's challenging though, is figuring out the right formula that will indicate the impact of a single store on the online and overall business. "What is promising is that everyone knows that impact is there and everyone is open to discussing what that framework is," he said. "It's about finding consistent results that are consistently measurable."
Stephen Kuhl, CEO and co-founder, Burrow
"Now is the time to do it, you can get retail for so cheap and landlords are starting to wake up to these flexible lease terms … That gives us flexibility to try things out."
Kuhl is one of many chief executives leading digitally native brands from clicks to bricks. Over the next five years, digitally native direct-to-consumer brands like Burrow are expected to build out 850 physical stores. These brands are getting creative when it comes to the definition of a physical experience. Kuhl, for instance, first dipped the companies' toes in physical spaces by striking up a deal with a landlord to use a fraction of the empty space, just the window fronts, to showcase Burrow couches and an interactive fortune teller experience. For now, the company is testing out its "Burrowhouse" location in New York, which will receive some changes in April, while it scouts out new locations in areas like downtown Brooklyn, Lincoln Park in Chicago and Ace Valley in San Francisco. These have been popular areas with many DTC brands.
Mark Qualls, vice president of store operations at GameStop
"In the end we have a loyal group of really passionate associates that we haven't frankly treated the right way, so we have to find a way to tap into what's important to them, find out what their passion is and then act upon that in a very successful way … Listen and learn is important, but you have to act on it."
Qualls went on a listening tour last quarter, visiting 17 cities and speaking with 25 store leaders and between 10 and 15 district heads. He discovered that the biggest demands came down to higher wages, more hours and better education for employees. GameStop has since developed a program focused on incentivizing good service that makes customers happy, too. The retailer is one of many companies aiming to reduce turnover — which can be as high as 60% — and develop the skills that modern store associates are required to have given how customer behavior has changed.
Caroline Brown, director of experiential design at MM.LaFleur
"We don't have tech in our showrooms and it's intentional, and it's because she [the customer] is inundated by it … to feel familiar I'm not going to put a nine-foot screen in there. I want her to feel like she's at home trying on clothes with her best friend."
Despite popular belief, the future of stores does not mean more digital screens. For a brand like MM.LaFleur, which caters to professional working women who, as Brown puts it, "hate to shop," a high-touch and high-service experience is more valuable than having a tech-enhanced experience. "The challenge was: don't give them a regular retail store, they don't want product out there," she said. It can be easy for retailers to chase the shiny objects or the latest hot tech trend, but what's important, Brown said, is to make sure that the customer experience comes first and foremost.
Kambiz Hemati, vice president of global retail design at Foot Locker
"I think we [Foot Locker] are a destination for sneakers, but we want to be more about community and the human interaction in the store. I see more tech helping in the back of house and less in the front."
Experiential retail is certainly a big industry buzz word, but it's something that Hemati has been working on for two decades with brands like Nike, Starbucks, Verizon and now Foot Locker. "Everybody should spend time in stores and watch how shoppers shop," he also said, adding that every brand has a different set of values and customer they are trying to reach. For instance, when he was at Verizon, he noted that as a tech company, having tech in stores wasn't additive. At Foot Locker, the core customer is incredibly mobile savvy, making AR experiences a worthwhile venture. Retailers, however, may be better off investing more money and time on technology that solves operational issues and allows associates to spend more time on the floor servicing customers.
Gene Lunger, executive vice president of licensee operations, business development and retail education at Ashley Homestores
"If you're not willing to accept risk, you will not survive … Disrupting yourself is uncomfortable and requires you to change the way you do things."
Don't be patient, that's Lunger's advice for retailers in a nutshell. The furniture store executive keeps a Blockbuster card from the '90s in his pocket, "As a reminder of what happens when you're trapped in your business and not working on it." Part of that comes down to being "obsessed" with the customer, and the employee. People-first leadership is necessary for modern retail businesses, he said. "It's about the associate feeling inspired to inspire the customer, it's not about the transaction quotas," he added.
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