As some stores shutter, tech will open new doors

Brick-and-mortar will continue to drive huge sales for retail. However given the sheer volume of extra space, the way in which it is used to drive sales simply must change. Moreover, competition for consumers’ disposable income is fiercer than ever, and retail must find a way to either draw from or win back customer spending on categories like technology and travel. What are new opportunities to repurpose store space and attract more customers with integrated offerings? Flex spaces, entertainment hubs, dining experiences—these are the new frontiers of brick-and-mortar.

Technology can breathe new life into the space

Any renewed look at store layout should start with brand experience. Brand needs to be top of mind in a way that’s organic to a customer’s path through the store:

“You should have brand from the get-go. That should be part of the conversation. You need to figure out how you’re going to emanate that brand into the entire space, whether it’s environmental, whether it’s technology, whether it’s different touch points engrained in the space.” — Dick Lew, Brand Practice Leader, Gensler

Technology is ripe with possibilities in terms of optimizing space. As automation and the Internet of Things become more prominent at each touch point, space will increasingly be used to communicate with customers wherever they are in-store:

Retailers are preparing to tailor the shopping experience to the ever-changing needs of each person. Coupled with data from online transactions, digital sensors and devices will make our buying experience far more engaging and personalized.” Renata Mattos, Latin America Lab Services, IBM Systems

Soon enough, checkout will happen remotely as we leave the store, foregoing the need for lines or individual scanning of products. 3D printers will allow businesses to print products locally in-store, rapidly meeting demand and renewing inventory.

Some retailers have jumped on the opportunity to cross-brand in-store, hoping to attract new customers in partnership with another retailer. Sephora recently opened 13 new locations inside JCPenney around the country, offering co-branded gift cards to a handful of customers upon rollout. Kohl’s has adopted a similarly bold strategy to bring in new customers: adding Amazon return centers to stores in different locations. In Chicago, stores with these return centers have seen foot traffic 8.5% higher than elsewhere, and since launch, 56% of customers who brought in Amazon returns have been new Kohl’s customers.

Others are now seeing the space as a way for customers to trial their products and experience a version of their brand’s world. At Alibaba’s Hema supermarkets, customers can choose items and have chefs actually prepare their meal onsite while they finish the rest of their shopping. Nike’s Soho shop in New York features a mini basketball court, a treadmill synced with screens that digitally simulate a run, and a soccer arena.

Connect—through cross-promotion and creativity

Obviously, some big box stores have more extra space than others, making for a greater challenge. It’s a cue to think beyond the retailer’s immediate offerings. What if the spare footage was auctioned off as flex space made available for cultural events, gatherings, or other forms of commerce? You can imagine a farmer’s market occupying an unused section of brick-and-mortar one weekend, a yoga or Crossfit group making use of the space during the week, and pop-up stores that bring in loyal customers of other brands appearing on a bi-weekly basis.

If a retailer can offer experiences across a broader segment of customers’ lives, they can also gain greater insights into customer preference. Moreover, they can localize these experiences based on the audience at hand, equipping their sales associates with powerful knowledge of their customer base and generating incremental shopping trips.

WeWork has taken space in a Shanghai shopping mall, setting a new standard for co-working programs. The byproduct is high-net-worth professionals working where they shop.

The Mall of America, among others, has begun offering 4-D rides on the level of a theme park experience, seeing the potential of unused spaces as entertainment hubs. In San Jose, Pacific Retail overhauled usage of mall space to not only include a 24-hour fitness center but adorn the outer walls with 20,000 square feet of murals by local artists.

Your store can be a living interface

Redesigning the retail space will be a way for brands to prove out and expand their purpose. If the old brick-and-mortar model was all about the transaction, the new one will look to enrich customers’ lives in far more ways than previously imagined. The key theme, it seems, is community. As retailers look to appeal to the local community’s identity and interests, they will bring enormous value to the brick-and-mortar environment. Rethinking the space means rethinking what your customers want and need.

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Updated Jan 10, 2019 | Originally published June 2018