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The Future of The Retail Store

Posted February 5, 2013
Posted in Blog, Store Experience, Strategy, Technology, The Future, Trends

By Doug Stephens

busy-mall

Retail is dead!

At least, that’s how Marc Andreessen sees it.  The entrepreneur and tech investor was recently quoted saying that all physical retail stores will die, succumbing eventually to the vast sea of online competition.  According to Andreessen, there will be one way to shop for everything and that way will be e-commerce.  It’s also fair to say, given that Andreessen co-founded Netscape and is invested in a number of online properties, that he might be just a little predisposed to this extreme position.  Nonetheless, his opinion caused some unrest in the retail community and should be taken seriously.

On the other hand…

I have been a vocal proponent of a somewhat different future; one that includes both virtual and physical stores.  You see, if I believed that humans shopped for no other reason than to acquire goods, I might be more aligned with Andreessen’s view but in fact, we don’t shop just to get stuff  –  any more than we go to restaurants purely for nutrition.  In fact, we often shop to fulfill other deeper needs as well – the need to disconnect, to socialize and to commune – and at times to simply be out in public. Why else would celebrities brave the hoards of paparazzi to shop for things they could undoubtedly have delivered to them on a silver platter?  The physical, human experience of shopping is in some ways of far greater value than the goods that come along for the ride.  So, while shopping is a means of acquiring the things we want and need, it’s also a meaningful social activity that appeals to our deepest, human tendency to gather in tribes.

That said, I’m convinced that between the futures that Andreessen and I describe, lies the truth.  But one thing is quite certain; that retail stores will be much different in the years to come than they are today.

But how different?

Regrettably, this is where the debate usually ends, with one side declaring brick and mortar retail dead and the other passionately defending its infinite existence.  Rarely do we hear either side attempt to describe the specific ways in which stores are likely to evolve from what we see today.  In other words, few seem willing to paint a picture the store of the near future.

So, I’ll take a shot at it, based not on what I foresee twenty years from now but rather based on what I see just around the corner and in front of me today.

And so…

These are some of the biggest changes I see to the concept of the retail “store”.

Less Take and More Make

Stores will increasingly become places that we visit, not simply to pick up mass produced articles but also to design and co-create special things with the personal assistance of experts.  Whether it’s customizing a suit, building a one-of-a-kind notebook computer or designing the perfect bicycle, stores will be the point of collaboration and customization.  These elements of customization will make for unique personal and physical experiences.

Less Product and More Production

With online players like Amazon prepared to ship just about anything we want in a matter of a day or two, our dependency on physical stores for mere distribution will continue to wane rapidly.  Smart brands will have no choice but to, focus increasing amounts of attention on making their store spaces experiential brand starting points, with high production value. Stages where magic happens.  Canadian sporting goods retailer Sport Check recently unveiled a concept store that might better be described as an adult amusement park for the sports enthusiast. Leveraging a variety of media and technology, the store has morphed into a wall-to-wall sporting experience.  The store remains the most visceral expression of the brand essence.

Less Conversion but More Converts

The purpose of retail will no longer be to solely convert every customer into a buyer of goods but rather transform them into disciples of the brand itself.  To begin a relationship – a dialogue that may play out in any number of buying channels; online, in-store, mobile or elsewhere.  It doesn’t matter where purchases take place. What matters is that the consumer falls in LOVE with the brand and shares that love with others.  The store maintains the potential to be that emotional center of gravity for the brand.

Less People but More Performance

The economics of online competition mean that brick and mortar discount merchants will have no alternative but to completely automate their store environments to remain cost-competitive – Walmart , for one, is already heading in this direction.   At high-end merchants, stock clerks, cashiers and inventory counters will be the similarly replaced with technology. Front line salespeople, however, will be higher performing professionals who are paid considerably more money than today, and will be expected to literally sweep customers off their feet! These rare individuals will be intense believers in the brand, super-users of its products and co-creators with their customers. The era of the minimum wage clerk is giving way to the simultaneous rise of the robot at the low end and the Brand Ambassador at the high end.

Less Interruption and More Exchange

The current practice among retailers of asking for personal information only to annoy and interrupt with meaningless offers will give way as consumers garner more tools to filter out these useless overtures.  Enlightened retailers, like Neiman Marcus,  will appeal to their customers for a more overt exchange of value promising distinctly better, more customized and enjoyable experiences in exchange for relevant personal information.  The transition is less about privacy and data and more about earned trust through performance.  And the fruits of these data inputs will be almost immediately tangible to customers through clearly personalized services and product offerings, as data latency quickly becomes a thing of the past.

Less Established and More Ephemeral

Consumers, particularly younger consumers are developing an insatiable appetite for what’s new and next.  Therefore, managing the same 100 stores in a mall for years on end simply won’t do anymore. Leases will shorten, new retail brands will evolve more quickly, old ones will die sooner and pop-up installations will rotate through the space. Change will be continual.  The mall manager’s role will become that of editor and curator as the mall becomes a revolving door for new brands and concepts, in a relentless effort to captivate consumers.

Less Average and (Much) More Remarkable

In a contracting market, there will be increasingly little room for sameness.  Ten retailers at the mall selling variations of the same clothing styles will soon become 5 retailers who absolutely kill it, with unique and remarkable collections.   Average, forgettable experiences simply won’t pay the rent anymore and will be kicked to the curb by outstanding stores who bring something new and fascinating to the market.Get My Book.001

So, is retail dead?  Not a chance. If anything, it’s the very pervasiveness of online alternatives that is causing the best stores to rise out of the ashes of 30 years of mediocrity, ushering in what I, for one, believe will be the true Golden Age of the Store.

(Update) Coincidentally, a week after writing this post, Google announced that they would be opening physical retail outlets. 

 

COMMENTS

  • Anh  says:

    I actually found this particular article , “The Future of The Retail Store |”, highly compelling not to mention it was
    in fact a wonderful read. Thanks for the post,Jessika

    Feel free to surf to my web page; http://yahoo.com

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Thanks Jessika!

      Reply
  • Brett Powell  says:

    Doug, you’ve provided a very thoughtful vision of the future of physical retail. It’s refreshing to see a broader view that embraces the human appeal of “meaningful social activity.” Great stuff! Thank you.

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Thank you for sharing your thoughts! I appreciate it.

      Reply
  • gustiecreative  says:

    Very insightful. Glad you mentioned Pop Up retail and short term leasing. You offer keen insight on developing trends of the consumer and retail that are here to stay and will become commonplace. Look forward to reading your book.

    Reply
    • Doug Stephens

      Doug Stephens  says:

      For sure, time frames are shortening. Not only for leases for our whole frame of reference on brand longevity. The idea of a brand persisting for decades – much less centuries, will become a thing of the past in the years to come. Thanks for taking the time to comment.

      Reply
  • Jamie Williamson  says:

    Great piece! I agree wholeheartedly with your organic/holistic thinking. I’ve mentioned some of the points you bring up with brand managers before. Daggers almost flew out of their eyes at me! It amazes me how people are so afraid, they blind themselves to great opportunities. Again, great work!

    Reply
  • Andy Powell  says:

    Interesting article. I envisage retail stores and spaces shifting back closer to the historical role of the medieval market square. – where a range of social needs were met beyond the commercial / transactional. The interesting thing is that this shift back in time is enabled by a range of innovative digital technologies.

    Reply
  • Chris Green  says:

    I complete get where you’re coming from Doug and I totally share your view.

    I have been working in OOH media for the last 10 years and for a large majority of that time on media propositions in UK shopping malls. The property groups that own these spaces have a contractual commitment to their tenants to drive footfall through their doors and into the shopping space but it was historically the brands /stores that were the reason the shoppers came. But, until recently, the retail environments have been too much about ‘shifting product’ and very little about giving the customer a brand experience they can relate to personally and consequently remember and share! (And with social media at the fingertips of every ‘wired’ teenager today [and indeed oldie], the issue of sharing a bad experience is a greater challenge for brands than ever before!)

    In recent years the mall owners have been the ones who have tried to change the shopping experience. The emergence of out of town destination shopping venues have delivered a more ‘attraction-like’ experience for the shoppers and as a result, a wider physical catchment of consumers. The mall has become a day out in which you can see a film, display your prowess as a trampolinist, grab a bite to eat and ooh yes, throw in a bit of retail therapy too. And by design, there’s something for ALL ages too.

    It is only natural therefore to assume that these spaces will keep evolving and trialling new ideas. And yes, this is ‘rubbing off’ on the retailers themselves too as the space owners offer more flexible leasing terms and less stringent legal ‘do’s and dont’s’ within the retail unit space!

    In my experience, the trail blazer in this space has to be Westfield. They literally are all about the experience and design the retail space to reflect this!

    Incidentally, today we see so much more space on the walkways of the malls being utilised for short term (pop-up) promotion by brands that use truly amazing creative ideas to engage the public. Here again, this attraction-like approach has both young and old flocking to experience the brand and tweeting their reaction, in words and pictures.

    The pressure is on as consumers actively look for the next great brand experience. And when they find it they are sure to go tell their friends.

    The question is … Will they find it on-line? For me, virtual engagement can never be as strong as a physical experience and that is why your article in my humble view is ‘on the money’!

    Reply
  • Dean  says:

    My staff and I just held an off-site meeting where we discussed the future of retail. It’s eerie how close we came to your vision. I agree 100% with your prognosis. My business is dependent on retail survival and I accept that I must morph the business to remain relevant. I was glad to read that someone else shares our point of view that retail will in fact evolve to meet society’s new and changing needs for product acquisition, socialization, and diversion. Kudos on a well written perspective.

    Reply
  • Jean-Eric PONTHOU  says:

    I believe that a cross-canal experience is highly expected from modern consumers. It will take some time both to older retailers and current brands to adjust their shop profile or product offer to these changes. I do agree with you “change will be continual” probably because everything new means more interesting for online shoppers. Aren’t pop up retail and short term leasing for instance the adaptation of offline businesses to online rules of the games? In my opinion, this does not mean that brands are not here to stay . It means they have to set up new ties with consumers. Concerning retailers, they may be able in the end to supply consumers with better-quality contents and use social networks a more efficient and personal way than pure players or big chains. This means for retailers investing time and money to develop. Not all retailers will be able to afford it. We are experiencing the law of the survival of the fittest and i agree there is absolutely no way to manage a shop the same way as in the past. @JePONTHOU

    Reply
  • Chris Holdsworth  says:

    This is a very thoughtful counterpunch to claims that retail is dead. Emerging technology and communication preferences are transforming the traditional retail experience, but not extinguishing it. A tangible interaction will always play an important role in the overwhelming majority of customer purchases. Successful retailers of the future will represent a bridge between those two worlds. Retailers that can devise a cohesive plan to effectively combat “showrooming” should be the first to reap the rewards of bridging those two worlds.

    Reply
  • Henry Ragin  says:

    Doug-
    I find your statements extremely thought-provoking particularly in the areas of creating “more remarkable” and in the use of technology to improve the shopping experience.

    I wanted to ask you (or anyone else) if there is a contradiction between the socialization of shopping and the time pressure faced by many consumers. If so, those who can solve this contradiction could be the true winners.

    Thanks for an interesting post.

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Thanks Henry. Good question. I think the balance between shopping and time-restriction is interesting. We tend to be hearing considerably less about time-starvation today than we did in the late 1990’s and early 2000’s. Consumers seem more willing to carve out time for themselves as they do a wholesale reconsideration of their participation in the rat-race. As far as shopping goes… regrettably, most shopping is drudgery, because retailers make it so. I think as more retailers grasp the idea that their stores are really media points – not simply distribution points, they may create more entertaining experiences – thus making the decision to spend valuable time, an easier one for consumers.

      Reply
  • Tribhuvan Jakkal  says:

    DEEP VISIONARY STUDY.

    Reply
  • Jennifer  says:

    I too enjoyed your article and took some notes to ponder. I did want to mention a little about pop up stores. I dislike them very much. I own a small store and seasonally I would do well and that would carry me through the slower seasons. With these cut throat pop up stores they take away from us little guys who are here all year long, paying taxes, giving long term employment and a standing in the community. Who can resist the temptation of the flashy pop in pop out store. What I would like to know is how do I compete with that? Remember small budget and not the typical make your experiences with every customer count, be a bigger experience, been there done that. I need more out side of the box. Thanks and keep it coming.

    Reply
  • Geoff  says:

    Doug great piece

    Your strategic foresight into the retail landscape brings some big ideas to the front. i think retail will continue to see it is not an off/on line win lose proposition but more of an integrated one that must balance business goals with consumer needs

    Very good read

    Reply
  • Karen Conlon  says:

    Great article Doug! – I agree in many respects. I think the customer focused experience of shopping will become more creative and geared to individual needs. Shopping is about relationships, with ourselves and our needs, and with the flexibility of retailers to meet and exceed expectations. I look forward to seeing more pop ups, greater individuality and movement away from generics!

    Reply
  • François  says:

    I appreciate the artcicle and i’ve some questions in my mind :
    What are the Retailler’s reactions ?
    Does it influence their strategy ?

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Hi Francois,
      There’s a spectrum of reaction in the marketplace from those who are taking a lead role in the transformation of retail – like Bonobos for example and those who are doing nothing, like Sears. I like to think of it this way, retail, as an industry is being hacked by savvy, bright, outsiders who don’t play by the industry’s outdated rules. It’s a wakeup call for everyone!

      Reply
  • Herwig  says:

    Oh my…. but, what’s the difference between old stype POST-ORDER, and new style EMAIL-ORDER ? Most of these talks are completely artificial. In the past, post order lazy people had thick paper catalogues on the table, and ordered by snail-mail. Now the catologue is on the web and the order is by email.
    STILL, there is exactly the same big industrial warehouse which stores the goods, and still it’s delivered in the most energy spilling and polluting and chaotic ways (Trucks => planes=> trucks => delivery vans)
    So WHERE exactly is the different product ? Only in our fantasy.

    Reply
  • Mark Barnebey  says:

    I concur with many of Doug’s comments. One of the best retailers in evolving with this model is Bass Pro Shops which are part retail, part interactive gaming, and part dining experience. Shopping centers of the future will need to follow a similar model to be successful along with significantly higher levels of technology in the stores and common areas.

    Reply
  • Phil Huckbody  says:

    Whilst the online market will continue to grow, there will always be a demand for physical stores. I believe these will mainly fall into two categories… (1) Budget retailers satisfying the needs of the masses for mundane, regularly bought items that the public are unlikely to go online to buy. (2) Smart retailers. This is the really interesting category, where the progressive retailers will ensure they specialize in,not only their stock, but also the service they offer. The staff will be ambassadors for their brands and discerning customers WILL return to enjoy the service and advice they experience. Shopping is still an incredibly popular pastime, especially for the younger age spectrum; the switched-on retailers will grab these customers NOW and ensure they remain loyal and even become ambassadors for their brands. They will invest in their retail spaces and ESPECIALLY their people – good service will be the minimum requirement; 100% exceptional service will be the realistic target. They will celebrate their victories and learn from their mistakes quickly.

    Reply
    • Cahterine  says:

      HI, i really like your point. just want to know do you think small brands do not have budget to engage with high technology as big brands do? Burberry and Ralph Lauren invest lots of money onto digital branding and the use of high technology. It seems only big brand can do this.
      Thank you

      Reply
      • Doug Stephens

        Doug Stephens  says:

        Reply
        • Cahterine  says:

          Hi Thank you so much for your replay.

          I am a student from MA Communication Design at Central Saint Martins, London. My communication design question is How can brand commuicate their brand identity in coutless new situations? New situations means a smart city-a fully wired city in the future. There are lot of changes, e.g. a fully wired city which I am focusing on, everything is connected by an IP address, even human beings. In this situation, will the brand identity be changed? how can brands deal with this new situation? AS YOU SAID, there will be some retail stores, but it become an experience rather than a ‘buying and pay’ place. I found this is very inspiring.

          Reply
          • Doug Stephens

            Doug Stephens  says:

            You call out an important point and one that a lot of brands are currently struggling with. While it’s important to use these new channels in a “native” way – which is to say, adapting the message and how it’s being communicated to fit the form of the media channel itself – it’s also important for brands to stay true to who they are and make sure they don’t lose their brand essence or confuse their audience.

      • Doug Stephens

        Doug Stephens  says:

        Reply
      • Doug Stephens

        Doug Stephens  says:

        Ironically, many of the technologies mentioned are more scalable today than they might have been just 20 years ago. Small to medium sized retailers have more available to them today than ever; from mobile POS, to social commerce platforms, digital signage packages, offline analytics technologies etc. The problem is that many are unaware of what IS available and how it can help transform their business. With a little exploration and a willingness on the part of retailers to do some of the set up work themselves, they can access many of the same platforms are their larger competitors.

        The real upper-hand comes though in the ability of the small retailer to engineer, control and measure every aspect of a differentiated guest experience. And this, I find, is most often where small retailers aren’t as effective as they can or should be. Many have not developed a completely articulated and differentiated brand culture with unique customs and artifacts. This, as one might imagine, leads to a epidemic of sameness in most markets. And today, sameness is a recipe for extinction.

        Reply
  • sheila  says:

    Completely agree with you … from a sales perspective it will be interesting to see how organisation will start working commissions and bonuses for staff given the conversion may happen in any channel..

    Do you have examples of organisations that have a brand strategy cross-channel? that do it well?

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Thanks Sheila. Solid examples are hard to come by. Different companies are doing some pieces quite well. Tesco is certainly exploring some very interesting ground including virtual stores, augmented reality catalogs, connected stores etc. Macy’s is also making big investments in the concept but the fruits of that investment aren’t apparent yet. Bonobos, Warby Parker and some other start-up retailers are also taking an omni-channel first approach that makes them very disruptive relative to in category competition.

      Reply
  • Shabby Chic Lane  says:

    What happens to all those people who like to view what they buy? Up-cycling maybe a fad but retro goods are not new but the future is constantly creating a past….thats why we up-cycle. We experience all ages, all money income groups and all are interested because they are one off’s.

    Reply
  • Mike Davidson  says:

    Good article. We are having an interactive broadcast on the 3rd July @ 10am EST which covers this subject. Anybody interested in booking a place please email me for details.

    Reply
  • Ashish Bhasin  says:

    What a prophetic prognosis Doug.. makes a very interesting read . i have a question ( to you or anyone ) whats the future of retail in developing countries or emerging markets which are still in prehistoric era – strapped on resources and new technology ?

    Reply
  • Mark Ferrari  says:

    Hi Doug.
    Nice to see some calm non sensational opinion. I think everyone needs to stop thinking of Online Vs Offline. It’s just buying and selling based on the want of the customer. If the customer wants to buy electronically or personally ( i.e. visit the seller in person) then let the market decide the outcome as far as what’s dead and whats not and if that is physical retail then who really cares? The landlord, not really, they will have to adapt to the market or they will die. My point? look at the opportunities available to smart businesses, your customer carries your cash register with them everywhere they go, all you gotta do is make it ring!!

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Exactly Mark. I’m not as concerned about the amount of physical retail as I am about their being quality retail that delivers awesome experiences.

      Reply
  • Nombulelo Silinda  says:

    Very interesting article sir, my assignment at university is based on it.

    Reply
    • Doug Stephens

      Doug Stephens  says:

      Thank you Nombulelo! Good luck with your assignment. 🙂

      Reply
  • ELMARIE COLES  says:

    Very interesting article. I find that retail wont die in a hurry. Customers still enjoy the experience gain found in having a traditional retail outlet. I always fear the product I see online, may not be what I receive, as from previous shopping experiences. It will take good service delivery for everyone to adopt the concept of online shopping. If I am wishing for a chocolate bar….. I am wishing for it now! If I get asked on a date the friday night and realise I need a new outfit for saturday night, yes I may search the web that night but am I going to get the outfit delivered the next day? I think not. So you most likely will find me going all the way down to the store to pick it up the following day .To my surprise I may get there and decide I no longer want it and find something better…….. now this is an example of issues retailers may have to look into and find ways to ultimately make that client happy and satisfied by their choices. Traditional retailers must stay focused and play close attention to change, to remain in the game. Minimizing floor space, reinventing store layout to increase intimacy of customer interactions, remaining relevant by investing in technology advancements and finding creative ways to engage with the public will be guidance to survival.

    I have this article as an assignment for my Honours course and all the feedback given by the readers of this article has given me much more insight to your view point than I had on my first read.

    Reply
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